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.
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.
WhiteCoat is exactly correct. You take away the punishment from bad decisions, and you will get more bad decisions.
“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.
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…
Let’s see …
No one should undergo a hardship for things that are beyond their control. Is that the premise?
So if someone falls on hard luck, why stop at medical debt? Why don’t we forgive their mortgage debt, their student loan debt, their tax debt, and their credit card debt?
Why is it that the onus falls upon the medical professionals to get an extra 12 years of education and go a quarter of a million dollars in debt and who are then expected to give away their services?
Or is the premise that we should only forgive debt when it is related to the “straw that broke the camel’s back”? Isn’t that how the mortgage industry crumbled? Are you looking to do that to the medical industry so the “irresponsible” patient with the BRCA gene can’t get *any* treatment and just dies?
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 receiving 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.
So you’re saying that people won’t take advantage of a loophole if one is created? It’s your opinion that if tax debts were suddenly forgiven in bankruptcy that people wouldn’t just stop paying their taxes and then go bankrupt after a few years to avoid the bill? If so, I consider that opinion naive.
It’s not that the smoker makes a willful decision to repeatedly become sick. It’s that the cancer patient may pay a small amount toward treatment initially, then when other bills come in, the patient pays mortgage, credit cards, and all the other bills first, has nothing left for medical bills, and then stiffs the medical providers.
Don’t get me wrong. I absolutely believe that the cost of medical care in this country is ridiculous. I also believe that *something* must be done to reign in costs.
Giving away services for free and creating an arbitrary loophole that allows people to get out of one type of debt while forcing them to pay all the other types of debt is not the way to go about doing so. If anything, such a move will make medical care more expensive so that providers can cost-shift to the patients that do have money or who haven’t met the qualifications to declare bankruptcy.
A modified free market approach is the only way to save our medical system.
My guess is whitecoat is that you have never been on the other end of this situation. If you had been taking care of your child with cancer for year or so like I have you would have a much different appreciation dwindling resources, constant negative cash flow, etc, etc. Do you honestly think the vast majority of those thinking about it want to go through a medical bankruptcy? I wouldn’t ask you (or anyone) to walk a mile in my shoes but think about it.
Your guess would be wrong.
You’re missing the point.
I’m not saying that people shouldn’t be able to go through bankruptcy. And I fully agree that medical costs are out of control.
My point is that by making people liable for some debts and not liable for others, you encourage people not to pay debts for which they will not be liable.
If we want to reform bankruptcy laws, then do so for *all* industries, not just the medical industry.
So EM you have had a kid with cancer, with 3 to 5 figure bills coming in from multiple hospitals and docs (responsible to you an payed at this time). My apologies. The reality (with the exception of the very rich) most americans are one serious/extended medical illness from financial ruin. Many plans have a one million dollar limit. Those that don’t have limits for going “out of network”, which is what often what happens with serious illnesses requiring specialized care. The problem with “reforming” bankruptcy laws for “all” industries, is that we choose to buy a house, car, credit card expenses,etc,etc. Nobody (directly) chooses a serious medical illness. Even with the best insurance/catastrophic care limits are reached, Trust me on this, this is not some benign academic blog argument speaking.
Speaking of missing points the last line from the WSJ healthblog: “Jacoby says current bankruptcy law hasn’t kept all medical debts from being forgiven, but she interprets Obama’s statement as meaning that there would be fewer hurdles for patients to wipe the slate clean”
Their talking about fewer hurdles here not making it easy. I guess spending a year plus on a peds-onc floor watching what other families go through has given me a different perpective than you. I don’t see anybody “shirking” their duty. Maybe you need to get out of the ER where everyone you see is ” 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” (your words)
goodbye
Misquoting/misattributing my statements adds nothing to the discussion.
While I think that we need to address how to help those with catastrophic illnesses, we also can’t throw the baby out with the bathwater.
I’ll wait to see what happens with the “fewer hurdles” issue, but still think that if we are going to make “fewer hurdles” it should be done across industry lines and not focused on one industry.
You clearly haven’t walked very far my shoes whitecoat. Try rereading my statement. Just how do you equate someone who made a bad decision with a house/car/credit cards with say a family dealing with pediatric cancer? I’m sorry but you come across as utterly clueless as to the reality of medical coverage today.
The discussion has shifted from whether or not one industry should be punished solely because it provides a high-cost service to whether or not I empathize with someone in “your shoes.”
My kids have several health issues. Fortunately none of them have cancer. They do need frequent medical treatment and our family’s medical expenses last year were more than $125,000, so back off on the “woe is me” kick.
No one would ever say that children with cancer don’t deserve treatment. The question is rather who will pay for it.
I guarantee that if you force providers to pay for expensive care, they will slowly ratchet back on the amount of care they will provide to those who cannot pay. In other words, care to those who can’t afford it will be “rationed.” Look at what is happening to psychiatric services across this country now. A vast majority of people with psychiatric problems are indigent. It is extremely difficult to find any psychiatric care at all in some areas of the country.
Keep forcing the “best medical care someone else can pay for” issue. Then future children with cancer will get little or no treatment.
Is that what you want? Or is the whole discussion just about you?
The notion that healthcare shouldn’t be free is a truly bizarre one. IMO, it belies an uncomfortably selfish philosophy.
Selfish for physicians to want to receive reimbursement for providing services. Right.
So you wouldn’t have any problem coming to my house and providing free childcare, free cooking, and free maid service for the rest of your life so I can go provide my services to others for free?
Don’t forget – make one small screw up and you’ll get sued for millions of dollars.
You need to practice under the same conditions as the healthcare providers do, you know.
You will find that more and more people are less and less sympathetic to Doctors’ “plight.” Don’t I wish I had an extra 125,000 sitting around to pay for medical care. I believe that you, Whitecoat, can afford health insurance or is this your co-pay? Sounds serious to me! Lucky you that you can afford it. Health care is abnormally expensive compared to the cost of everything else. I agree that the education is expensive, but anybody who can afford 125,000 for their kids healthcare isn’t doing too badly. As for the idea that if surgeons make one mistake they are liable for a million dollars, oh please. You have insurance for that and you guys have done a good job convincing legislators that the only reason health care is expensive is because of malpractice. That isn’t true. The laws are sooo strict that medical professionals have pretty much free rein to do whatever they like without reprisal. Can I come and provide free maid service for the rest of my life while you take care of others? Are you going to take care of me and my family as well? Do I get to live in the house with my family? What about hospitalization, are you going to cover that? This sounds like something I would do if you would provide free care for everybody, sure! I know you were being facitious don’t get in an uproar. I am pointing out some problems with your argument.
I’ve got it now.
The only way that people can gain “street cred” with you is to be both worse off than you and to make less money than you. If they make more money than you, then they’re elitist, and if they don’t have as many medical problems as you and your family, then they haven’t “been there.”
You’re making multiple faulty assumptions while you continue on your “woe is me” kick. You have no idea how much money I make or how much of it is spent on family expenses, malpractice insurance, student loans, charity, or anything else. So instead of addressing the issues, let’s try to get the sympathy vote by jumping on the “rich doctor’s” case because he went hundreds of thousands of dollars into debt and spent 8 years busting his ass working sometimes 120 hours per week in post-secondary education getting a degree so he could make more than minimum wage. What an elitist I must be.
Insurance will cover you for malpractice judgments up to the limits of the policy – which are usually $1 million. Judgments more than that are paid out of the doctor’s pocket. Get too many judgments against you and you’ll have difficulty getting hospital privileges or malpractice insurance. Learn about the industry a little better before making incorrect generalizations about it.
There are no “problems” with my argument. Your logic is that someone should spend more than a decade of their life in training and take out hundreds of thousands of dollars in loans to finance that training so that they can provide services to you for free.
Should people that don’t purchase car insurance and who get into wrecks just get free cars because of their bad luck? If your house burns down and you didn’t purchase homeowner’s insurance, do you expect that everyone should just build you a new home? Why is medical care any different?
Using your twisted analogy, why should you be entitled to live in my house if you provide services to me for free? I don’t get to come live in your house and eat your food because I take care of your family in the hospital. You think that you should just be entitled to walk into a hospital and demand the best medical care in the world for nothing?
That kind of attitude will soon result in very few people receiving any medical care.
Say hello to rationing.
Get your medical care while you can.
Here I am trying to decide whether to declair bankruptcy or what to do. I have syndrome X, and was with an insurance that was paying the hospital and doctors what they thought was reasonable and customary, then I was stuck with the rest. These bills are getting so hi, leaving me with about 59,000 in medical bills. I’m getting hounded by phone calls, every day. I can only pay about 400.00 per month, but they want more than what I can pay. I’m not a drinker, smoker, and eat right. My cells won’t except the insulin, so I have severe endocrine problems. I was contacted by a creditor yesterday that told me that I should get another job to pay the bills. I tried to get another job, but when I get so sick, I have to quit because I start getting pancreatitis, hospitalized every other month for 4 to 5 days. I also have a child and a husband that works his tail off. I have insurance, but the insurance and the doctors are fighting about the prices and leaving the rest to the patient. This is not fair. There needs to be a law passed about this. We don’t over spend, but what about us? what should we do?
I agree with White Coat. I work at a medical practice. One of our patient’s had elective bunion surgery. The next month the notice of bankruptcy discharge came. It takes at least 6 months to file bankruptcy. The bunion surgery was planed in a way so she didn’t have to pay for it. Our physician made nothing on the surgery. The elective surgery was a bonus for this scammer.