Out-of-control medical costs have definitely contributed to the ailing U.S. economy.  Not to mention pushing many consumers to the brink of financial ruin.  A recent study published in The American Journal of Medicine reveals that 62.1% of personal bankruptcies filed in 2007 could be attributed at least in part to healthcare costs.  And this was before the economic downturn swung into effect.  No wonder that more and more consumers are filing for bankruptcy, since medical costs have only continued climbing.

An article posted at examiner.com states that “[m]ost Americans who filed for personal bankruptcy due to health care costs were middle-class, homeowners who had gone to college” and that, of those, “75% reported having health insurance.”  Interestingly, these figures are contrary to previous studies looking at the causes of bankruptcy filings.  According to the Journal study, those studies failed to take into account bankruptcies that were due in major part to medical costs because of the way they were designed.

“Older studies on bankruptcy,” the article says, “were problematic because they were based solely on court records. Even though they showed that rates of medical bankruptcy were substantial, these court-based studies often understated medical bankruptcies. Why? Many medical debts were not recognizable on court records…Many medical debts were disguised as credit card debt or mortgages. Most medical debtors charged health care they couldn’t afford to credit cards or they mortgaged their homes to pay for medical bills. In addition, debts due to hospitalization or doctor visits–which were turned over to collection agencies–were not usually recognizable on court records.”

The researches in the Journal study decided to take a different approach: “They obtained 118,308 bankruptcy petitions filed in the United States between January 25, 2007 and April 11, 2007. A random national sample of 2,314 bankruptcy filers were surveyed and interviewed; their court records were also abstracted.”

Here is a bullet list relating some of the Journal findings:

* The highest out-of-pocket health care costs were associated with non-stroke neurological illnesses, such as multiple sclerosis, followed by diabetes, injuries, stroke, mental illnesses and heart disease.

* For 48% of medical debtors, hospital bills were the largest single out-of-pocket expense. Prescription drugs for 18.6%, doctors’ bills for 15.1% and insurance premiums for 4.1% of other debtors were the largest expense. Medical equipment and nursing homes where the largest expense for the remainder of medical debtors.

* Illness-associated loss of income also contributed to financial problems related to medical bills. In 37.9% of medical debtors, the illness resulted in the patient’s family member losing or quitting a job; in 24.4% of debtors, the illness led to getting fired.

* Unaffordable healthcare costs contributed directly to the bankruptcy of 92% of medical debtors.

The Journal authors draw this sobering conclusion in their study:  “[T]he U.S. healthcare financing system is broken not only for the poor and uninsured, but also for insured, middle-class families – they frequently collapse financially under the strain of the current health care system.”

For many, filing for bankruptcy protection may be the best chance to pay off staggering medical debts while holding on to their homes and automobiles.  People stuck in this tough financial situation should consult with an experienced bankruptcy attorney for a free case evaluation so they can start getting their life back on track.