Harvard researchers say 62% of all personal bankruptcies in the U.S. in 2007 were caused by health problems—and 78% of those filers had insurance

By Catherine Arnst

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.

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.”

The study underscores President Barack Obama’s arguments in calling for health-care reform legislation this year. In a letter to Democratic Senate leaders this week, the President said: “Health-care reform is not a luxury. It’s a necessity we cannot defer. Soaring health-care costs make our current course unsustainable. It is unsustainable for our families, whose spiraling premiums and out-of-pocket expenses are pushing them into bankruptcy and forcing them to go without the checkups and prescriptions they need.”

Arnst is a senior writer for BusinessWeek based in New York.

1. Helping you choose the most appropriate company to apply to.

2. Helping you find the most effective plan design.

3. Pre-Screening any medical conditions you might have.

4. Walking you through the health insurance application process.

5. Answering any and all questions you might have in order for you to make the best buying decision.

6. Being there to help you well after your insurance plan has been placed into force for any customer service related issues or problems. Keep in mind that insurance company employees have no personal or financial interest in making sure you are happy with your plan or getting your problem resolved like your agent/broker.

Keep in mind that the brokers help is at no cost to you period. The insurance company compensates them for all their time and effort.

The premiums charged by the carriers are regulated in the state of Illinois which means the premiums are the same if you purchase from an agent or broker or buy direct from the company itself.

The main difference between the HSA and it’s traditional PPO counterpart is the HSA does not have a doctor’s office co-pay and a co-payment for prescription drugs. When the owner of a HSA plan visits the doctor, the providers office bills the insurance company and the carrier then applies the provider network discount otherwise known as “repricing”. This repricing represents a discounted office fee and then that amount would be applied towards the plan deductible. The same goes for the prescription drugs purchases. In the past, the traditional PPO type plans would offer a doctor’s office and prescription drug copay that the insured would be paying a premium for each month if they utilized these benefits or not on a month to month basis.

Chicago health insurance plans only have one drawback, the premiums are normally a little higher than the suburban area plans. More happens in Chicago that can increase the usage of health insurance, for example, auto accidents, tranfers of bacterial and viral infections due to a more heavily populated area and other events such a falling victim to city related crime resulting in injury which would trigger the need for medical attention. Also, medical providers charge higher fees to cover their higher operating costs in the big city. Auto and homeowners insurance reflect normally higher premiums also.

All in all, health insurance in Chicago is working out well. The most important thing to do is try to keep  yourself in good health by staying away from tobacco products and keeping your weight in check. Take advantage of the great wellness benefits have and go the the doctor for a checkup at least once a year. Making an effort to stay in good physical shape will always be the best insurance policy.

If you do not have any health insurance, check out the nice plans offered in the Chicago area and protect yourself against the devastating cost of a hospital stay without health insurance coverage.