Moving beyond Medical Debt

In recent years it has become clear that medical costs are imposing severe financial burdens on American families, sometimes to the point that bankruptcy becomes the only escape from crippling debt. When evaluating the well-established connection between outstanding medical debt and consumer bankruptcy, most existing empirical studies attempt to quantify the percentage of consumer bankruptcies that are caused by unmanageable medical indebtedness. This Article addresses what we believe to be a more significant line of empirical inquiry, namely, the connection between health insurance coverage and consumer bankruptcy as a more precise measurement of how national health insurance programs may or may not affect bankruptcy filing rates. Data from a national longitudinal survey of adults from 2004 through 2014 indicate that the principle predictor of consumer bankruptcy is a lapse in medical insurance coverage, while controlling for socioeconomic variables such as race, marital status, household income, and debt-to-income ratios. Individuals who experienced a gap in coverage over a two-year period were roughly twice as likely to file for bankruptcy as those who retained continuous coverage. These findings contribute to the ongoing debate regarding the Affordable Care Act and the provision of health insurance to low-income Americans, and the role consistent health insurance coverage plays in relation to the consumer bankruptcy system