Medical-related bankruptcies filed in 1981 totaled 8%, reports Business Week.

Medical-related bankruptcies filed in 2001 totaled 50%, according to a new study from Harvard University.

Medical-related bankruptcies filed in 2007 totaled 62%, says the news magazine.

One can only wonder what the rate will be for 2009.

The researchers, quoted in the story as being surprised by one fact in their 2001 analysis, say that 78% of those filing had insurance when first becoming ill, with private insurance coverage being most common at 60.3%. (2001 data)

The numbers show a trend that started in 2001.

Employee benefit surveys often show that health insurance is, if not the most important benefit, certainly one of the most important. That insurance, based on this data, does not appear to be protecting middle-class families who are hit with a major medical episode.

It is hard to overstate how alarming these figures are, especially as they include no filings in this year unlike any other economically.

The study was funded by the Robert Wood Johnson Foundation.

Business Week

“Medical problems caused 62% of all personal bankruptcies filed in the U.S. in 2007, according to a study by Harvard researchers. And in a finding that surprised even the researchers, 78% of those filers had medical insurance at the start of their illness, including 60.3% who had private coverage, not Medicare or Medicaid. (Emphasis added)

“Medically related bankruptcies have been rising steadily for decades. In 1981, only 8% of families filing for bankruptcy cited a serious medical problem as the reason, while a 2001 study of bankruptcies in five states by the same researchers found that illness or medical bills contributed to 50% of all filings. This newest, nationwide study, conducted before the start of the current recession by Drs. David Himmelstein and Steffie Woolhandler of Harvard Medical School, Elizabeth Warren of Harvard Law School, and Deborah Thorne, a sociology professor at Ohio University, found that the filers were for the most part solidly middle class before medical disaster hit. Two-thirds owned their home and three-fifths had gone to college.

“But medically bankrupt families with private insurance reported average out-of pocket medical bills of $17,749, while the uninsured’s bills averaged $26,971. Of the families who started out with insurance but lost it during the course of their illness, medical bills averaged $22,658. “For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, co-payments, and deductibles that illness can put you in the poorhouse,” said lead author Himmelstein. “Unless you’re Warren Buffett, your family is just one serious illness away from bankruptcy.”

Source: Business Week, June 4, 2009

Citation: Journal of the American Medical Association, June 4, 2009, Online. August print publication scheduled.