Obamacare Will Increase, Not Decrease, Bankruptcies

by Don

So many false claims have been made for Obamacare that I did some research about medically caused bankruptcies.  What I found indicates that Obamacare will probably INCREASE, not decrease, medically caused bankruptcies.  

“Bankruptcy facts”: “63% of filers blamed credit card bills.  50% blamed mismanagement.  37% blamed pay cuts or job loss, and 28% blamed medical bills.” And, “89% of filers still get credit card offers on a regular basis.”  (see: http://goo.gl/vH12Fw).

 In her book ”The Fragile Middle Class…”, (now Senator) Elizabeth Warren claims that two out of three bankruptcy filers have lost a job and 40% of bankruptcies result from medical crises, unemployment or divorces.  (http://goo.gl/vH12Fw

“The primary cause of personal bankruptcy is a high level of consumer debt often coupled with an unexpected insolvency event such as the loss of a job, a major medical expense not covered by insurance, divorce, or death of a spouse (Groupp, Scholz, and White, 1997, Buckley and Brinig, 1998 and Nelson, 1999.)

In summary, bankruptcy is usually the result of an unexpected event which happens to someone who already has considerable debt.  Going for the sensational or showing political bias, headline writers and some authors blame bankruptcies on medical bills even when medical bills are a small part of a person’s debt.       

Bankruptcy is not the end of one’s life.  “Bankruptcy isn’t meant to ruin lives—it was created to help people resolve their debts in a legal manner.”  (http://goo.gl/isa3ri

Perhaps the biggest surprise is the size of the medical debt causing bankruptcy.  “On average, medically bankrupt families had $17,943 in out-of-pocket expenses, including $26,971 for those who lacked insurance and $17,749 who had insurance at some point.”  (http://goo.gl/ZD4CCJ )

Having bankruptcies caused by this level of debt says more about our nation’s failing economic policies that don’t create decent jobs and our failing education system that doesn’t teach the skills needed to earn a good living and responsibly manage finances than it says about  health insurance or America’s medical care.   

However, the new Obamacare insurance deductibles are in the range of $6250 per person and $12,500 per family, much greater than with most of today’s policies.  An accident or illness with these high Obamacare deductibles could easily result in bankruptcy, especially if medical expenses require paying two year’s deductibles. 

So many Obamacare claims are false that I should not have been surprised to find another lie.  But, I was shocked to find that Obamacare will probably significantly increase bankruptcies.            

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