Bankruptcies and health care

According to The Fraser Institute, the idea that large numbers of Americans are declaring bankruptcy due to medical expenses is a myth and the introduction of government-run health insurance in the U.S. will do nothing to reduce personal bankruptcies.

“The current debate about reforming U.S. health care policy has included suggestions that nearly two-thirds of personal bankruptcies in the U.S. result from uninsured medical expenses or loss of income due to illness. Advocates of socialized medicine argue that this would not occur if the U.S. adopted a government-run health system similar to Canada’s,” according to the “Health Insurance and Bankruptcy Rates in Canada and the United States” report.

Brett Skinner, author of the report, used 2006 and 2007 bankruptcy data to show that personal (non-business) bankruptcy filings as a percentage of the population were 0.2 percent in the U.S. during 2006 and 0.27 percent in 2007. In Canada, the numbers are 0.3 percent in both 2006 and 2007. The bankruptcies reviewed were non-business filings.

“There is no evidence to support the idea that a government-run health care system in the U.S. will reduce personal bankruptcies,” Skinner said.

Other findings in the report include:
• Medical spending was one of several contributing factors in 17% of U.S. bankruptcies.

• Medical debts were only as high as 13% of the total debt among American bankruptcy filers who cited medical debt as the reason for bankruptcy.

• Canada and the U.S. have similar employment insurance programs, and the unemployment rates in Canada (5.3%) and the U.S. (4.6%) during the study period were similar.

• Aside from a universal single-payer health insurance in Canada, there are few other significant health, social, or legal policy differences between the two countries that could be casually linked to bankruptcy rates.