We Need to Rethink What We Know About Medical Bankruptcy

For millions of Americans, health insurance can be the difference between going bankrupt and getting back on your feet. We all know how burdensome the cost of health care can be in the United States. New data shows that we need to reevaluate how it contributes to financial woes.

An economist at the Massachusetts Institute of Technology led a massive research project, just published, into medical bankruptcy. The team wanted to know how often debt and bankruptcy resulted from medical expenses, whether ongoing treatments or major events. What they found was surprising.

One widely cited figure says that 60 percent of bankruptcies stem from medical issues. But this research, which examined data collected in California between 2003 and 2011, found that only 4 percent of bankruptcy filings among adults older than 25 and younger than 64 had a medical basis. That seems like a gigantic shift, but it's not actually the whole story. Health care costs alone may have only accounted for a small portion of bankruptcies, but they played a part in far, far more.

Health care isn't just something you pay for with money or an insurance plan — it also requires time, energy, and community support. That's where people tend to get tripped up. Medical issues may interfere with the ability to hold down a job, and thus receive or acquire insurance coverage, which balloons into greater and greater debt. The research team has a lot of work to do with their data sets, but if you're anxious about your finances and your health, make sure you've got your networks and plans in order now, before you have to worry about them.