Canceling Health Insurance Can Double Your Risk of Bankruptcy
When I wrote earlier this week about calculating the total cost of your health insurance plan out of pocket , several of you asked why we even need to worry about health insurance.
If we need to pay $ 10,000 or more in premiums, deductibles, and co-insurance a year before our insurers begin to cover all the costs of on-net health care, why not skip this whole health insurance thing and pay it all ourselves. medical expenses?
Well, new research from the American Bankruptcy Institute shows that dropping health insurance doubles your chances of filing for bankruptcy. As MarketWatch reports:
People are twice as likely to go bankrupt if their health insurance is interrupted, according to new research released this week. According to a study published by the American Bankruptcy Institute, in fact, all it takes is a two-year break in coverage for the chance of bankruptcy to double.
MarketWatch notes that correlation is not causal, and that people without health insurance who filed for bankruptcy may have faced additional financial pressures (such as low income or no savings) that influenced the filing decision. In other words, not everyone who goes without health insurance will have the same increased risk of bankruptcy.
However, following the adoption of the Affordable Care Act, bankruptcy filings dropped by 50 percent, according to Consumer Reports :
While courts never ask people to declare why they are filing, many bankruptcy and legal experts agree that medical bills were a major cause of personal bankruptcy before public health care expanded under the ACA. Unlike other causes of debt, medical bills are often unexpected, forced, and large.
Consumer Reports also cites a 2014 study by bankruptcy professor and attorney Daniel Austin that “found that medical debt is the biggest contributor to personal bankruptcy.” In 2019, the American Journal of Health published a study showing that the percentage of medicine-related bankruptcies remained unchanged after the Affordable Care Act passed, meaning that two out of three bankruptcies were still associated with exorbitant health care costs or “disease.” … -related to the loss of a job. “
Put it all together, and it’s easy to assume that the cause of bankruptcy has declined overall, while the percentage of medical-related bankruptcies has remained unchanged, in part because the ACA gives more people the opportunity to purchase health insurance.
And now that the American Bankruptcy Institute is suggesting that dropping health insurance doubles your risk of bankruptcy, well … it’s a good reason to stick with this health insurance plan, even if it costs you a lot of money out of pocket. …