Eight million Americans file for bankruptcy annually due to medical expenses. Sen. Bernie Sanders (I-VT) wants to put an end to it.
The idea, outlined by his campaign, centers around having the federal government “negotiate and pay off past-due medical bills in collections that have been reported to credit agencies”.
According to Sanders, this will eliminate $81 billion in past-due debt. A startling figure, his plan would help the 46 million Americans who have at least one unpaid medical bill on their credit report.
If you think the millions of Americans with past-due medical debt are simply irresponsible, think again. In 2015, the late physicist Leon Lederman, a Nobel Prize winner, sold his gold Nobel Prize medal for $765,000 to cover medical bills.
Another thought is that those filing for bankruptcy simply didn’t have insurance. However, Sen. Elizabeth Warren (D-MA) said at last night’s presidential debate that, “I spent most of my time studying one basic question, and that is why hardworking people go broke. And one of the principal reasons for that is the cost of health care. And back when I was studying it, two out of every three families that ended up in bankruptcy after a serious medical problem had health insurance.”
A study published in the American Journal of Public Health echoes her findings. This study, conducted by Dr. Himmelstein, et al., found that two thirds of bankruptcies were due to medical expenses or medical problems causing work loss. If you include all medical-related reasons, the figure jumps to 71.5%.
Regardless of your political leanings, or what the true percentage of bankruptcies due to medical hardship actually is, it’s clear that the increasing cost of medical expenses is a major problem.
Here are the highlights of Sanders’s plan:
- Eliminate the $81 billion in past-due medical debt.
- Remove and exclude medical debt from existing credit reports.
- Prohibit requiring the disclosure of medical debt discharge on housing, loan, or other applications.
- Include broad “automatic stay” protections, placing an immediate prohibition on any evictions, utility (heat, electric, etc.) interruptions, foreclosure proceedings, wage garnishments, driver’s license suspensions, and other actions.
- Substantially limit the assets that can be seized and the wages that can be garnished in collection to ensure consumers do not lose their homes, jobs, or primary vehicles and will be able to financially support their families.
- Allow for the adjudication — including potential discharge — of debt, including interest and penalties, stemming from direct payments to providers and insurers for medical expenses. Assuming documentation, this includes medical debt incurred on credit cards or any other consumer debt product.
- Prohibit the collection of debt beyond the statute of limitations.
- Significantly limit the contact attempts per week a collector can make to an individual through any mode of communication, regardless of how many bills are in collection.
- Eliminate means testing requirements to file for bankruptcy.
Many of the items in Sanders’s plan may seem ambitious, but that doesn’t mean they aren’t badly needed. The reality is that in today’s America, those with the best and highest paying jobs typically get the best health insurance coverage.
Meanwhile, those with entry-level or low paying jobs get worse coverage and less comprehensive insurance. This means that those that are poor end up owing the most money and quickly run out of options. It’s an unfair system in which the insurance companies win, while hardworking Americans lose.
With the average three day stay at a hospital costing $30,000, which is nearly 50% of the median household annual income, it’s no wonder that Americans simply can’t keep up. Once income tax, housing, and other necessary expenses are taken into account, it’s easy to see how a single trip to the hospital can result in catastrophe.
It reminds me of the 2001 comedy, Down To Earth, starring Chris Rock in which a character says that hospitals will charge you $100,000 for a heart surgery and then have the nerve to tell you to relax. The last thing on your mind is relaxing, when you know you might never be able to recover financially.
As is becoming all too common, an anonymous user posted the following question on Reddit.com:
“I currently have medical debt to the tune of $137,000 post insurance, mostly thanks to a high risk pregnancy and two very sick babies. I owe to several different parties: various doctors, labs, hospital, support staff, surgeons, all billed separately and some of the staff we saw in hospital was out-of-network for our insurance. My husband and I currently make a little under ~$70,000 annually between the two of us for a family of four, and I’m going to college. I had to call because the bills were coming due, and got put on a payment plan that’s more than our mortgage, and that’s as low a monthly rate as they could do. Even exhausting all of our savings, there’s no way we can keep this up for more than a few months. I have no idea what to do? Should I file bankruptcy?”
The top ranked response to her question? To post her plea on social media with the hope the hospital will be able to work with her or extinguish some of it.
Clearly, there has to be a better solution.