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Medical debt's 'underreported' toll

by Astrid Fiano, DOTmed News Writer | September 13, 2010

"Medical care involves huge costs for patients. Insurance is full of gaps and deductibles and uncovered services, so many with illnesses find themselves with thousands of dollars in debt," Woolhandler explained. "This is not simply a problem with uninsured, but also for those with private insurance who are experiencing prolonged illness. Their debt is made even worse if they become too sick to work or need to take an absence from work to care for a sick family member, so often they can lose insurance when they need it most."

Woolhandler also points out that in addition to mounting debt, many persons in this situation lose their job for reasons relating to the illness.

Woolhandler's study on bankruptcy surveyed over 2,300 participants. The researchers obtained detailed reasons for the bankruptcies the participants had filed. Around 60 percent of the participants stated that one reason for the bankruptcy was illness or income loss due to illness.

"The issue does not get the attention it should in health policy debate," Woolhandler said. "We know about the numbers: one and a half million bankruptcies will be filed this year, and we know two thirds will be due, at least in part, to medical bills or illness. This is a very large problem. To demonstrate how large, a woman has as much probability of filing bankruptcy as graduating college, and two-thirds of those bankruptcies in turn will occur in the wake of a medical illness." The numbers of those affected by medical debt may even be understated, as some people with illnesses are too sick or too demoralized to file bankruptcy, even if it is in their best interest.

Davenport agrees that medical debt may be underreported because it is often hidden in other debt. "You may use a credit card to pay for a procedure and if the cost of the procedure is really significant, you may end up getting a loan from the bank or a home equity loan. You may well have medical debt that is money owed to a hospital or clinic, but often you have done what you could to pay off the medical debt but incurred other debt. People often do that when they are in the midst of treatment and need to keep paying the bills and keep the treatment going."

What kind of problems does medical debt cause? Woolhandler says an earlier data collection in 2001 found that many persons avoided seeing the doctor or didn't fill prescriptions because of cost. She points out other studies, such as from the Commonwealth Fund, found that people with high medical debt behave like those with no insurance -- they do not seek out preventative care.