Bankruptcy Reform and the Costs of Sickness: Exploring the Intersections

Two important developments in the personal bankruptcy system unfolded over the course of the last several years: lawmakers considered and ultimately passed an omnibus bankruptcy bill, and researchers began to delve more broadly and deeply into medical-related financial distress among bankruptcy filers. Drawing on prior scholarship, this article contributes to this symposium by considering what, if anything, these developments have to do with one another. Part I briefly reviews two recent empirical studies of bankruptcy filers and the findings they produced. Although these findings may not have had discrete prescriptive implications for bankruptcy reform, they have contributed to a more subtle and complex understanding of medical-related financial distress. Part II identifies some of the medical-specific amendments in the Bankruptcy Abuse and Consumer Protection Act (BAPCPA), and explains why the findings from the empirical studies were not likely to have altered BAPCPA more substantially. Part III considers the future intersections between BAPCPA and households with medical-related financial distress, largely from an ex post perspective. BAPCPA increases administrative costs substantially and this may have a bigger effect on these households than the substantive provisions of BAPCPA. BAPCPA may also signify a reduced commitment to governmental management of household risk and may be followed by future erosions in social insurance. This article concludes with a note of how BAPCPA might affect the course of future research on medical-related financial distress