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Will Health Care Reform Mean Fewer Bankruptcy Filings?

Posted on Jul 2, 2012 in Bankruptcy, Bankruptcy Information, Illinois, Wisconsin

As you probably heard, last Thursday the Supreme Court ruled on the Patient Protection and Affordable Care Act, otherwise known as “Obamacare”.  The court found the Act to be constitutional.  This decision means that should the Act stay in place, over the next few years many new changes will be enacted in an attempt to provide affordable healthcare to every American and to reform the healthcare insurance industry.  Politics aside, many questions remain about exactly how this Act will affect the country.  Specifically, we at Lakelaw are wondering what the effect of PPACA will be on bankruptcy.

At first glance you might not think that a bill about healthcare would have much to do with bankruptcy, but in the U.S. today a large percentage of bankruptcies filed are “medical bankruptcies.”  Medical bankruptcies are bankruptcies which are largely the result of expenses like hospital or doctor’s bills or the cost of prescriptions.  Such medical costs can be financially devastating for almost any family.

Enter Obamacare.  Supporters argue that PPACA will greatly decrease the number of medical bankruptcy filings because those who previously did not have insurance will now be covered, greatly reducing the amount of out-of-pocket medical expenses for the family should medical problems arise.  Additionally, in the long run PPACA should lower the cost of healthcare overall, which would reduce medical costs for everyone.  This could help ease the burden that so many families face when they are hit with unexpected medical costs.

On the other hand, critics of the Act point out that the majority of those who file for “medical” bankruptcy” already had health insurance when their medical difficulties began.  In addition, PPACA does not eliminate all co-pays or other out-of-pocket medical costs, so some medical expenses would remain.  Finally, they argue, Massachusetts’s recently reformed healthcare system, which PPACA was modeled after, has not been shown to have significantly lowered the number of medical bankruptcies in that state. 

Both arguments have merit and certainly the results of PPACA remain to be seen.  We at Lakelaw simply hope that as many families as possible are able to achieve solid financial footing.  If you are considering bankruptcy as a route for moving forward financially, especially to deal with medical debt, please contact us to discuss your options.

This post was authored by Lakelaw summer intern Tatiana Barry

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