Medical Debt A Big Factor in Bankruptcy
For years, healthcare has been a major subject of discussion in the United States. Costs are ever-increasing, and many claim there is no clear solution, while others propose very different solutions to the problem. But it should come as no surprise that medical debt has become a larger and larger factor leading to bankruptcy, according to a new study published last year and mentioned in the New York Times.
The study followed almost 250,000 people filing for bankruptcy.
According to the study, roughly 20 percent of those seeking financial counseling in 2010 and 2011 cited medical debt as the primary cause of their decision to file for bankruptcy.
There are many suspected reasons for this. Job loss in a difficult economy triggers loss of employment benefits such as health insurance, which in turn leaves more people with mounting medical bills. Additionally, studies show that employers who offer health coverage are charging higher premiums and deductibles, leaving employees to shoulder more of the costs. And there will always be unexpected medical bills, as long as medical emergencies exist. But those costs are increasing constantly, leaving higher debt in their wake.
But medical bills are often outsourced to collection agencies quickly, and those with medical debt are left struggling with phone calls and letters until they give in and file for bankruptcy.
The study was conducted by a group called CredAbility, an Atlanta-based nonprofit credit counseling agency that serves clients all over the country.