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Managing Medical Bills on the Brink of Bankruptcy
Yale Journal of Health Policy, Law & Ethics (2010)
  • Melissa B. Jacoby, University of North Carolina at Chapel Hill
  • Mirya Holman, Duke University

This paper presents original empirical evidence on financial interactions between medical providers and their patients who go bankrupt. We use a nationally representative sample of people who filed for bankruptcy in 2007 to compare two popular but hotly contested methods of measuring medical burden. By applying both methods to the same filers, 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 as measured by the survey method. The court record method paints a different picture, with only half of the cases containing identifiable medical debt, and of substantially more modest amounts. We test several theories to explain the discrepancy and find we can account for it to a significant extent by filers’ methods of managing medical bills that make it difficult or impossible for the court record method to detect them. For example, we find the highest rates of mortgage and credit card use for medical bills among respondents with the largest discrepancies between the survey method and the court record method. Respondents who report medical bills as a reason they filed for bankruptcy mortgaged their homes for medical bills at nearly four times the frequency of other filers, and were about a third more likely to use credit cards for medical bills. We also find disparities by age, sex, race, and housing tenure that skew the court record measure. Our findings suggest that the advice offered by experts in “medical practice management” reduces providers’ financial exposure from patient liabilities. One implication of this “success” is that the court record method of measuring medical bills should not be used on a standalone basis to measure the impact of medical bills on financially distressed families. Also, the court record method should not be used to refute survey estimates of medical burden in debates over health care or bankruptcy reform.

  • bankruptcy,
  • medical debt,
  • medical bills,
  • consumer credit,
  • credit cards,
  • home mortgages
Publication Date
Citation Information
Melissa B. Jacoby and Mirya Holman. "Managing Medical Bills on the Brink of Bankruptcy" Yale Journal of Health Policy, Law & Ethics Vol. X Iss. 2 (2010)
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