Wondering about the connections between bankruptcy and medical bills? Melissa Jacoby (UNC Law School) and Mirya Holman (Duke Law School) have an important new paper on "Managing Medical Bills on the Brink of Bankruptcy: Evidence and Implications from a National Study."
Here's their abstract:
This
paper presents original empirical evidence on financial interactions
between medical providers and their patients who go bankrupt shortly
thereafter. Using a nationally representative dataset of people who
filed for bankruptcy in 2007, 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 half of these
same individual’s court records contain identifiable medical debt, and
many others have less debt than they did before. After exploring the
data, we conclude that the discrepancy is best explained by respondents
shifting medical bills to consumer credit (credit cards, home equity
loans), a behavior that is especially present among those who report
that medical bills were a reason they filed for bankruptcy. The
findings offer a window into the success of medical providers in
reducing their exposure to losses and protecting them from the
regulation that the bankruptcy system otherwise would impose on their
future interactions with these patients. The data also present a
cautionary tale about relying exclusively on court records to measure
the financial burden of medical care on bankruptcy filers absent
significant changes in the information that the federal bankruptcy
court forms require.
One take-away here seems particularly important to me as a lay person in the field of bankruptcy but as someone who uses court records to divine something about legal history. The court records don't come close to telling the complete story of why people file for bankruptcy. This is a particularly important lesson for anyone who's trying to use court records to create a picture of a society's economy or culture. Another take-away for me as a lay person but who's scared by the prospect of both medical bills and bankruptcy, repeat players who deal with poor people (or those of us who might become poor) have techniques for getting paid, especially when they're providing a service you can't do without.
I'm a bit slow to pick up on the importance of the paper and its research. It's old news that uninsured (or underinsured) individuals often file bankruptcy because of medical costs. And many physicians insist on up-front payment, leaving the patient to wrestle with the insurance company. No surprise there. So some folks have medical debts owed to physicians, and some folks have medical debts owned to third-party financers (e.g., credit card companies). Again, no shock. So what am I missing?
Is the concern that reviewing bankruptcy filings and noting "credit card debt" only tells half the story? Are folks relying on that info without looking behind the label to learn the nature of the underlying credit card debt? Again, why would folks NOT look behind the label?
So I'm left wondering why I should read the paper. Help me out here.
Posted by: Tim Zinnecker | August 03, 2009 at 10:12 PM
The paper adds precision to what you report as things we already know.
I've asked Jacoby and Holman to write a little bit more that goes beyond their abstract; so we'll be continuing this discussion shortly.
Posted by: Alfred | August 04, 2009 at 09:35 AM