Center for American Progress Action

Medical Debt: Can Bankruptcy Reform Facilitate a Fresh Start?
Testimony

Medical Debt: Can Bankruptcy Reform Facilitate a Fresh Start?

Testimony of Elizabeth Edwards Before the Subcommittee on Administrative Oversight and the Courts

CAP Action Senior Fellow Elizabeth Edwards testifies before the Subcommittee on Administrative Oversight and the Courts.

SOURCE: CAPAF

Download this testimony (pdf)

Chairman Whitehouse and Members of the Subcommittee, thank you for inviting me here today to discuss the causes and consequences of medical bankruptcy. We are in the middle of a great national debate on health care. For the first time in more than 15 years, we are truly trying to fix the broken health care system—and deal with the twin problems of the status quo, skyrocketing health care costs and the millions of Americans living without health coverage. As Congress and the administration wrestle with the big picture and the very important details, it will be critically important to ensure that health reform guarantees that coverage and care will be affordable for Americans of all incomes.

I know that the committee is concerned about the financial hardships that many Americans experience due to health care costs, particularly bankruptcy. As you know, medical expenses are a major factor in nearly two-thirds of bankruptcy filings. People with poor or no health insurance coverage and a significant health problem are more likely to accrue considerable medical debt than people who have good coverage and good health—and thus are particularly vulnerable to bankruptcy. Yet when they reach bankruptcy court, the bankruptcy trustee has little ability and little incentive to address the underlying factors that have led to medical debt and medical bankruptcy, including insurance company denials and aggressive collection efforts by medical debt collectors. Medical debt is, of course, a symptom of larger problems in our health care system—and the solution to medical debt and medical bankruptcy is real health reform that results in affordable, reliable health coverage and affordable health care for all Americans.

The problem of unaffordability is most apparent for the nearly 47 million Americans who lack health insurance. Roughly two-thirds of Americans without health insurance have incomes below 200 percent of the federal poverty level—or approximately $44,000 for a family of four. Most people without health insurance are workers or live in families with a worker, but do not have health coverage through an employer. With the annual average cost of employer-sponsored health insurance nearing $13,000 in 2008, health insurance is clearly unaffordable for families who must purchase it on their own.

Download this testimony (pdf)

The positions of American Progress, and our policy experts, are independent, and the findings and conclusions presented are those of American Progress alone. A full list of supporters is available here. American Progress would like to acknowledge the many generous supporters who make our work possible.