Medical debt blamed for rise in personal bankruptcies

By Carol M. Ostrom
Seattle Times staff reporter

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All he had to do was walk down to the Family Medicine Clinic at Harborview Medical Center, where he serves as chief of family medicine, and spend a few minutes talking to patients.

One man, 59, newly diagnosed with cancer that has spread to his internal organs, said he'd worked all his life in the insurance business. When his company recently moved out of state, he stayed where he'd put down roots but was working part time and unable to afford health insurance.

Another patient, 50, told Crittenden she works full time in a job that doesn't provide health benefits. She takes medications for high blood pressure and stomach problems and has other health conditions, including a "totally shot" knee. She pays monthly installments on her medical bills and owes about $10,000.

Over the past 12 years, the number of personal bankruptcies has tripled in Washington state, from about 15,000 in 1991 to almost 40,000 last year.

In 1991, about 14 percent were caused by medical debt, according to estimates in a report released yesterday by the Working for Health Coalition, a statewide health-advocacy group composed of physicians groups, nurses organizations and health advocates.

By last year, that percentage had surged to nearly 50 percent, the report said, a figure based on a national study of the causes of bankruptcy conducted by two leading researchers and published in 2001.

"This is just the tip of the iceberg," said Crittenden, chairman of the coalition, because many people are just one serious medical problem away from financial disaster.

The reason people get in trouble with medical bills, he said, is easy to see: Many working full time can't afford health insurance and don't qualify for low-income programs.

According to the report, health-insurance premiums, when compared to workers' earnings or overall inflation, have soared. Since 1992, workers' earnings have chugged along on a flat percentage climb, generally between 2 percent and 4 percent a year.

But over the same period, health-insurance premiums have soared, with double-digit percentage increases in each of the past three years.
 
For a family of four, with two adults and two children, a 2002 study by the state Office of Financial Management shows it takes $34,000 in King County just to provide food, housing and child care, Crittenden said.

Add health insurance, and that figure jumps — to $44,000 if the family has to buy individual insurance for family members.

If anyone has a health problem, that could bring expenses to $48,000 a year.

"For many people, health insurance is the lowest priority when they are on the edge of financial ruin," the report says. "Instead, they make the responsible choice to work, to feed and house their kids, and to pay taxes."

Even the insured struggle

Having health insurance didn't immunize people from financial problems, the report said. The earlier national survey found that half of the people forced into bankruptcy because of medical bills had health insurance.

Some, like former Olympia Mayor Dave Skramstad, found themselves in bankruptcy court because they decided to care for a dying relative at home — in Skramstad's case, his wife, who died of cancer in 1989.

Their health insurance, like most, had limited benefits for home health care. Like many people in a tight spot, he paid bills with a credit card, paying 18 percent interest. A month after he took office in 1991, Skramstad filed for bankruptcy, sold his heavily mortgaged, four-bedroom home to pay bills and took up residence in a mobile home.

But even worse than underinsurance is no insurance, the report says, and more than 318,000 working adults in the state were in that situation in 2002 — more than 11 percent of the state's workers.

Bankruptcy not a solution

Ellen McCauley, one of the patients who waited at Harborview, says she's responsible about her bills, but she supports a daughter and grandchild, and just can't get ahead. There's not a chance she can afford another $400 to $600 a month for individual insurance premiums, co-pays and deductibles, she said.

"I am blessed, I can pay monthly," she said. But she worries about the possibility that she has sleep apnea, a breathing difficulty that could require her to buy a machine that may cost more than $2,200 — cash upfront.

Even bankruptcy wouldn't help her out, she said, because her conditions aren't a one-time crisis, but are chronic. "It might wipe out the debt I have today, but I will still need my medications tomorrow," she said. "Bankruptcy isn't a solution, unless you can foresee not having any medical problems in the future."

Expenses for chronic diseases, like dirty dishes, just keep piling up, McCauley said.

For Crittenden, the report shows the growing crisis, one he thinks could be solved with a national program to cover low-income people who are uninsured.

"I'm not saying it would be cheap," notes Crittenden, who estimates $40 billion to $70 billion would be needed. "But it's within the possibilities of a country that's spending billions of dollars on lots of other things."

Carol M. Ostrom: 206-464-2249 or costrom@seattletimes.com