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Massachusetts study sheds doubt on whether health insurance mandates makes a difference

Maryalene LaPonsie | March 9, 2011

You would think that having health insurance would provide reasonable protection against sky-high medical bills, and you would be wrong if a recent study published in The American Journal of Medicine (AJM) is to be believed. Titled "Medical Bankruptcy in Massachusetts: Has Health Reform Made a Difference?," the study sheds doubt whether universal health insurance is an effective way to keep medical bills at bay.

Health insurance and bankruptcy

In 2006, Massachusetts became the first state to adopt a universal health insurance statute. Every man, woman and child was required to maintain medical coverage or face financial penalties. Sound familiar? It should. The Massachusetts law is widely credited as serving as the model for federal health reform.

Today, Massachusetts boasts that 98.1 percent of residents have health insurance. With that level of coverage, one might expect that medical bankruptcies would be a thing of the past. However, the AJM study indicates that while Massachusetts residents are insured at a relatively high level, they are not immune to unmanageable medical bills.

According to data collected in 2009, 53 percent of Massachusetts bankruptcies could be considered medical bankruptcies, meaning they were caused by health care expenses. A bankruptcy study completed in 2007 showed that 59 percent of Massachusetts bankruptcies were caused by medical bills. With only 199 people participating in the 2009 survey, it was determined that there was no statistical difference between the number of medical bankruptcy filings occurring before and after the Massachusetts universal health insurance law went into effect.

Lessons for federal health reform

Since the Massachusetts law appears to be ineffective at stemming the tide of medical bankruptcies, the study questions whether the federal health insurance mandate scheduled for 2014 will see similar results. "The recently enacted national health reform is unlikely to adequately address the widespread problem of medical bankruptcy," according to the AJM report.

Their solution? A "substantially improved--not just expanded--insurance, as well as better disability insurance programs to provide income support to ill individuals and family caregivers," the study said. The study conclusions also note that Canada, which offers universal health insurance through the government, does appear to have a lower rate of medical bankruptcies.

Not everyone is convinced that the answer is more government regulations and programs, however. Avik Roy, writing for Forbes, notes that the lead author for the study, Dr. David Himmelstein, is co-founder of Physicians for a National Health Plan. That group advocates a single-payer health care system in which the government provides medical coverage for all citizens.

Roy charges that Himmelstein exaggerates claims that the Massachusetts law is inadequate. Specifically, he takes issue with the rather broad definition of medical bankruptcy used for the study. As defined by the study, any bankruptcy meeting any of the following four criterion is considered a medical bankruptcy:

  1. Debtor specifically cited illness or medical expenses as reason for bankruptcy or had medical bills exceeding $5,000 or 10 percent of income
  2. Debtor or spouse lost more than two weeks worth of income because of illness or disability
  3. Debtor or spouse lost more than two weeks worth of income to care for someone ill
  4. Home mortgaged to pay medical bills

Critics of the study argue that lumps a lot of people, who just happen to have medical bills, into the medical bankruptcy category without taking into consideration such factors as consumer debt and unemployment.

Tags : massachusetts, health reform, medical bankruptcy

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