7 ms·

How the Affordable Care Act Drove Down Personal Bankruptcy

56 points by ch4s3 10y ago

ruby-99 10y ago
This seems like an interesting side effect, that I'm not sure policy makers had anticipated.
- ch4s3 10y ago
  If memory serves correctly, this was one of the numerous ideas floated by the administration at the time.
- maxerickson 10y ago
  No, reducing medical bankruptcy was an explicit goal of expanding access to insurance. Here's text from the legislation: Half of all personal bankruptcies are caused in part by medical expenses. By significantly increasing health insurance coverage, the requirement, together with the other provisions of this Act, will improve financial security for families.
  - Johnny555 10y ago
    Which is just another hidden cost of not having universal healthcare -- when a hospital can't recover $250,000 in cancer treatment costs due to a bankrupty, they have to make it up somewhere else, so we end up paying $17 for a 10 cent ibuprofen pill in the hospital.
    - maxerickson 10y ago
      Uncompensated care (including bad debt and costs they choose to forgive) is a measurable portion of costs for most hospitals but it isn't that extreme. http://www.aha.org/content/16/uncompensatedcarefactsheet.pdf http://www.aha.org/content/16/uncompensatedcarefactsheet.pdf ~5-6%.
    - massysett 10y ago
      I doubt hospitals have cost accounting systems sophisticated enough for them to have any idea what the cancer treatment costs, just as Verizon doesn't know how much it costs for you to talk on the phone for fifteen minutes. Just because they billed $250,000 doesn't mean that's what it cost or even that they ever expected to actually receive $250,000. Besides, apparently the goal of universal healthcare was to allow everybody to still receive the "$250,000" cancer treatment that they were getting before universal healthcare. This suggests that both with and without universal healthcare, the cancer treatment was being provided, so not having universal healthcare did not actually create another cost. This isn't trivial nitpicking: the ACA was sold as something that would reduce costs. This was mostly false. The real aim of the ACA was to raid the pockets of more people. Before, there was a "$250,000 cancer treatment" and the insured paid for it with a "$17 ibuprofen." The true objective of the ACA was to keep the "$250,000 cancer treatment" but instead pay for it by raiding the pockets of young, healthy people who previously did not have insurance. It turns out that raiding the pockets of young, healthy people is not so politically popular. They didn't have insurance for a reason--it's expensive! Their unemployment and student debt is already high, and they already have to pay for old people through Social Security and Medicare tax. Yet the ACA wanted to use those young people, who would pay premiums, use little health care, and thus help pay for more "$250,000 cancer treatments". Now this political dishonesty is blowing back, as the insurance markets are under strain because the young healthies still aren't getting insurance to help pay for the cancer treatments that others get.
      - brianwawok 10y ago
        I don't think your raiding pockets of kids goes with reality. Why then did ACA let kids stay on parents insurance to 26 even if married? Millions of kids got free insurance by hopping on their parents plan. Millions of kids got better medical treatment for no money out of their pocket. ACA isn't perfect but it's way better than we had before.
      - Daishiman 10y ago
        I'm sorry, but in what reality is this "political dishonesty" "blowing back"? The ACA has overwhelming support in most US populations by a wide margin. So everyone has to pay into insurance including people who don't use it normally. That's. The. Point.
danesparza 10y ago
This is an interesting story, but correlation is not causation. The article even admits this, stating "The truth is that it’s not that easy to determine how many bankruptcies are caused by medical debt. Examining the paperwork doesn’t always offer insight because debtors often juggle their indebtedness, for example, using a credit card to pay an outstanding medical bill while leaving other debts unpaid." The bankruptcy code itself changed tremendously in 2005: http://www.nolo.com/legal-encyclopedia/new-bankruptcy-law-chapter-7-13-30040.html http://www.nolo.com/legal-encyclopedia/new-bankruptcy-law-ch... The housing market bubble mostly likely had a tremendous effect on bankruptcies as well: https://en.wikipedia.org/wiki/United_States_housing_bubble https://en.wikipedia.org/wiki/United_States_housing_bubble
- mifeng 10y ago
  Yeah I'm surprised that the just picked a single year (2010) instead of the 10 year average prior to 2012, the year ACA took effect. Agree that the housing crash likely elevated bankruptcies. A number of states have laws where even if the bank takes your house in a short sale, they can go after you personally for the remainder of the loan.
- notadoc 10y ago
  It has long been established that medical bills are the leading cause of bankruptcy and a significant cost burden, this is not new information. http://www.cnbc.com/id/100840148 http://www.cnbc.com/id/100840148 http://www.npr.org/sections/health-shots/2016/03/08/468892489/medical-bills-still-take-a-big-toll-even-with-insurance http://www.npr.org/sections/health-shots/2016/03/08/46889248... If you're slightly interested in this topic, 2 milliseconds on Google will reveal a wealth of information.
  - SamReidHughes 10y ago
    It's also well known that study considered any bankruptcy with the slightest smidgen of medical debt to be a medical bankruptcy. Edit: or expenses. Over $1000 in expenses over 2 years and you're in that category.
agileminor 10y ago
Or bankruptcies started coming back down again after the 2008 crash. Note that their graph/data start in 2009 - if you include years before that, this "result" no longer makes any sense.
kbutler 10y ago
Amazing what you can infer if you look at a small enough window of time. http://www.tradingeconomics.com/united-states/bankruptcies http://www.tradingeconomics.com/united-states/bankruptcies (hit the "max" button) Pretty clearly shows that the ACA came at the trailing end of the huge spike in bankruptcies from the real estate bubble bursting. Correlation does not imply causation, however much one wants to sell a particular story. I expect better from consumer reports.
- maxerickson 10y ago
  You've linked corporate bankruptcies there. Trends in personal bankruptcy do appear to be similar though. http://www.bankruptcyaction.com/USbankstats.htm http://www.bankruptcyaction.com/USbankstats.htm
rebootthesystem 10y ago
Does everyone here understand that the ACA much promoted "twenty-seven million people now have insurance" is a complete farce? The number keeps expanding, of course, and it is a tragedy of almost unimaginable proportions. OK, with great claims one must offer solid evidence. No problem, I accept this responsibility. Thankfully this is a rather easy task. The great majority of these 27 million people are on what's known as Medicaid. Is Medicaid health insurance? No, it is not. Medicaid is a loan. What? Medicaid is a loan from the government. It is, if one wishes to interpret it this way, no different from taking out a home equity line of credit. In other words, you must repay what you spent. Yes, care you receive under Medicaid must --BY LAW-- be repaid. And, when your lender is the government the realities of dealing with the worst possible kind of loan shark --one with overwhelming power-- can and do easily surface. Medicaid enrollment as of 2016 reached over 70 million people. Here's the requisite chart: https://www.statista.com/statistics/245347/total-medicaid-enrollment-since-1966/ https://www.statista.com/statistics/245347/total-medicaid-en... Every single one of these people has, effectively, entered into a promissory note with the government. They DO NOT have health insurance, they have a loan. And here's where it gets ugly: The State, again, by law, is obligated to seek repayment for services offered and can --and does-- attach your property in the process of doing so. Medicaid is a program that has convinced people they have medical insurance when, in reality, they have a loan. And this loan can and does cost them their estate as the State automatically becomes the first lien holder once you are on Medicaid. Please don't take my word for it. Here it is from the horse's mouth: https://www.medicaid.gov/medicaid/eligibility/estate-recovery/index.html https://www.medicaid.gov/medicaid/eligibility/estate-recover... Here's another source with a revelation that should terrify anyone: "if the property is sold while the Medicaid beneficiary is living, not only will the beneficiary cease to be eligible for Medicaid due to the cash from the sale, but the beneficiary would have to satisfy the lien by paying back the state for its coverage of care to date" They should have added "refinanced" to that statement. http://www.elderlawanswers.com/medicaids-power-to-recoup-benefits-paid-estate-recovery-and-liens-12018 http://www.elderlawanswers.com/medicaids-power-to-recoup-ben... Medi-Cal has similar provisions: http://www.dhcs.ca.gov/services/Pages/TPLRD_ER_cont.aspx http://www.dhcs.ca.gov/services/Pages/TPLRD_ER_cont.aspx Another reputable source: http://www.nolo.com/legal-encyclopedia/how-medicaid-recovers-the-cost-long-term-care-from-your-estate-after-you-die.html http://www.nolo.com/legal-encyclopedia/how-medicaid-recovers... You might have to pay your parent's Medicaid bill: https://www.agingcare.com/articles/medicaid-repayment-of-nursing-home-estate-recovery-150497.htm https://www.agingcare.com/articles/medicaid-repayment-of-nur... More detail from HHS: https://aspe.hhs.gov/basic-report/medicaid-estate-recovery https://aspe.hhs.gov/basic-report/medicaid-estate-recovery https://aspe.hhs.gov/basic-report/medicaid-liens https://aspe.hhs.gov/basic-report/medicaid-liens To be clear, estate recovery was not imposed by ACA. No, this has existed since the very start of the program. What ACA has done is to systematically shove tens of millions of people into Medicaid for, dare I say, political gain. Nothing less than putting lipstick on a pig. ACA membership numbers look good to the uninformed because tens of millions of people have been hoisted onto Medicaid. If left unchecked these numbers could easily reach into the hundred million plus range. This is a tragedy. None of these people fully understand that they do not, in fact, have health insurance at all. They are signing on to a loan, with the loan shark being the government. Think about this for a moment: This is probably the largest grab of personal property from any government anywhere in the world in the history of humanity. And all of this property is being grabbed from the poor and lower middle class. Soon one hundred million of our citizens will owe the government everything they possess in order to repay their medical bills. This is theft sold as medical insurance. When you have real insurance of any kind the insurance company doesn't come after your estate to recover their costs. When you have real insurance the insurance company doesn't take a chunk out of the sale of your home while you are alive and, at the same time, kick you out of your insurance policy. Medicaid is NOT insurance, it's a dystopian reality nobody is talking about. I think this is absolutely revolting. Why aren't the idiots burning down business districts during their "demonstrations" up in arms about this shit? Right, it requires critical thinking skills. EDIT: I failed to add something very important here, which is what my position is on how this should work. I apologize for not making that clear. Medicaid Estate Recovery should NOT be a part of the program. It should NOT exist. We should provide medical care to the needy without ANY recovery requirements whatsoever. If someone needs a million dollars in medical care they should receive it. They should not have to worry about being on the hook to repay it in any way. That is what a decent and compassionate society does and how it behaves, not by sinking it's hooks into people who have no choice but to sign on the dotted line. If this estate recovery business were done by a private insurance company they would be destroyed by both public opinion and brought-up on fraud charges. We should demand better from our government. We should demand that estate recovery be completely removed from Medicaid. Hope that clarifies my position.
narrowrail 10y ago
I'm not sure I care for this topic on HN, but I believe one of the biggest problems in healthcare is the 'collaboration' among the hospitals and insurance companies on billing through the National Uniform Billing Committee[0], which ultimately results in people not knowing how much stuff costs (i.e. how much is an MRI). Without this knowledge, people can't make proper decisions because it's completely opaque. [0]https://en.wikipedia.org/wiki/National_Uniform_Billing_Committee https://en.wikipedia.org/wiki/National_Uniform_Billing_Commi...

56 points by ch4s3 10y ago

ruby-99 10y ago

This seems like an interesting side effect, that I'm not sure policy makers had anticipated.

ch4s3 10y ago
If memory serves correctly, this was one of the numerous ideas floated by the administration at the time.
maxerickson 10y ago
No, reducing medical bankruptcy was an explicit goal of expanding access to insurance. Here's text from the legislation: Half of all personal bankruptcies are caused in part by medical expenses. By significantly increasing health insurance coverage, the requirement, together with the other provisions of this Act, will improve financial security for families.
- Johnny555 10y ago
  Which is just another hidden cost of not having universal healthcare -- when a hospital can't recover $250,000 in cancer treatment costs due to a bankrupty, they have to make it up somewhere else, so we end up paying $17 for a 10 cent ibuprofen pill in the hospital.
  - maxerickson 10y ago
    Uncompensated care (including bad debt and costs they choose to forgive) is a measurable portion of costs for most hospitals but it isn't that extreme. http://www.aha.org/content/16/uncompensatedcarefactsheet.pdf http://www.aha.org/content/16/uncompensatedcarefactsheet.pdf ~5-6%.
  - massysett 10y ago
    I doubt hospitals have cost accounting systems sophisticated enough for them to have any idea what the cancer treatment costs, just as Verizon doesn't know how much it costs for you to talk on the phone for fifteen minutes. Just because they billed $250,000 doesn't mean that's what it cost or even that they ever expected to actually receive $250,000. Besides, apparently the goal of universal healthcare was to allow everybody to still receive the "$250,000" cancer treatment that they were getting before universal healthcare. This suggests that both with and without universal healthcare, the cancer treatment was being provided, so not having universal healthcare did not actually create another cost. This isn't trivial nitpicking: the ACA was sold as something that would reduce costs. This was mostly false. The real aim of the ACA was to raid the pockets of more people. Before, there was a "$250,000 cancer treatment" and the insured paid for it with a "$17 ibuprofen." The true objective of the ACA was to keep the "$250,000 cancer treatment" but instead pay for it by raiding the pockets of young, healthy people who previously did not have insurance. It turns out that raiding the pockets of young, healthy people is not so politically popular. They didn't have insurance for a reason--it's expensive! Their unemployment and student debt is already high, and they already have to pay for old people through Social Security and Medicare tax. Yet the ACA wanted to use those young people, who would pay premiums, use little health care, and thus help pay for more "$250,000 cancer treatments". Now this political dishonesty is blowing back, as the insurance markets are under strain because the young healthies still aren't getting insurance to help pay for the cancer treatments that others get.
    - brianwawok 10y ago
      I don't think your raiding pockets of kids goes with reality. Why then did ACA let kids stay on parents insurance to 26 even if married? Millions of kids got free insurance by hopping on their parents plan. Millions of kids got better medical treatment for no money out of their pocket. ACA isn't perfect but it's way better than we had before.
    - Daishiman 10y ago
      I'm sorry, but in what reality is this "political dishonesty" "blowing back"? The ACA has overwhelming support in most US populations by a wide margin. So everyone has to pay into insurance including people who don't use it normally. That's. The. Point.

danesparza 10y ago

This is an interesting story, but correlation is not causation. The article even admits this, stating "The truth is that it’s not that easy to determine how many bankruptcies are caused by medical debt. Examining the paperwork doesn’t always offer insight because debtors often juggle their indebtedness, for example, using a credit card to pay an outstanding medical bill while leaving other debts unpaid." The bankruptcy code itself changed tremendously in 2005: http://www.nolo.com/legal-encyclopedia/new-bankruptcy-law-chapter-7-13-30040.html http://www.nolo.com/legal-encyclopedia/new-bankruptcy-law-ch... The housing market bubble mostly likely had a tremendous effect on bankruptcies as well: https://en.wikipedia.org/wiki/United_States_housing_bubble https://en.wikipedia.org/wiki/United_States_housing_bubble

mifeng 10y ago
Yeah I'm surprised that the just picked a single year (2010) instead of the 10 year average prior to 2012, the year ACA took effect. Agree that the housing crash likely elevated bankruptcies. A number of states have laws where even if the bank takes your house in a short sale, they can go after you personally for the remainder of the loan.
notadoc 10y ago
It has long been established that medical bills are the leading cause of bankruptcy and a significant cost burden, this is not new information. http://www.cnbc.com/id/100840148 http://www.cnbc.com/id/100840148 http://www.npr.org/sections/health-shots/2016/03/08/468892489/medical-bills-still-take-a-big-toll-even-with-insurance http://www.npr.org/sections/health-shots/2016/03/08/46889248... If you're slightly interested in this topic, 2 milliseconds on Google will reveal a wealth of information.
- SamReidHughes 10y ago
  It's also well known that study considered any bankruptcy with the slightest smidgen of medical debt to be a medical bankruptcy. Edit: or expenses. Over $1000 in expenses over 2 years and you're in that category.

agileminor 10y ago

Or bankruptcies started coming back down again after the 2008 crash. Note that their graph/data start in 2009 - if you include years before that, this "result" no longer makes any sense.

kbutler 10y ago

Amazing what you can infer if you look at a small enough window of time. http://www.tradingeconomics.com/united-states/bankruptcies http://www.tradingeconomics.com/united-states/bankruptcies (hit the "max" button) Pretty clearly shows that the ACA came at the trailing end of the huge spike in bankruptcies from the real estate bubble bursting. Correlation does not imply causation, however much one wants to sell a particular story. I expect better from consumer reports.

maxerickson 10y ago
You've linked corporate bankruptcies there. Trends in personal bankruptcy do appear to be similar though. http://www.bankruptcyaction.com/USbankstats.htm http://www.bankruptcyaction.com/USbankstats.htm

rebootthesystem 10y ago

Does everyone here understand that the ACA much promoted "twenty-seven million people now have insurance" is a complete farce? The number keeps expanding, of course, and it is a tragedy of almost unimaginable proportions. OK, with great claims one must offer solid evidence. No problem, I accept this responsibility. Thankfully this is a rather easy task. The great majority of these 27 million people are on what's known as Medicaid. Is Medicaid health insurance? No, it is not. Medicaid is a loan. What? Medicaid is a loan from the government. It is, if one wishes to interpret it this way, no different from taking out a home equity line of credit. In other words, you must repay what you spent. Yes, care you receive under Medicaid must --BY LAW-- be repaid. And, when your lender is the government the realities of dealing with the worst possible kind of loan shark --one with overwhelming power-- can and do easily surface. Medicaid enrollment as of 2016 reached over 70 million people. Here's the requisite chart: https://www.statista.com/statistics/245347/total-medicaid-enrollment-since-1966/ https://www.statista.com/statistics/245347/total-medicaid-en... Every single one of these people has, effectively, entered into a promissory note with the government. They DO NOT have health insurance, they have a loan. And here's where it gets ugly: The State, again, by law, is obligated to seek repayment for services offered and can --and does-- attach your property in the process of doing so. Medicaid is a program that has convinced people they have medical insurance when, in reality, they have a loan. And this loan can and does cost them their estate as the State automatically becomes the first lien holder once you are on Medicaid. Please don't take my word for it. Here it is from the horse's mouth: https://www.medicaid.gov/medicaid/eligibility/estate-recovery/index.html https://www.medicaid.gov/medicaid/eligibility/estate-recover... Here's another source with a revelation that should terrify anyone: "if the property is sold while the Medicaid beneficiary is living, not only will the beneficiary cease to be eligible for Medicaid due to the cash from the sale, but the beneficiary would have to satisfy the lien by paying back the state for its coverage of care to date" They should have added "refinanced" to that statement. http://www.elderlawanswers.com/medicaids-power-to-recoup-benefits-paid-estate-recovery-and-liens-12018 http://www.elderlawanswers.com/medicaids-power-to-recoup-ben... Medi-Cal has similar provisions: http://www.dhcs.ca.gov/services/Pages/TPLRD_ER_cont.aspx http://www.dhcs.ca.gov/services/Pages/TPLRD_ER_cont.aspx Another reputable source: http://www.nolo.com/legal-encyclopedia/how-medicaid-recovers-the-cost-long-term-care-from-your-estate-after-you-die.html http://www.nolo.com/legal-encyclopedia/how-medicaid-recovers... You might have to pay your parent's Medicaid bill: https://www.agingcare.com/articles/medicaid-repayment-of-nursing-home-estate-recovery-150497.htm https://www.agingcare.com/articles/medicaid-repayment-of-nur... More detail from HHS: https://aspe.hhs.gov/basic-report/medicaid-estate-recovery https://aspe.hhs.gov/basic-report/medicaid-estate-recovery https://aspe.hhs.gov/basic-report/medicaid-liens https://aspe.hhs.gov/basic-report/medicaid-liens To be clear, estate recovery was not imposed by ACA. No, this has existed since the very start of the program. What ACA has done is to systematically shove tens of millions of people into Medicaid for, dare I say, political gain. Nothing less than putting lipstick on a pig. ACA membership numbers look good to the uninformed because tens of millions of people have been hoisted onto Medicaid. If left unchecked these numbers could easily reach into the hundred million plus range. This is a tragedy. None of these people fully understand that they do not, in fact, have health insurance at all. They are signing on to a loan, with the loan shark being the government. Think about this for a moment: This is probably the largest grab of personal property from any government anywhere in the world in the history of humanity. And all of this property is being grabbed from the poor and lower middle class. Soon one hundred million of our citizens will owe the government everything they possess in order to repay their medical bills. This is theft sold as medical insurance. When you have real insurance of any kind the insurance company doesn't come after your estate to recover their costs. When you have real insurance the insurance company doesn't take a chunk out of the sale of your home while you are alive and, at the same time, kick you out of your insurance policy. Medicaid is NOT insurance, it's a dystopian reality nobody is talking about. I think this is absolutely revolting. Why aren't the idiots burning down business districts during their "demonstrations" up in arms about this shit? Right, it requires critical thinking skills. EDIT: I failed to add something very important here, which is what my position is on how this should work. I apologize for not making that clear. Medicaid Estate Recovery should NOT be a part of the program. It should NOT exist. We should provide medical care to the needy without ANY recovery requirements whatsoever. If someone needs a million dollars in medical care they should receive it. They should not have to worry about being on the hook to repay it in any way. That is what a decent and compassionate society does and how it behaves, not by sinking it's hooks into people who have no choice but to sign on the dotted line. If this estate recovery business were done by a private insurance company they would be destroyed by both public opinion and brought-up on fraud charges. We should demand better from our government. We should demand that estate recovery be completely removed from Medicaid. Hope that clarifies my position.

narrowrail 10y ago

I'm not sure I care for this topic on HN, but I believe one of the biggest problems in healthcare is the 'collaboration' among the hospitals and insurance companies on billing through the National Uniform Billing Committee[0], which ultimately results in people not knowing how much stuff costs (i.e. how much is an MRI). Without this knowledge, people can't make proper decisions because it's completely opaque. [0]https://en.wikipedia.org/wiki/National_Uniform_Billing_Committee https://en.wikipedia.org/wiki/National_Uniform_Billing_Commi...