Short-Term Health Insurance Plans Won't Solve Long-Term Problem

August 13th, 2009 by Reed Allmand

As the many Americans face job losses, many are facing the prospect of being uninsured as their COBRA plans are either unaffordable or have run out. For those Americans who can’t afford individual comprehensive healthcare going uninsured is often the end of the line. Unfortunately the uninsured are at a high risk of eventually becoming burdened by medical debt. Medical debt is one of the leading causes of financial problems in America and many Americans file bankruptcy because they are facing massive amounts of medical debt they simply can’t afford. And while medical debt generally hits the uninsured the hardest, there’s a second group of Americans who are getting swamped by medical debt, the underinsured.

As healthcare costs have risen and more Americans become unemployed or self-employed, a cottage industry of “short-term” or “emergency” healthcare insurance has popped up to cash in on the medical insurance gap created by the rising unemployment rate and the increased cost of traditional healthcare insurance. Many Americans sign-up for these healthcare plans that don’t provide coverage for pregnant women, often don’t pay for basic check-ups and have huge deductibles that are as much as $5,000 a year and then when they need to use the plan they end up with a huge amount of medical debt because these “catastrophic” insurance plans often exclude the very procedures that most patients need.

For those debtors facing medical debt, bankruptcy may offer relief. Bankruptcy allows many debtors to discharge various types of debt, including medical debt.