Medical Bills Biggest Cause of Bankruptcies

Nearly 20 percent of the national population is struggling with healthcare-related expenses. Healthcare is the number one cause of bankruptcy filings, surpassing credit card bills and unpaid mortgages. Such bankruptcies represent about 60 percent of all filings. Accidents and illnesses unleash an overwhelming load of medical debt. Having health insurance does not absorb the financial burden. Nearly 10 million individuals with a healthcare plan will nonetheless accumulate medical bills that they cannot pay off. Policies with high deductibles are overburdening many households and requiring consumers to pay more out-of-pocket expenses. The now common annual out-of-pocket maximum of $5,000 can be difficult to pay, given that the average family brings home $50,000. Americans will incur additional credit card debt to pay for the healthcare-related debt. Credit card companies impose high interest rates on unpaid balances, late fees, and penalties for reaching the credit limit. This causes debt to swell up, leading to a ferocious debt cycle for consumers. What is more troubling is that individuals and families will eat away at their savings and stop paying for necessities such as food, utilities, and prescription drugs which cycles into more health issues down the road. With the largest population in the country, the state of California will account for a substantial percentage of individuals with medical debt. This begs the question of whether Obamacare will solve the problem or whether bankruptcy may be the true solution.

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