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Medical debt, and the battle over health care

Posted by: Jessica Silver-Greenberg on August 11

The Obama administration’s proposed overhaul of the health care system in this country has been met by the fiercest kind of resistance. Outrageous claims have been tossed around with abandon forcing the White House to launch a special website solely combating the most damning charges. In one especially hysterical accusation, Barack Obama’s health care plan was credited with causing forced euthanasia for the elderly.

But what continually confounds me is why so many Americans are outright rejecting any change to the health care system, when it’s that very system that’s leading to a record number of bankruptcies . It’s not just the roughly 47 million uninsured Americans that should be paying attention. In a news conference last week, Obama took to the streets and the bully pulpit. He stressed that health care reform impacts “every American who has ever feared that they may lose their coverage if they become too sick, or lose their job, or change their job.”

And guess what, medical debt plays a large role in bankruptcy. a leading voice in the debate, Aparna Marthur, from the American Enterprise Institute concluded in her research that “nearly 27 percent of filings are a consequence of primarily medical debt.” Elizabeth Warren, the force behind the embattled consumer financial protection agency also registered the role of medical debt in personal bankruptcy findings. In a report produced by Debb Thorne, she concluded that half of all bankruptcies are linked to medical debt.

Now, there’s a new paper, presented on the popular blog creditslips, which adds to the debate. The paper is from Melissa Jacoby at the University of North Carolina and Mirya Holman at Duke. The two women pored over records from the Consumer Bankruptcy Project, which tracks court records and responses from those hit with bankruptcy proceedings. As CreditSlips’ reports: "By combining the methods, we find that nearly four out of five respondents had some financial obligation for medical care not covered by insurance in the two years prior to filing, but only about half of the court records contain identifiable medical debt, and of substantially more modest amounts."

If medical debt for Americans with or without insurance, is forcing hard working people into bankruptcy, it seems high time to review the existing system. Maybe with more data points, knee-jerk resistance will give way to productive debate.

Reader Comments


August 11, 2009 11:25 AM

All this talk about health care has got to stop. If we don't even know if Obama is legally President, then why talk about health care? People do not care about health care! What people care about is the rule of law and why Obama has never shown a birth certificate! Luckily Republicans know that this is a REPUBLIC of LAWS and will not let Obama keep skirting the CONSTITUTION!


August 11, 2009 11:44 AM


The writer needs to get a grip.

If someone smokes, boozes, dopes, and gorges -- which consumes at least 35% of U.S. medical costs -- doesn't follow that they would have financial problems? Isn't that logical?

And is it my problem? My taxes should go up? Isn't there a moral hazard here?

We are our brother's keeper. It is not a blank check. There is personal responsibility.

gabe, san diego

August 11, 2009 12:09 PM

there are other ways Obama can tackle health care costs, without more bureaucracy and higher debt. why healtcare costs are so high. real interesting articles:


August 11, 2009 12:49 PM

There's a simple explanation as to why so many American's don't want 'change' in the healcare system--They're affraid the government will make the situation worse than what it is now. Let's get real here. How sucessful has the government really been in implementing large scale (budget intensive) initiatives that accomlishes what they said it would accomplish and is on budget?? The short answer, 'not very'. So given this poor track record why should the American public trust the government to accomplish such a daunting task such as health care reform?


August 11, 2009 01:21 PM

The paper says that only about half of the court records contain identifiable medical debt, and of ... modest amounts. How does this support the closing statement that medical debt is forcing . . people into bankruptcy?


August 11, 2009 01:21 PM

Give me a break. Who ever said that those of us against Obama's Socialism are against some kind of health care reform? We just don't want the government running our healthcare. They're already screwed up social security. Let's not compound the error by giving them our healthcare.


August 11, 2009 02:08 PM

The backlash against Obama's reforms are >not


August 11, 2009 03:09 PM

The backlash against Obama's reforms are >not


August 19, 2009 10:09 AM

i have health care.if i go to the hospital and miss work for a month,i may go bankrupt,i may not.but the point is that the line should be a bit further back,so i do not hessitate to get medical care before my illness gets worse and requires more expensive treatment.oh and by the way that medical insurance costs me more than i pay for food for my family of 5,or my mortgage on my illustrious mobile home!


August 20, 2009 04:53 PM

I'm curious who all these people are who are so vehemently opposed to the idea of medical care for all. We live in a country of limitless possibilities and unimaginable wealth. Yet we let thousands of people die each and every year simply because they cannot afford healthcare, or the healthcare they can afford won't cover their treatment.

These people are your neighbors. They are your friends, your relatives. They haven't done anything wrong. Put yourself in their shoes and ask yourself, "Why am I condemning them to a death sentence simply because they aren't fortunate enough to have sufficient personal/employer based health coverage?"

Thank you for your interest. This blog is no longer active.



BusinessWeek's Adrienne Carter, Jessica Silver-Greenberg, and David Henry deconstruct the mysteries of high finance, Wall Street, and hedge funds for pros and ordinary investors. E-mail them directly if you've got tips about big deals, a hedge fund, or even securities industry gossip.

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