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Unintended Effect of Obamacare: Decrease in Personal Bankruptcy Rate

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Unintended Effect of Obamacare: Decrease in Personal Bankruptcy Rate


Updated: June 13, 2017    Published: May 5, 2017

Unintended Effect of Obamacare: Decrease in Personal Bankruptcy Rate
Image: Pete Prodoehl / Flickr

Since implementation of the Affordable Care Act in 2010, the personal bankruptcy rate in the United States has decreased by 50%.

In 2010, the number of personal bankruptcy filings in the United States peaked at 1,536,799. Fast-forward to 2016 and those numbers were halved to 770,846. This, according to Consumer Reports, looking at data from the American Bankruptcy Institute. More significantly, CR reports that many bankruptcy and legal experts interviewed agree that consumer medical bills have been a significant, long-running contributor to personal bankruptcy filings – and the decline in these filings started in the same year that the Affordable Care Act was put into place.

Per CR’s coverage:

“It’s absolutely remarkable,” says Jim Molleur, a Maine-based bankruptcy attorney with 20 years of experience. “We’re not getting people with big medical bills, chronically sick people who would hit those lifetime caps or be denied because of pre-existing conditions. They seemed to disappear almost overnight once ACA kicked in.”

Obamacare was signed into law in 2010, with rollout beginning in 2011 and full implementation taking place in 2014. While the state of the economy showed improvements under Obama’s second term, many of the experts interviewed by CR agree that the expansion in health coverage has had a huge effect on the recent decline in personal bankruptcy filings. And, honestly, you don’t need to have a deep knowledge of bankruptcies or healthcare in order to understand the possible ties between the two: Many of us have experienced some kind of medical emergency and immediately found ourselves thinking things like “How much will this hospital stay cost me?” Do a Google search for “save money on health care” and you’ll face more than 69 million results. To put this into better perspective, a more general Google search for “Kim Kardashian” will give you more than 70 million results. Kim Kardashian broke the Internet; healthcare costs are breaking our finances.

In a recent conversation with Kaiser Health News editor-in-chief Dr. Elisabet Rosenthal, Vox reporter Julia Belluz made this biting observation: That the American healthcare system is damaged to the point at which the immediate concern for most incoming patients is the cost of care or treatment. “…[I]sn’t it absurd that sick people need to go to the hospital thinking about how to control the cost of their care instead of just getting medical help?”

From 2000 to 2014, total U.S. spending on healthcare doubled from under $1.5 trillion to more than $3 trillion. Last year, U.S. healthcare spending reached a peak of $10,345 per person. While that amount isn’t the average amount that each person spent on getting the care they need (it’s an across-the-board average), out-of-pocket costs paid by healthcare consumers also increased due to the increasingly growing popularity of high-deductible plans. The ACA has afforded many Americans with options that allow them to better manage their healthcare costs. With its recent passing in the House, the new, revised AHCA bill has the potential to make health insurance unaccessible for many across the country and likely drive increases in personal bankruptcy filings in following years.

Consumer Reports also dived into the state of American debt tied to medical bills – with medical debt decreasing from $56.5 million in 2011 to $43.8 million in 2016. Take a look at CR’s full reporting to dig into their methodology.

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The views expressed here are those of the author and do not necessarily represent or reflect the views of Healthcare, Inc. and

(H/T Consumer Reports)

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