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Academic

: The Faculty Lounge

Jacoby and Holman on Managing Medical Bills on the Brink of Bankruptcy

By Alfred Brophy

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Wondering about the connections between bankruptcy and medical bills? Melissa Jacoby (UNC Law School) and Mirya Holman (Duke Law School) have an important new paper on "Managing Medical Bills on the Brink of Bankruptcy: Evidence and Implications from a National Study."

Here's their abstract:

This paper presents original empirical evidence on financial interactions between medical providers and their patients who go bankrupt shortly thereafter. Using a nationally representative dataset of people who filed for bankruptcy in 2007, we find that nearly four out of five respondents had some financial obligation for medical care not covered by insurance in the two years prior to filing, but only half of these same individual?s court records contain identifiable medical debt, and many others have less debt than they did before. After exploring the data, we conclude that the discrepancy is best explained by respondents shifting medical bills to consumer credit (credit cards, home equity loans), a behavior that is especially present among those who report that medical bills were a reason they filed for bankruptcy. The findings offer a window into the success of medical providers in reducing their exposure to losses and protecting them from the regulation that the bankruptcy system otherwise would impose on their future interactions with these patients. The data also present a cautionary tale about relying exclusively on court records to measure the financial burden of medical care on bankruptcy filers absent significant changes in the information that the federal bankruptcy court forms require.

One take-away here seems particularly important to me as a lay person in the field of bankruptcy but as someone who uses court records to divine something about legal history. The court records don't come close to telling the complete story of why people file for bankruptcy. This is a particularly important lesson for anyone who's trying to use court records to create a picture of a society's economy or culture. Another take-away for me as a lay person but who's scared by the prospect of both medical bills and bankruptcy, repeat players who deal with poor people (or those of us who might become poor) have techniques for getting paid, especially when they're providing a service you can't do without.

Full post as published by The Faculty Lounge on August 03, 2009 (boomark / email).