Bill Moyers recently interviewed Katherine Newman, who wrote the book The Missing Class, just one of several she's written about how regular people live their lives and cope from paycheck to paycheck. She teaches at Princeton University, where she also directions the Institute for International and Regional Studies. They discussed how many people including the middle class are struggling in a world that they increasingly feel estranged from. One of the topics was the causes of debt and bankruptcy. The following is an excerpt from the transcripts of his January 28, 2008, interview:
BILL MOYERS: Are people going into debt merely because they're spending too much money?
KATHERINE NEWMAN: The biggest source of bankruptcy, the biggest pressure leading to bankruptcy is actually medical expenses. So this is not what we would call out there buying Cadillacs.
BILL MOYERS: More people are going into bankruptcy because they can't afford their medical bill?
KATHERINE NEWMAN: That is the biggest push toward bankruptcy for most people who file. It's an unexpected and very high medical cost. And this is something we don't really appreciate. We often think, oh, well, they've been on a spending spree they couldn't afford. But it's a spending spree with taking care of a spouse who is ill, or, you know, a ruptured appendix. Well, that's not really a very discretionary expense. You sort of have to do that. And that is a really important reason why we're seeing a lot of people reach bankruptcy. The foreclosure crisis, of course, is not helping matters.
Her concerns are not without substance.
The following article was published by consumeraffairs.com on February 3, 2005.
According to a 2005 Harvard University Study , Illness and medical bills caused half of the 1,458,000 personal bankruptcies in 2001, according to a study published by the journal Health Affairs.
The study estimates that medical bankruptcies affect about 2 million Americans annually -- counting debtors and their dependents, including about 700,000 children.
Surprisingly, most of those bankrupted by illness had health insurance. More than three-quarters were insured at the start of the bankrupting illness. However, 38 percent had lost coverage at least temporarily by the time they filed for bankruptcy.
Most of the medical bankruptcy filers were middle class; 56 percent owned a home and the same number had attended college. In many cases, illness forced breadwinners to take time February off from work – losing income job-based health insurance precisely when families needed it most.
Families in bankruptcy suffered many privations -- 30 percent had a utility cut off and 61 percent went without needed medical care.
The research, carried out jointly by researchers at Harvard Law School and Harvard Medical School, is the first in-depth study of medical causes of bankruptcy. With the cooperation of bankruptcy judges in five Federal districts (in California, Illinois, Pennsylvania, Tennessee and Texas) they administered questionnaires to bankruptcy filers and reviewed their court records.
Dr. David Himmelstein, the lead author of the study and an Associate Professor of Medicine at Harvard commented: "Unless you're Bill Gates you're just one serious illness away from bankruptcy. Most of the medically bankrupt were average Americans who happened to get sick."
Today's health insurance policies -- with high deductibles, co-pays, and many exclusions -- offer little protection during a serious illness. Uncovered medical bills in 2005 averaged $13,460 for those with private insurance at the start of their illness. People with cancer had average medical debts of $35,878.
"The paradox is that the costliest health system in the world performs so poorly. We waste one-third of every health care dollar on insurance bureaucracy and profits while two million people go bankrupt annually and we leave 45 million uninsured" said Dr. Quentin Young, national coordinator of Physicians for a National Health Program. End article excerpt.
To pull things together, a deeply disturbing question that Katherine Newman raised is: “The question is, who's "we"? Is the "we" really the inclusive "we" that it-- that once was? You know, when prosperity was growing after World War II, when we had really a long, long period of shared prosperity, everybody was doing better. We now see these projections that kind of fan us out into haves at the top and have-nots at the bottom and the gap is widening”
Questions that I have are:
As planners/leaders, are you seeing health care a cause of bankruptcy ?
How is it affecting your clients?
How do you introduce health care as a topic with your clients?
As planners/leaders should we be concerned about the narrowing inclusively of “we