In 1988 Leon Lederman won the Nobel prize for his discovery of the Higgs boson subatomic particle. In 2015, he auctioned off his Nobel medal for $765,000 to pay his mounting medical bills.
Lederman isn’t the only comfortably middle-class American whose health insurance failed to protect him from catastrophic medical bills. Last year families piled up $88 billion in new medical debts and, according to the US Consumer Financial Protection Agency, medical bills account for more than half of all debts sent to collection agencies.
Medical bankruptcy is emblematic of the financial pain inflicted by our health care system. Over the past 18 years, we’ve studied medical bankruptcy by surveying bankruptcy filers across the nation. Our initial studies were carried out in collaboration with sociologist Deborah Thorne and Elizabeth Warren, then a Harvard Law School professor, who virtually founded the field of consumer bankruptcy research. Subsequently, we and Dr. Thorne have collaborated with other bankruptcy experts to survey random samples of debtors.
In 2007, we found that illness and medical bills contributed to about two-thirds of all personal bankruptcies, up from about half of bankruptcies in 2001. Many medically bankrupt families had been hit by a double whammy: The medical bills rolled in just as their paychecks stopped because they were too sick to work. And despite the expansion of health coverage under the Affordable Care Act (Obamacare), medical issues still contribute to about two-thirds of all bankruptcies. That translates into more than 500,000 American families suffering medical bankruptcy each year,
More than three-quarters of those medical debtors had insurance — mostly private insurance. But their coverage didn’t protect them from gaps in coverage — deductibles, copayments, surprise bills, and uncovered services that drove them to financial ruin.
Private insurance is a defective product. And financial disaster isn’t the only defect. Each year, 17 million insured adults skip filling a prescription from their doctor because they can’t afford it. And similar numbers never get to the doctor in the first place because they fear the cost. Among women with breast cancer, those facing high deductibles start treatment six to nine months later than women with full coverage. Heart attack victims with less than full coverage are 20 percent more likely to delay seeking emergency care. In both cases, the consequences can be deadly.
For private insurers, these defects aren’t a bug; they’re a feature. They profit by not paying for care. Their business model is based on collecting premiums, avoiding sick people, and denying coverage for expensive services whenever possible. Insurers boast in reports to shareholders about their low “medical loss ratios” (MLR), the low share of premiums they dribble out to pay for care. This year alone, private insurers will spend $252 billion of the premiums they collect on themselves rather than on care for the people they cover.
But instead of making health care more user-friendly and affordable, the Trump administration has moved to further hollow out coverage. It’s encouraged a migration to bare-bones, short-term insurance policies that leave enrollees unprotected but are highly profitable for insurers; UnitedHealthcare’s short-term plan has an MLR of only 37.3 percent; only 37 cents of every premium dollar goes to pay for care, while 63 cents stays with the company. Trump officials have encouraged states to impose cumbersome Medicaid work requirements that have driven tens of thousands of the poor off Medicaid, swelling the ranks of the uninsured, who now number 30 million. And the Justice Department has joined a suit that would end the Affordable Care Act’s protections for people with preexisting conditions.
Unfortunately, some Democrats’ health reform proposals would merely tread water on health coverage. The public option plans offered by Joe Biden, Pete Buttigieg, and several other contenders would leave many uninsured and do little to upgrade coverage for insured Americans. Tens of millions would continue to be saddled with unaffordable premiums, copayments, and deductibles and fenced into narrow provider networks that cause surprise bills. Such half-way measures would leave millions unable to get the care they need and at risk of medical bankruptcy.
In contrast, the Medicare for All reforms championed by Senators Sanders and Warren would abolish copayments and deductibles as well as narrow networks and surprise bills. In nations that have adopted that approach, officials could barely comprehend what journalist T.R. Reid was talking about when he asked them how many of their people were bankrupted by medical bills.
Our health care financing system is broken. For 90 years our nation has tried, without success, to craft a fix that includes a role for private insurers. Patchwork reforms succeed only in exchanging old problems for new ones. Single-payer national health insurance is the only real solution. Until we implement such reform, all of us (except, maybe, Jeff Bezos and Bill Gates) will remain only one serious illness away from medical bankruptcy.
Dr. David Himmelstein and Dr. Steffie Woolhandler are distinguished professors at the City University of New York at Hunter College and lecturers in medicine at Harvard Medical School.