Cancer and illness underlie many Washington bankruptcy filings

June 12, 2013 (Press-News.org) Cancer and illness underlie many Washington bankruptcy filings

Article provided by CBG Law Group PLLC
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Getting sick in the United States can lead to a financial tailspin that results in debts an individual or family may never be able to repay. A recent study by researchers in Washington found that cancer patients, in particular, were more at risk for bankruptcy.

The lead author of the study, Dr. Scott Ramsey, director of the Hutchinson Institute for Cancer Outcomes Research in Seattle, matched almost 200,000 adults from a cancer registry in western Washington with an equal numbers of cancer-free individuals. Then by reviewing court records, he and his colleagues determined who had filed bankruptcy.

Between 1995 and 2009, the researchers noted that the cancer patients were 2.5 times more likely to file for bankruptcy protections. Young women were the most at risk and the highest rates of bankruptcy were traced to thyroid cancer, which affects younger individuals.

Age was a major determinant in whether a cancer diagnosis and treatment pushed an individual toward a Chapter 7 bankruptcy filing. Those over the age of 65 did not feel the same affects, likely because of universal Medicare coverage for seniors.
Insurance coverage often leaves gaps with copayments and deductibles

This problem is not limited to those who are uninsured. Approximately three-quarters of those who listed major illness as a factor in a bankruptcy filing had private medical insurance when first diagnosed with an illness.

For one woman in her 50's, the diagnosis of non-Hodgkin's lymphoma was when she realized her insurance covered none of her diagnostic tests and only some of her surgical costs. With co-payments and deductibles, she was $150,000 in debt within several years and then diagnosed with pancreatic cancer.

Three years later, she was no longer able to work and needed to file for bankruptcy protections. Bankruptcy offers a fresh start and is a way to eliminate medical debts.
Will the Affordable Care Act offer financial protections going forward?

Unfortunately, even though the 2010 Patient Protection and Affordable Care Act will allow more people access to health insurance coverage, it is questionable whether it will reduce the costs of medical care. The basic level of insurance offered through federal insurance exchanges has been called "skimpy," because it will only cover 60 percent of medical expenses.

Massachusetts provides a guide. Two years after implementing health reform, bankruptcy rates prompted by medical expenses remained almost unchanged. The insurance coverage was so minimal that it failed to provide adequate financial protections.

According to Dr. Steffie Woolhandler, professor at City University of New York School of Public Health at Hunter College, The reforms failed to reduce health care costs in Massachusetts, which are currently some of the highest in the world. For example, a 50-year-old seeking a health care policy on the Massachusetts insurance exchange would pay a yearly premium of about $5,000 with a $2,000 deductible. Then after being out-of-pocket $7,000 in a year, this individual would still pay 20 percent of the health care costs up to $15,000.

As medical costs continue to increase faster than the general inflation rate, bankruptcy is one of the few remedies available. It provides a complete discharge of most debts, which can occur in as little as four to five months after filing.

Often struggling and falling behind on medical bills is worse than a bankruptcy filing for your credit rating. Contact a Washington bankruptcy attorney for more information, if you are struggling with medical bills after suffering from a prolonged illness.