Most Driven Into Debt by Medical Bills HAVE Health Insurance

Most driven into debt and bankruptcy by medical bills have health insurance. For example, Reader's Digest notes:

Between 2000 and 2003, seven in ten adults who were driven into debt by medical expenses had insurance at the time.

Similarly, as of 2009:

More than 2.2 million California adults report having medical debt, and two-thirds of those incurred the debt while insured, according to the authors of "The State of Health Insurance in California (SHIC)," a comprehensive new report from the UCLA Center for Health Policy Research.

And as the Washington Post pointed out last year:

Sixty-two percent of all bankruptcies filed in 2007 were linked to medical expenses, according to a nationwide study released today by the American Journal of Medicine. That's nearly 20 percentage points higher than that pool of respondents reported were connected to medical costs in 2001.

Of those who filed for bankruptcy in 2007, nearly 80 percent had health insurance.

Why is this happening?

Above and beyond the fact that health insurers nickel and dime everyone by trying to exclude necessary medical care from coverage (you've heard the horror stories), there are two additional reasons:

(1) People think that they are covered, and so authorize more health care than they would if they knew in advance that they would have to pay for it out of their own pocket;

and

(2) People are underinsured, and can't afford to buy an adequate level of insurance for their needs.

As an interesting historical sidenote, the Nixon administration helped to launch the whole HMO concept. Specifically, as Michael Moore told Democracy Now last month:

[My researcher] found this Watergate tape—has nothing to do with Watergate, it’s one of the Nixon tapes—at the Archives, National Archives, where Nixon and Ehrlichman are discussing whether or not to support this HMO concept. And Ehrlichman says to Nixon, "You’re going to love this, because this is private enterprise. This isn’t like some freebie thing." Nixon goes, "Oh, I like that. Tell me about it." And then Ehrlichman says, "Well, this is how it’s going to work, these HMOs. They’re going to make more money by providing less care. The less care they give them, the patients, the more money the company makes." Nixon goes, "Ooh, not bad!" And it’s all there on tape.

In the same interview, former top Cigna health insurance executive Wendell Potter confirmed to Democracy Now, "I do know that tape".

Note: The effect of the new health care bill on this issue is beyond the scope of this essay.