Numerous studies, surveys and polls (from sources as varied as Harvard University to financial site NerdWallet) have found that the leading cause of consumer bankruptcy isn't reckless spending. It also isn't student loans or divorce. It isn't even the death of a breadwinning loved one. No, these studies consistently found that the number one self-reported cause of personal Chapter 7 and Chapter 13 filings in America is medical debt.
It was hoped that, prior to its passage in late 2009, that the Patient Protection and Affordable Care Act - colloquially known as "Obamacare" - would not only provide broader access to health insurance for those struggling to get coverage, but that it would also cut down on the number of medical bill-related bankruptcy filings. Unfortunately, that doesn't seem to be the case.
The unintended consequences of Obamacare
Ironically, the PPACA may have actually made the medical debt issue worse for some people. This has happened in part because many of the nation's largest insurers no longer have the right to disqualify people willing to pay for coverage simply because of underlying, preexisting conditions. In response to that, and to higher numbers of people using their services, insurance companies have started shifting more and more costs back onto consumers in the form of:
- Higher deductibles (the deductibles on lower-premium policies can be thousands of dollars, which must be paid in full before the insurance coverage kicks in)
- More out-of-pocket expenses like non-covered services or durable medical supplies
- Fewer "in-network" providers to choose from, which can result in services being not covered or covered at a lesser rate (70 percent versus 90 percent, for example)
- Fewer prescription drug coverage options
- Higher co-pays for office visits
The influx of added health-related costs, in addition to a still-recovering economy where many people have only been able to find jobs that pay significantly less than they were making just a few years ago, means that, for many, medical bills are simply out of control. This is the case even when routine care is an issue; add in a sudden injury or chronic illness, and you have a recipe for financial disaster in many instances.
Thankfully, medical debt can be discharged as unsecured debt in a Chapter 7 bankruptcy filing, and can usually be included in a Chapter 13 repayment plan. For more information about how a bankruptcy proceeding could help you escape from unmanageable medical and non-medical debt alike, contact an experienced bankruptcy attorney in your area.