This is the real reason most Americans file for bankruptcy
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Filing for bankruptcy is often considered the worst-case scenario.
And for many Americans who pursue this last-ditch effort to save their finances, it’s for a reason: health care costs.
A new study by university researchers found that 66.5% of all bankruptcies were related to medical problems, either because of high costs of care or downtime from work. An estimated 530,000 families turn to bankruptcy each year due to medical issues and bills, according to research.
Other reasons include unaffordable mortgages or foreclosure, at 45 percent; followed by spending or living beyond means, 44.4 percent; providing help to friends or relatives, 28.4 percent; student loans, 25.4 percent; or divorce or separation, 24.4 percent.
While the results are consistent with previous bankruptcy studies, the data also highlights a key new factor: whether the Affordable Care Act has reduced the burden of medical debt for people.
“Despite the gains in coverage and access to care from the ACA, our results suggest that it has not changed the proportion of bankruptcies with medical causes,” a item on the study published in the American Journal of Public Health.
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The number of debtors who cited medical issues as a contributing reason for their bankruptcy actually increased slightly after the law was implemented – 67.5% in the three years after the law was passed versus 65.5%. % previously.
According to research co-author Dr. David U. Himmelstein, a distinguished professor at Hunter College and founder of the Physicians’ Advocacy Group for a National Health Program, the culprit for the lack of improvement was insurance. -inadequate disease.
“Unless you’re Jeff Bezos, people don’t have very good alternatives, because the insurance available and affordable to people, or that most employers provide to them, is not adequate protection if you are sick, ”Himmelstein said.
Most families don’t have enough savings for a simple emergency, let alone thousands of dollars in unexpected medical bills. A recent study by the personal finance website Bankrate found that only 40 percent of Americans saved enough to cover an emergency expense of $ 1,000.
To help combat this problem, Physicians for a National Health Program is advocating for a National Medicare for All program that would expand insurance coverage for Americans.
“Health insurance is only very partial protection,” Himmelstein said. “I compare it to a hospital gown that looks like a blanket until you actually inspect it.”
The research looked at 910 Americans who filed for bankruptcy between 2013 and 2016.