What is the number one reason Americans file for bankruptcy?

Francis Lanzano Contributor
What is the number one reason Americans file for bankruptcy?

Answer: Healthcare Costs

A recent study published in the American Journal of Public Health found that 66.5 percent of all bankruptcies filed by Americans were tied to medical issues. The filings were driven by both the high costs of care and the money not being made while the patient was out of work. Moreover, the findings showed that over half a million families turn to bankruptcy each year, 530,000 to be exact, because of high medical bills. Other forms of leverage were also significant contributors to the number of bankruptcy filings such as mortgages or foreclosure, student loans, and divorce, but most were driven by the sometimes astronomically high costs of coverage for health care.

According to the survey, even with coverage and insurance, more individuals are finding they simply cannot cover their medical bills. The study’s authors noted that, “despite gains in coverage and access to care from the Affordable Care Act, our findings suggest that it did not change the proportion of bankruptcies with medical causes.” It makes sense then that roughly 6 out of 10 American adults say they’ve been surprised by a medical bill they thought would be covered by insurance. This was according to a survey from the research group NORC at the University of Chicago. When health becomes the number one priority, other necessary expenses like rent, electricity, auto insurance, and food pile up creating a hole that’s sometimes impossible to crawl out of.

File:Lyndon Johnson signing Medicare bill, with Harry Truman, July 30, 1965.jpg

President Lyndon B. Johnson signing the Medicare Bill at the Harry S. Truman Library in Independence, Missouri. Former president Harry S. Truman is seated at the table with President Johnson. The following are in the background (from left to right): Senator Edward V. Long, an unidentified man, Lady Bird Johnson, Senator Mike Mansfield, Vice President Hubert Humphrey, and Bess Truman.

This hole gets deeper and darker when those who can’t afford to pay off their debt must turn to collection agencies or payday lenders. Utilizing these outlets adversely impacts the borrower’s credit score, which drives up available interest rates. According to CNBC, there are steps one can take to protect yourself, especially when it comes time to vetting the hospital bill. Patients should always verify that the bill is not covered by insurance, keep an eye out for outrageously priced items, see if you qualify for Medicaid, pay with a credit card, and last but not least negotiate, negotiate, negotiate. Remember, they would rather work with you to get paid than getting a collection agency involved. Until we can figure out a better way to keep coverage high and costs low, make sure you scrutinize your next hospital bill.