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Obamacare Expected to Reduce Medical Bankruptcies

Posted on in Bankruptcy

A study conducted by NerdWallet Health last year found that the No. 1 cause of bankruptcies in America is unmanageable healthcare bills, according to CNBC.com. “Bankruptcies resulting from unpaid medical bills will affect nearly 2 million people [in 2013], the study found, “and even having health insurance doesn't buffer consumers against financial hardship.” NerdWallet conducted the study by analyzing data from the Census Bureau, the Center for Disease Control, the Commonwealth Fund, and the federal court system, CNBC.com reports. The organization estimated that in 2013 1.7 million Americans would file for bankruptcy protection.

NerdWallet Health Vice President Christina LaMontagne told CNBC that, “with an average American family bringing home $50,000 in income, a high medical bill and a high-deductible insurance plan can quickly become something they are unable to pay.” This is what invariably leads to bankruptcy. About 56 million American adults were expected to struggle with healthcare costs and medical bills in 2013.

Some experts suggest that this will change as the implementation of the Affordable Care Act (or Obamacare) continues. According to The Daily Kos, without the Affordable Care Act, “15 percent of the country would have declared bankruptcy in the next decade.” The Daily Kos suggests looking at Obamacare as a necessary bankruptcy prevention cost—“How much would you be willing to pay to guarantee you would not go bankrupt because of illness?” the publication asks. “Whatever that amount is, one should subtract it from whatever premium one pays for health care under the Affordable Care Act.”

The idea, according to The Daily Kos, is that while insurance premiums may have been cheaper for some Americans before the rollout of the Affordable Care Act, most of those plans didn't cover costs for catastrophic events. If a person with a $30,000 / year salary got terminally ill, he or she would invariably go bankrupt. With deductibles hovering at about $6,000 per person with Obamacare, the most a person would have to pay in the event of a severe diagnosis is $6,000.

Whether or not Obamacare does actually reduce the number of medical bankruptcies is yet to be seen. Many families will still be struggling financially due to medical bills. If you are considering bankruptcy in Illinois because of medical debt or any other reason, the most important step is to seek legal counsel. Contact Newland & Newland, LLP today.

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