surgical toolsDuring a rare press conference President Obama defended the Affordable Care Act by saying “in a country as wealthy as ours nobody should go bankrupt if they get sick.” The problem is the Obamacare will not even come close to eliminating medical bankruptcy.

Even under the law, people who buy insurance on the new exchange will face out of pocket limits they may not able to afford. For a family plan the annual out of pocket limit will be over $12,000. This is a financial burden many families simply can’t afford, especially while dealing with all the other expenses normally faced when taking care of a very sick family member.

The vast majority of people who filed for bankruptcy because of health problems had insurance. The problem is that their private insurance was insufficient. The bronze plans required under Obamacare with their incredibly low actuarial values and high out of pocket limits will not stop this problem.

In fact, data from Massachusetts which adopted a very similar state based reform plan indicates the ACA will only modestly reduce this problem. From research on Massachusetts right before and after implementation.

In 2009, illness or medical bills contributed to 52.9% of bankruptcies in Massachusetts. In contrast, in early 2007, medical bankruptcies accounted for 59.3% of personal bankruptcies in the state (P.44 for comparison with 2009 proportion) and 62.1% nationally (P.02). Because the total number of personal bankruptcy filings in Massachusetts increased by 51% between fiscal years 2007 and 2009, the absolute number of medical bankruptcies in the state actually increased by more than one third during that period, from 7504 to 10,093. [...]
Even before the changes in health care laws, most medical bankruptcies in Massachusetts, as in other states, affected middle-class families with health insurance. High premium costs and gaps in coverage— copayments, deductibles, and uncovered services— often left insured families liable for substantial out-of-pocket costs. None of that changed

It would be possible to dramatically reduce medical bankruptcy by adopting one of the far more comprehensive universal health care systems used in other countries, but that is not what President Obama did. He put forward a bill that will increase the number of people who are technically “insured” but will still leave many “underinsured”, and being underinsured is the main cause of medical bankruptcy.

It undermines the entire idea of progressive government when Democrats make promises about laws that were never really designed to deliver.

Photo by phalinn released under Creative Commons License