The internet is awash in euphoria and dire predictions over the election of Donald Trump as President. One thing that is sure to change with the election is the number of people covered by health insurance and subsidies to allow health insurance coverage is set to decline. Studies done in 2009 and 2013 found that between 57% and 62% of personal bankruptcy filings were as a result of medical bills that could not be paid. The link below compares both studies and the conclusions in each.
My own experience over 20 years of filing personal bankruptcy for individuals is that medical bills are rarely the sole cause of filing for a bankruptcy. There are generally a variety of factors which cause individuals to file bankruptcy, with medical bills being a part of the equation. The authors of the 2013 Nerdwallet study appear to have accounted for this finding and still came up with the 57% figure.
“Bankruptcy: We relied on a widely cited Harvard study published in 2009. NerdWallet Health chose to include only bankruptcy explicitly tied to medical bills, excluding indirect reasons like lost work opportunities. Thus we conservatively estimated medical bankruptcy rates to be 57.1% (versus the authors’ 62.1%) of US bankruptcies. We also used official bankruptcy statistics, released this month through March 2013, from US Courts.”
So what to expect with an estimated 20-25 million people about to lose health insurance coverage over the next two years?
If the 2013 study showed the accurate figure for “medical bankruptcy” filings, then the consequences for bankruptcy filing rates could be dramatic. Inability to pay medical bills will result in a dramatic upswing in the number of filings based on the 57% figure. The amount of increase in medical bankruptcies depends largely on whether the new Trump administration can find a suitable replacement for the millions of Americans who rely upon the exchanges and Medicaid, where the greatest losses of coverage will be felt. Loss of personal savings and increased credit card debt are also possibilities as Americans attempt to cover medical bills without insurance. A future article will focus on the effect of the loss of Obamacare to the medical industry. Will medical providers suffer the same fate as consumers?
At Mickler & Mickler, we attend Court on a regular basis. We have the experience and knowledge to ensure that you receive the correct advice when confronted with difficult financial decisions related to filing bankruptcy. Contact us at 904.725.0822 or firstname.lastname@example.org.
Bryan K. Mickler