A Loophole for Medical Bankruptcy
Posted by WhiteCoat on January 8, 2009
In 2005, special interest groups pushed for, and obtained, changes in the bankruptcy laws that made it more difficult to eliminate debt in bankruptcy proceedings.
An article in yesterday’s Wall Street Journal Health Blog notes that the Obama administration intends to change bankruptcy laws again – this time making it easier for patients filing medical bankruptcy to “wipe the slate clean.”
Toward the end of the “Obama-Biden Plan” contained on change.gov, one of the goals of the administration is the following:
Reform bankruptcy laws to protect families facing a medical crisis: Obama and Biden will create an exemption in bankruptcy law for individuals who can prove they filed for bankruptcy because of medical expenses. This exemption will create a process that forgives the debt and lets the individuals get back on their feet.
The WSJ article cites an expert that gives the reasoning behind the medical exemption:
Those revisions “were geared toward people who had been irresponsible spenders,” Jacoby said. “People with serious medical problems do not fit that model.”
Aaaaah. I see.
If you are irresponsible with your health, smoke like a fiend for 20 years, develop lung cancer or a heart attack, and run up hundreds of thousands of dollars in debt, that’s permissible. You can run up millions of dollars in debt by being irresponsible when you drink and drive, get into a car accident and break your neck. That, you shouldn’t have to pay for. But if you buy too much crap with your credit card, you’re on the hook, pal.
What will happen bankruptcy laws are changed to allow a loophole for elimination of medical debt?
People just won’t pay their medical bills and will create as much debt as possible – knowing in advance that they will never have to pay for it.
How do you think medical providers will respond to patients with chronic medical problems and high debt loads? You connect the dots. I’m beginning to see where this whole “medical credit score” is coming into play. It really is going to be used to decide whether or not to provide elective care to patients.
One of the commenters to the WSJ article cited a post from John Goodman’s Health Policy Blog on this issue that is worth the read. Interesting how “medical bankruptcy” is defined.
The whole concept is just another way to push the notion that health care should be “free.” As I noted just a couple of days ago, I think that advancing this theme is the wrong way to go.
But if we’re heading down that road, I think Obama-Biden ought to take it a step further. Create a loophole in bankruptcy law that allows for elimination of back taxes and medical school student loans.
Then you’ll see the first hand effect of your dumb idea.
shadowfax said
If you are irresponsible with your health, smoke like a fiend for 20 years, develop lung cancer or a heart attack, and run up hundreds of thousands of dollars in debt, that’s permissible.
Yeah, cause NOBODY ever gets sick for reasons other than irresponsibility. It just never happens, right? Right?
Not saying that at all.
Just the same way that NOBODY ever goes into credit card debt for reasons other than irresponsibility. It just never happens, right? Like losing a job and trying to make rent/car/food payments. Or trying to put clothes on their kids’ backs and food in their mouths. What a bunch of irresponsible parents. Trying to feed their kids. Can you imagine?
My point is that Obama is drawing artificial lines in the sand by letting people escape from medical debts, but not from any other type of debt. Why can’t I declare bankruptcy and escape from my student loan debt? Or why can’t I just refuse to pay taxes for a couple of years and then wash those debts away with a simple bankruptcy? Simple. Government, you, I, and everyone else with half a brain knows that if such loopholes were created, people would abuse them.
By creating a medical bankruptcy loophole, it will encourage abuse and it will just make people think that medical care is free. The effects won’t immediately trickle down to you or me in the emergency department. But it will happen.
I predict that access to non-emergency care for those with a low “medical credit score” or those whom the hospital deems are likely to run up a large debt will become worse and not better.
Guess where those patients who can’t find care will end up.
Peter said
WhiteCoat is exactly correct. You take away the punishment from bad decisions, and you will get more bad decisions.
Rachel said
“I predict that access to non-emergency care for those with a low “medical credit score” or those whom the hospital deems are likely to run up a large debt will become worse and not better.
Guess where those patients who can’t find care will end up.”
Luckily with some sort of universal healthcare plan this will hopefully not be a problem. People will not have to be worried about being denied healthcare due to their medical conditions and/or lack of money, and the burden on the ER will likely lessen because more people will have access to primary care physicians.
Dr. B said
I don’t understand what you are concerned about…you don’t like the idea of forgiving debt or you think we should also forgive credit debt? Surely you don’t want someone to be “punished” for being sick, one of your patients, no less. Surely, you know that not everyone can get insurance because they have been disqualified or dropped by their insurance. Do you argue that people use their credit card to make ends meet and get in over their head more often than having more wants than money? Its not a perfect system, but people are getting their life savings wiped out cause they develop breast cancer. Or maybe they were too irresponsible and mutated their BRCA genes…
Answered on new blog site …
Charles Pulse said
I think it is a real leap for you to state that the so called loophole will cause people to not pay their medical bills and to create as much debt as possible. I can just see someone (say a smoker) who comes in for treatment for cancer, after recieving his or her medical bills saying, “Well, I can either pay these bills or get sick again and again so I can drive my medical expenses up enough to declare bankruptcy.
Answered on new web site …
wackyvorlon said
The notion that healthcare shouldn’t be free is a truly bizarre one. IMO, it belies an uncomfortably selfish philosophy.
Response on new blog here.
ER nurse said
“Luckily with some sort of universal healthcare plan this will hopefully not be a problem. People will not have to be worried about being denied healthcare due to their medical conditions and/or lack of money, and the burden on the ER will likely lessen because more people will have access to primary care physicians.”
OK so people will not have to worry about healthcare because of lack of money? Just who is gonna be paying for said care? OH yeah the taxpayer (ie. the person with “universal healthcare). The burden on the ER will not lessen. We will have more people with “medicaid” as their “insurance” that use the ER as their PCP. Just what color is the sky in your world.
“The notion that healthcare shouldn’t be free is a truly bizarre one.”
Yeah and food and housing should be free to all too right. After all those two things are needed too right. Please leave me your home address so I can forward my bills to you.
Angry at dumb people said
WOW! I LOVE HOW THE NURSE IS COMPLAINING ABOUT PEOPLE COMING INTO THE ER AND USING THEM AS A PCP!! SERIOUSLY LADY IF THEY WANNA WAIT SIX HOURS FOR MEDICINE LET THEM. ITS NOT LIKE A NURSE LIKE YOU KNOWS HOW TO TREAT PEOPLE ANY WAY! LETS TALK ABOUT PEOPLE WHO ARE IN MEDICAL DEBT BECAUSE OF DOCTOR ERRORS AND NURSES ERRORS. TAKING THE EXTRA STEP TO MAKE SURE SOMEONE GETS ANTIBIOTICS AFTER A SURGERY SO THEY DONT DEVELOP INFECTIONS. OR WHAT ABOUT THE DIABETICS WHO GET DENIED HEALTH INSURANCE BECAUSE OF THERE “PRE-EXISTING” CONDITIONS BUT THEY MAKE TOO MUCH FOR MEDICAID!!! YOU GUYS IN THE HOSPITALS CHECK THERE BLOOD SUGAR OPEN A BRAND NEW BOTTLE OF INSULIN, GIVE THEM ONE SHOT, SEND THEM ON THEIR WAY TO FIGURE OUT HOW THEY WILL GET THERE NEXT SHOT, THROW THIS BRAND NEW BOTTLE OF INSULIN IN THE GARBAGE INSTEAD OF HELPING SOMEONE IN NEED, AND THEN SLAP A FIVE THOUSAND DOLLAR MEDICAL BILL ON THEM!!!! I SERIOUSLY HATE PEOPLE LIKE THIS, HOW BOUT YOU STOP DOWNING ON PEOPLE WHO DONT GET GOOD HEALTHCARE PROVIDED THROUGH THEIR JOB AND GO ACTUALLY DO YOUR JOB!! STOP COMPLAINING BECAUSE YOU CANT HANG OUT WITH YOUR FELLOW NURSES AND GOSSIP AND EITHER QUIT YOUR DAMN JOB OR DO YOUR DAMN JOB!!! I HOPE OBAMA HELPS OUT ALL OF THOSE IN NEED AND MAKES PEOPLE LIKE YOU ACTUALLY WORK FOR THEIR MONEY!!!! THIS IS NOT AT ALL AN ATTACK ON THE GOOD DOCTORS AND GOOD NURSES WHO TAKE THEIR TIME TO REALLY HELP THOSE IN NEED..THIS IS TOWARDS THE ONES WHO ARE “TOO GOOD TO DO THEIR JOB” GET OVER YOURSELVES!!!!!!!!!!!!
never again said
You know you guys do a lot of things in the hospital that are completely unnecessary, like “conscious sedation.” I got that AND general anesthetic against my will for a procedure that is routinely done with just a block AND that’s how *I* wanted it. Not only did this nasty sedation and the general I declined triple the cost, but they added on some other things like foot pads for 176 freakin dollars!!! A blanket that I rented for 28 dollars. My wrist brace wasn’t good enough we had to have horrible half cast for another couple of hundred dollars. Guess what I asked for? A no frills operation as I was uninsured and wanted to make sure the bill was payable. The total was more than I made the whole damn year!!! They showed me no mercy. I hate Versed, the drug which made all of this possible and I hate everybody who was involved in this fiasco. If you don’t let us patients tell you not to do all this fancy stuff, then we patients can’t keep our costs under control. If we could afford insurance or our bosses supplied it we wouldn’t be uninsured. Its treatment like I got that makes it impossible to pay! No wonder health care premiums are so damn high you have to 100 g’s a year to pay for it! I hope we do have new bankruptcy laws, maybe then these hospitals will get a grip on their excessive and ridiculous charges. Foot pads that I never saw for 176 DOLLARS! You’ve got to be kidding me. Can you say health care RIP OFF!
Kathy said
Great article, but you forgot one thing…. The after effects of Versed. I lost years of precious memories and gained PTSD and anxiety attacks so severe that at times I have to take days off from work just to recover from them. In addition to health insurance benefits being paid out, sick pay to employees adds to the cost, employee moral goes down because their coworkers are not helping out with the workload, jobs are in jeopardy because people are unable to come to work and in some severe cases, end up filing for SSI or SSD.
All of this due to some poison shot into a patients veins that is cheap, makes the medical community a fortune, and their jobs easier because they now have compliant zombies that they can use to rush through medical procedures and operations, and laugh at them repeating themselves or crying out in pain, because who cares…they will forget whatever happened to them because Versed stole their memory of the experience.
Whomever ‘discovered’ this drug should be shot up with this stuff on a daily basis and suffer the same consequences as we have suffered….whatever happened to quality healthcare and actually helping and listening to the patient? Out the window, it’s all a money making scheme and numbers game…it’s sickening but unfortunately true.
All of the victims of Versed, like I am, are in my prayers daily…..
never again said
Yes, Kathy i didn’t mention the severe trauma and PTSD I got from the sneaky application of thier control drug Versed. It didn’t relax me at all, ( I was already relaxed and this made me paranoid , frightened and angry) I had told them not to give me anything like that, didn’t get amnesia, and was absolutely horrified and helpless to resist them. I had to just lie there and take it. I TRUSTED these people. They NEVER AT ANY TIME told me what their plan was and they just dispensed with informed consent because they knew I wouldn’t sign it. The medical people in this particular hospital just ignored me like I was a dog at the vet and went ahead and ruined me, physically, mentally and financially. I have zero sympathy for hospitals etc because of this. They had zero sympathy for me! They deliberately did this in violation of the law and knowing full well that I couldn’t pay for it. Thanks hospital for ruining my life. You say you wanted to “help” me? I can live without this kind of help. And oh yeah, despite all the cost my operation was botched and I had to have another one at another hospital! Is this a scam to make sure that I have to pay twice?
renee said
Hey ER nurse!
You know what, my husband has tons of medical debt from before our marriage (his mom was divorced, no child support, working full time and still could not afford medical, she paid her house, car, auto insurance, fed him and his brother… yatta yatta yatta) …
And yeah he went to the ER… life flighted after a Dodge that was passing a semi hit him turned him into a semi that hit him… he died on the table, he was on life support and in ICU, broke his back, both arms, his leg, ribs, he now has one lung, no spleen, and is still having surgries for all the issues from that wreak, no to mention cronic pain.
And guess what? he gets sick JUST LIKE YOU and every other human being (did I mention he also has no spleen?. Only difference is before we got married he didn’t have and wasn’t able to get insurance b/c after that wreak NO ONE would insure him. He couldn’t help that his mom couldn’t afford insurance. (he had just turned 18).
He’s on my work insurance now, thank you God. But now we have all this debt and are trying to raise our own family and it would be nice for some medical forgivness. Some people were born into circumstances worse than mine and obviosly yours, and spend a lifetime trying to be better, get an education, and all the american dream that wasn’t given to them, car wreak aside it would have been harder for him than me. But that doesn’t make him a bad person.
Not everyone that walks through your ER door is some dead beat looking to skip the bill and you shouln’t treat them like they are.
If you truely judge people like that with medicare or no insurance then you are in the wrong line of work, you are there to help and to heal… Just b/c we have his medical debt doesn’t mean we don’t pay all of our other bills, b/c we do, and we are taxpayers just like you.
My sister is a nurse and would be appalled to read what you wrote, she has known hard times herself. We were just more fortunate to have a family that could help and had medical insurance while growing up.
Maybe I wouldn’t file bankruptsy b/c I don’t want it on my credit report… but I wouldn’t stand there and judge what you do not know and do not understand.
Aaron Erickson said
Put down the Ayn Rand. You may learn something.
This is only the kind of philosophy that can come from someone who has never faced a wall of a sudden medical emergency. Lets hope your daughter gets an eating disorder, so you can experience what it is like to suddenly have to choose between your future solvency and getting care for your teenage daughter who might die if she does not get treatment.
Sorry – I we already have rationing of healthcare. By income – and usually the effects are on our most vulnerable.
If healthcare were anything approaching a free, and informed market, I might agree. But it isn’t. In the US, it is a protectionist racket, where because we do it half ass, we actually get the worst of rationing AND the daily injustice of people having to make some of the worst choices imaginable.
Just like there is no such thing as an atheist in a foxhole, there is no such thing as a healthcare free marketeer the minute that your child gets sick and you are faced with the prospect of mid five figure per month expenses to keep your kid from killing herself.
Leslie said
Lets start with the fact that I am not a fan of Obamah, i did not vote for him and i dont trust him.
My husband was critcally injured last fall with spinal injuries. We are/were responsible self employed people with a “good” 80/20 copay health insurance with 3000 deductable.
We were wrong. The ins company is dumping $80K worth of bills on us. It seems they dont think the anesthesiologist should be paid, they seem to think that $750 is enough to cover ICU for a day. They only want to pay $50K of this medical crisis.
Now i am not very wise when it comes to insurance, but i would never have agreed to this type of policy. I purchased an 80/20 policy.
My husband has not been able to work, still does not have full use of his hands. We have lost our business accounts (it is a service business) because my husband could not work. I have managed our business books and advertising, but i have Never been employed in the outside world.
I have sold everything possible to live on during the past few months. We have 2 cars, one is 10 yrs old, the other 13 yrs, both have over 200K miles on them. We have been responsible people and have NO outstanding debt, yet we are still screwed.
To top it off, the surgeon was very rude and did not even know what my husband’s injury was during the last consultation appointment. Why should he even be paid for that appointment?
I cant eat or sleep. I am sure i now have ulcers but cant afford to go to the Dr. I am seriously considering bankruptcy as i can no longer deal with the stress. I dont use credit. Who cares, our credit will be ruined anyway because we cannot pay these bills.
You tell me, What SHOULD I DO?
I cannot get financial assistance because we “had insurance”. I cannot get financial aid because i am not a mexican, a meth-head or a single mom.
BTW, who is paying for the medical bills of the fourteen illegals who were in a rollover accident just down the road from me? 4 air-ambulances, 4 ground ambulances were on the scene. I know from experience that the helicopters are $16500 each! Whoever is picking up that tab ought to consider picking up the tab of hardworking responsible US CITIZENS first.
Quaylyn said
It’s funny how you said “No one accumulates debt unless they are irrisponsible. We accumulated 26,000.00 From an emergancy surgery not from being irrisponsible. But because an organ in my boyfriends body exploded. And now he can’t work, and im stuck paying off these bills. No tell me is that fair to me. He can’t help pay them off if he can’t work. That suck you can’t file bankruptcy on your student loans. But don’t start attacking the people who you deim as irrisponsible, when you dont know our stories.
Tina said
Leslie, you should be ashamed by this comment: “I cannot get financial aid because i am not a mexican, a meth-head or a single mom.”
You probably deserve your ulcers.
maxina said
There are people who are not irresponsible and have awful things happen to them. At 21 I was diagnosed with a heart defect that would have killed me within a year with out open heart surgery. I was healthy as an ox for the first part of my life and the bam dying. So tell me why I should have to live with all my money going to medical bills and never get to move on? If medical prices were not so jacked up I would have been able to afford most of it!