By Jeffrey Freedman
What does a young woman who has just landed her first job teaching with AmeriCorps do when she is diagnosed with a cancerous brain tumor? While facing surgery, radiation and chemotherapy, Katie Weber worried: Would her health insurance cover the expenses, or would she be forced into bankruptcy by the time she was 23?
Because the Affordable Care Act, or Obamacare, was signed into law in 2010, Weber and millions of other Americans did not have to face bankruptcy due to an unexpected, involuntary and expensive illness.
According to the Kaiser Family Foundation, historically, medical debt has been the No. 1 source of personal bankruptcy filings in the United States. But after the Affordable Care Act was signed, helping about 23 million people get health care insurance, bankruptcy filings dropped roughly 50 percent: from 1,536,799 in 2010 to 770,846 in 2016.
It’s not easy to say how many bankruptcies are caused by medical debt, however, it has only been since the law was signed in 2010 that numbers dropped significantly.
Experts agree the Affordable Care Act played a major role, much bigger than the improved economy and changes to bankruptcy laws in 2005. Provisions of the law mandating coverage for pre-existing conditions, the end to annual and lifetime caps, and allowing young people to stay on their parents’ insurance until age 26 were major contributing factors.
In our offices, it is now rare to see debtors with huge medical bills, chronic illnesses or people denied coverage because they hit a lifetime cap or had a pre-existing condition.
Young people like Weber can focus on getting healthy instead of stressing over their mounting debts.
Tax credits and health savings accounts do not “replace” good health care insurance. It is impossible for the average American to set aside the funds to cover a serious or chronic illness.
In just one example, research cites the total cost of early stage breast cancer treatment at about $100,000. Advanced cases run $300,000 or more. Even with health insurance, out-of-pocket costs, including copays and coinsurance of 10 to 50 percent, add up. The majority of American savings accounts fall far short of that minimum 10 percent coinsurance payment for early stage breast cancer treatment, let alone funding the entire amount.
The Affordable Care Act may not be perfect, but it provides 23 million people with basic coverage that helps keep them out of bankruptcy court.
Among the many other drawbacks, repealing and replacing the Affordable Care Act with something that leaves more Americans uninsured will only serve to make our bankruptcy courts busier.
Jeffrey Freedman has handled bankruptcy cases since 1977. He was a founding member and on the board of the National Organization of Consumer Bankruptcy Attorneys.