How often do medical problems lead to bankruptcy?
Poor health is a less common cause of bankruptcy than commonly thought, but it brings other economic woes, study finds
“It doesn’t mean there aren’t really adverse economic consequences from adverse health. It just turns out they’re not [strictly] about bankruptcy. They’re much more about lost employment and earnings.”
—Amy Finkelstein, John & Jennie S. MacDonald Professor of Economics
A team of researchers led by an MIT economist has found that medical expenses account for roughly 4 percent of bankruptcy filings among nonelderly adults in the U.S.
The scholars combined medical records and financial data for hundreds of thousands of people to pinpoint the percentage of bankruptcies caused by medical costs, thus giving new empirical precision to a topic of considerable policy importance.
The 4 percent figure is lower than some commonly cited estimates, but the new statistic comes with a twist: It is part of a larger research project that found multiple negative economic consequences of having medical problems, including a 20 percent drop in earnings and an 11 percent drop in employment for adults between ages 50 and 59 who had been hospitalized.
This combination of effects — fewer medically rooted bankruptcies but pervasive workplace troubles for people with health issues — underscores the need to understand the full range of financial challenges people face due to their medical needs, the researchers say.