The Effect of Medical Costs on Bankruptcy
ILLNESS AS A PRINCIPAL CAUSE OF BANKRUPTCY : A CAUSAL COMPARITIVE REVIEW
A survey of American families , who have d for bankruptcy in 2001 revealed that approximately 50 percent of the debtors stated medical causes as the main reason for bankruptcy (Himmelstein . Warren . Et Al 2005 . The expenditure of individuals whose illness led to bankruptcy averaged a high 11 ,854 after start of the illness . While a large percentage of them , 75 .5 had insurance when illness commenced , 42 percent were more likely than other debtors to experience a lapse in [banner_entry_middle]
coverage . Even middle class insured families had fallen into the debt trap when they were sick . Comparatively this problem was not there in countries as Canada which had fully covered health costs for the population . There is hence a need for greater causal comparative analysis of the phenomenon of illness and injury as contributors to bankruptcy through a study of various factors entailed therein
There have been many causes for bankruptcy which have come to notice over the years . The main reason is that medical costs related to illness which has led to more than 50 percent bankruptcy cases in America . This is rather surprising as it has always been commonly believed that over expenditure by persons was the main cause of liquidation however it now appears that the health care costs are the main reason for bankruptcy This if found to be true will require establishing a more effective health care system which does not affect the survival of people and families in America . Once this is fully accepted then it will also facilitate agencies in identifying debt caused through excessive spending by using credit cards indiscriminately and other over expenditure by separating costs of spending on health care by individuals . Such separation will provide relief to individuals suffering from debt through medical expenses and they will be spared from harassment by credit card companies for recovery (Wordsworth 2000 . Thus it is important to establish a relationship between bankruptcy and medical costs
Review of Literature
A number of reasons have been stated to be the cause for bankruptcy Over spending is one of them and has been long proclaimed to be the key reason by credit card companies (Wordsworth , 2000 . A number of studies have been carried out across the United States of America to analyze this issue . Many of these have come to link medical costs with bankruptcy . An important study by Teresa Sullivan of University of Texas and Melissa Jacoby has established this after surveying bankruptcies in eight federal judicial districts across the United States from California to Pennsylvania (Wordsworth , 2000 . Unemployment was another main cause but ultimately this too came to be linked with health as loss of job also meant denying health insurance . Another aspect of the problem is under insurance (Wordsworth , 2000 . Heavy medical costs in America at present leading to higher medical care bills also emerge as a combined reason . To examine this issue , there is a need to carry… [banner_entry_footer]
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