Realist, not conformist analysis of the latest financial, business and political news

American Medical Bankruptcies

She wouldn’t pass the Facebook truth in advertising test

There are indeed things wrong with the American system of health care. It’s not a system we’d recommend to anyone at all, despite the manner in which we Europeans get our pharma research subsidised by it.

However, even given that we’d still insist that it’s important to understand what is wrong with it. And it’s not medical bankruptcies:

It’s been over a dozen years since Susanne LeClair of West Palm Beach, Florida, was first diagnosed with cancer, she’s been fighting ever since. Now she, like many other Americans facing life-threatening illness, is bankrupt despite having health insurance.

Before her first cancer-related surgery, LeClair was told by the hospital they accepted her employer-based health insurance.

“I paid my $300 copay. After the surgery, I started receiving all these invoices and came to find out the only thing covered was my bed because the hospital was out of network,” said LeClair. “My bills were hundreds of thousands of dollars, so I had no choice but to file bankruptcy.”

That is a bankruptcy caused by medical costs. And yet, well, so? The woman went to a hospital that her insurance didn’t cover. If she’d gone to the correct hospital then those costs would have been covered by her insurance. It’s like turning up at Bupa, without Bupa insurance, and being shocked at being asked to pay. If you’d gone to the NHS the bills would have been covered.

More than this though:

According to a study published in February 2019, about 530,000 bankruptcies filed annually are because of debt accrued due to a medical illness.

No, this is as with Elizabeth Warren’s “work” on the subject. In x% of bankruptcies there is unpaid medical debt. That’s not the same as insisting that medical debt caused the bankruptcy. We’d be pretty certain that there some rent or mortgage payments left mouldering in bankruptcy too. That doesn’t mean the financial falling over was caused by house prices. Equally, credit card debt etc.

All of which is before the point that if someone falls ill then, whatever the state of payment of their medical bills, they’re more likely to go bankrupt. Because not working does tend to make that more likely.

In Savannah, Georgia, a 35-year-old man who requested to remain anonymous to avoid being associated with a bankruptcy, recently found himself homeless and jobless due to prolonged hospital stays and hundreds of thousands of dollars in medical debt.

A type 1 diabetic for years, he had to reduce his work hours for a cellular retail store when trouble regulating his blood sugar resulted in a toe amputation in April 2019.

“I had to cut my work hours so bills were harder to pay. But in July 2019 I was admitted to the hospital again and I was fired from my job because I was in the hospital. I lost my insurance. They amputated my leg, which means I still can’t work,” he said.

It’s not exactly the medical bills that put this unemployed man into bankruptcy, is it?

As ever, before it’s possible to solve a problem it is necessary to understand the cause of it. That there are medical bills unpaid in many bankruptcies does not make medical bills the cause of all those many bankruptcies.

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4 years ago

What’s not to recommend about the American system? It is the system of paying for and getting what you want, except for prominent exceptions, such as to oldsters and veterans, who are promised all the free health care they say they want (it’s a “basic human right”) and then famously not getting it how and when they want it.

The problem is that this system is being subsumed into the more basic system of excuse-making, as when someone eats himself into a wheelchair, loses a leg to diabetes, and claims this is the (latest) reason he is “unable to work.”

Gavin Longmuir
Gavin Longmuir
4 years ago

There is an issue about the US system that Euro-whiners usually seem to miss — (almost) everyone in the US gets world-class medical treatment when they need it, even the likes of illegal immigrants and drug addicts. The problem occurs with paying the bills after treatment.

4 years ago
Reply to  Gavin Longmuir

That is a worthwhile point. The actual care I receive is first rate and I’m not subject to some of the long waits my Canadian relations endure. I also have good insurance and so don’t have the messy accounting issues either. I can’t help but feel that the tradeoff is a generally inferior care but in return no one gets an incomprehensible bill.

Even that study of many years ago that ranked the US medical system 37th in the world ranked it first in quality of care, but then knocked it down 36 places over financing.

4 years ago

That chap didn’t need medical insurance, he needed – what’s it called? – not-being-able-to-work insurance. I’ve got that through my mortgage. In fact, it is a compulsary part of my mortgage as the bank insists I cover myself for not being able to pay them.

4 years ago
Reply to  jgh

Disability Insurance. The left hasn’t yet tried to rename it so as not to offend someone.

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