Davenport points out the Pollitz study demonstrates what kind of liability people may be facing and what kind of pressure is on consumers with mounting medical debt. "And then you have folks with a situation where the insurers rescind the coverage once a person gets sick. They have insurance and pay the premiums and then when they develop cancer or a heart condition the insurance company goes back and finds something that serves as a pre-existing condition and the entire policy is revoked."

Will the Affordable Care Act or the Kilroy bill offer any significant assistance to those facing medical debt? With the Kilroy bill, Davenport says, the proposal is about how much resolved medical debt will impact the credit score. For consumers with the ability to take care of the medical debt, that would improve their situation. Those who might be particularly helped are the policyholders in contention with their insurance company over payment. Once the claim is resolved, the debt would removed from the credit report. "However," she points out, "if the consumer does not have the means to pay the debt, the Kilroy bill does not have much effect."

From Woolhandler's perspective, the Affordable Care Act offers a small possibility of relief. The act expands Medicaid coverage for the poor, so to the extent that bankruptcy is associated with lack of insurance, it helps. However, she points out, most bankruptcies are filed by those with insurance. In that instance, Woolhandler says, the Affordable Care Act may make the situation worse by setting a minimum standard of insurance (for the plans in the insurance exchanges) that is "skimpy" -- only covering 60 percent of average medical care costs by actuarial value. The families will be expected to pay the rest of the medical costs. This minimum standard of coverage will rapidly become the norm, Woolhandler feels, leaving families with grossly inadequate protection.

"For the people who are uninsured or underinsured, or being taken advantage of by the insurance company, the problem is acute, because of the financial hardship of high medical expenses, and their ability to obtain ongoing care. Certainly we know that the people who are underinsured, as an example, delay care, get less care and are likely to die when they get sick. The folks who either don't have coverage at all or have coverage which doesn't cover their needs, are incurring a relatively high proportion of their income to medical debt."

Davenport concurs with this assessment. If consumers are uninsured now, there will be various kinds of help getting insurance through the Affordable Care Act, she explains. But a major issue is consumers being victimized by insurance company abuses, including rescission of coverage or refusal to pay claims. Some of the reforms in the act may help in that regard. But in terms of comprehensiveness of coverage, the improvements in the act won't completely fix the problems for people, due to the leeway insurers may get in designing benefit plans and the terms of co-payments and deductibles. That opens the door for people to still be caught in expensive out-of-pocket costs. In addition, Davenport notes that half of the people who are covered will be so through private insurance offered in the exchanges in 2014. The key to consumer protection for costs in those plans must include oversight.

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