Bankruptcy Medical

You’ve probably heard that the U.S. Congress is considering the Medical Bankruptcy Fairness Act. This new act is came about because of studies performed by a Professor at Harvard University named Elizabeth Warren. Unfortunately, President Obama’s nomination of Elizabeth Warren as the director of Consumer Financial Protection Bureau is partly based on her studies indicating a need for a Medical Bankruptcy Fairness act and the recommendations of over 141 of her fellow professors saying she always makes conclusions about important matters by analyzing data very carefully. As with many government initiatives these days, these assumptions are wrong.

The truth about medical bankruptcy is that the statistical data uncovered by Professor Warren is faulty. Even in basic statistics classes, you learn that various conclusions can be drawn from statistical data and can be manipulated to tell a biased story. This is called selection bias and is the case with Warren’s first study of 1000 people that included those who files for bankruptcy for medical reasons. The results of the study were that half of those thousand people surveyed had filed bankruptcy because of medical reasons. The fact is that those people who were surveyed were in too broad of a category by including people who had some sort of addiction. This study was heavily criticized so Professor Warren launched another study in 2009.

Her 2009 study also had selection bias as it concluded that over 60 percent of those surveyed, filed for medical bankruptcy because of medical bills. The respondents that were added included people who lost work because they were sick and had to pay more than $5,000 for their medical care. The problem here is that even though those folks did apply for bankruptcy, only about 29 percent of them actually thought the reason for their bankruptcy was because of medical debt.

So what is the truth about medical bankruptcy? Yes, if you look at literature about the subject based on correct statistical techniques, there is definitely an increase in bankruptcy due to medical debt of about 25 percent since 2000. But these more trusted sources such as a panel study of income dynamics by professors David Dranove and Michael Millenson at the Department of Justice concluded that only 17 percent of bankruptcies are due to medical debt and only 9 percent of households who filed bankruptcy actually claimed medical debt as the main reason for filing.

Although there is a need to distinguish medical debt verses being overextended on a monthly basis, medical bankruptcy is an important consideration; you must not be led astray by the erroneous claims based on faulty collection of data. It is unfortunate that we continue to be forced to accept unqualified candidates for our most important government positions.

Many people are forced to file for bankruptcy due to the economic recession that has been experienced lately. Most of these bankruptcy cases are from those with job loss issues or debt arising from failed business investments. So in the United States alone, there are issues which largely involve the area of medical bankruptcy.

The meaning of medical bankruptcy is when talking about debts that relate to medical issues and most people started giving them this code name. The main point is that the medical debts have become too many in this period of economic hardship.

It would seem like the people who already own health insurance cover would not be affected by such problems, but this is not so. Facts are now out there showing that the majority of the people who have health insurance are mostly the ones filing for bankruptcies on medical grounds. These people had the health insurance but this could not be enough protection for them against falling into such kind of predicament which now has necessitated their filing for medical bankruptcy.

Another fallacy is the notion formed about the level of medical bankruptcy claims. It would surprise you to know that those who file claims for medical bankruptcy owe lower than $5000 medical bills.

From this, it is easy to see that most of the times the increase in these claims can be traced to the fact that insurance companies are now more vigorous about collecting their money. Therefore, the people who feel threatened by this will automatically run to place the bankruptcy claims. May be the best way out for them should have been to get the financial experts to work out a payment plan.

However, putting a bankruptcy claim could be the right move in some few special cases. Just as an example, there could be families that owe very large amounts of money on medical bills and that they may not be able to repay no matter what.

It is advisable that whoever may be thinking of filing for the chapter 11 bankruptcy to first consider the situation on the basis of its advantages and disadvantages. This is the most important step to take before making the final decision.

This is because filing for bankruptcy is a delicate matter that can have heavy impact on the family. It is always good to go consult a lawyer who has expert knowledge on medical bankruptcy so that one can make informed and correct choice.