Monday, September 14, 2009

The Truth War

I received an e-mail in favor of the Democrat's health care bill. In it, the sender stated that medical bills directly contributed to 70% of bankruptcy filings. This claim was too good not to check out.

In 2005 Harvard University published a consumer finance study of bankruptcies filed in 2001. It found illness and medical bills caused about 50% of personal bankruptcies. The best part is that 75% of those people had health insurance at the start of their illness. Read the entire study HERE.

38% lost their insurance during the illness. Because COBRA insurance is available for 18 months in the event they lost their job due to the illness (by the current federal law), either their insurance was canceled, hit their lifetime cap, or they had to make the hard choice of food Vs insurance premium. I didn't go to Harvard and there is no way to confirm, but my best guess is that lack of income because of the illness created an inability to work. Lack of income was a far greater cause leading to bankruptcy rather then just a lack of health insurance. However it is safe to assume that loss of insurance during the illness due to inability to pay the premium is an contributing issue. Which brings us to the health care plan. Even with the public option of government supported insurance, I don't believe any government program will move fast enough in moving someone from the public option to a Medicare type plan to have any real chance of avoiding bankruptcy. There is no reason to believe that the addition of a government supported Universal Health Insurance option, or any of the other proposed changes in the health care system will have any real financial impact of a catastrophic illness to the point of keeping a consumer out of bankruptcy.

EXIT QUESTION: Which issue is a greater threat to our economy and in greater need of reform: our health care system, or our financial system?

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