Editor's Note: This article continues our 8-part series excerpted from the "Healthcare Hostage Crisis" chapter of AC360° contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in October. To learn more about the book, follow David on Twitter at http://www.twitter.com/DavidGewirtz. Last week, we looked at how America's healthcare compared with other countries. This week, we start our look at how America's insurance system is failing those who are already insured.
David Gewirtz | BIO
Editor-in-Chief, ZATZ Publishing
Insurance coverage is another myth. We've all been led to believe that as long as we have insurance, we'll be taken care of. As insurance rates go up and up and up, we've been promised that even though it costs a lot more, it's worth it because our future is being assured.
But, like we've come to see with other aspects of the health care industry, health insurance is worse than broken - to many people, it seems more scam than service.
In August 2009, The American Journal of Medicine published a clinical research study entitled "Medical Bankruptcy in the United States, 2007: Results of a National Study." The research team consisted of David Himmelstein, MD, of the Harvard Medical School, Deborah Thorne, Ph.D., of Ohio University, Elizabeth Warren, JD, of Harvard Law, and Steffie Woolhandler, MD, MPH, also of Harvard Medical School.
I'm pointing out the research team here because I want you to understand that this is highly credible data.
There's one other thing I need to point out. This study was done in 2007, before the massive economic downturn that began during the 2008 presidential election cycle. What this means is the data presented provides far greater clarity about the health care industry's contribution to bankruptcy than it would have had the study been conducted later, when a lot of other bank failure-related issues might have muddied the mix.
Here's the key conclusion of their analysis:
In 2007, before the current economic downturn, an American family filed for bankruptcy in the aftermath of illness every 90 seconds; three-quarters of them were insured. Over 60% of all bankruptcies in the United States in 2007 were driven by medical incidents.
They had insurance
Some might say, "Those are pretty sobering numbers, but that's what they get for not having insurance." But here's where it gets really, really scary:
Most medical debtors were well educated, owned homes, and had middle-class occupations. Three-quarters had health insurance.
Three-quarters had health insurance. Put those two numbers together. Sixty percent of all bankruptcies in America were driven by people who couldn't pay their medical bills, most of whom actually had health insurance.
The health insurance they'd been paying for. The health insurance, that for some people, cost more than their mortgage or their rent. The health insurance that many of their employers had been forced to pay as a mere factor of the competitive environment.
That health insurance. The health insurance that didn't insure their health.
So, let's run some numbers. Using the study's statement that a medically-related bankruptcy occurs every 90 seconds, that's 350,400 medically-related bankruptcies in 2007.
So how much did these medically-related bankruptcy filers owe? After all, insurance does have a coverage cap, usually somewhere in the millions of dollars. Clearly, if their coverage exceeded millions of dollars, it'd make sense for their insurance to run out.
Ah, but that wasn't the case. On the average, most of these families (or their employers) paid $12,680 for their insurance. Each year. And how much money was it that caused their bankruptcy? Take a deep breath. This is gonna make you very, very angry:
Out-of-pocket medical costs averaged $17,943 for all medically bankrupt families.
That's right. Most families (or their employers) paid an average of $12,680 per year and their bankruptcy (which will ruin their lives for far more than one year) was for $17,943 - a difference of a mere $5,263.
Next week, we'll look at some of the schemes insurers use to drop your coverage once you get sick.
Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.
Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.
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