Will The Rising Cost Of Medical Insurance Cause More Bankruptcies?

January 5th, 2010 by Reed Allmand

The cost of medical insurance has continued to rise, burdening both employers and workers. But as the economy worsens many experts are predicting that the cost of coverage could increase as much as 30 percent each year with many employers passing on the increased cost of health insurance to workers.  Many workers, especially those who are living on tight budgets, will choose to drop their coverage making them more vulnerable to medical debt and bankruptcy.   Even government plans such as Medicaid and Medicare and feeling the squeeze and President Obama is predicting bankruptcy of these programs if steps are not taken to decrease the costs.  But for individuals and families reliant on employers to provide low-cost medical insurance, bankruptcy is already becoming a very real possibility. Here’s why…

1. Many employers are attempting to decrease their medical insurance costs by forcing workers to pay for a higher percentage of their premiums. This can be particularly difficult for families dependent on one salary. Many of those families either forgo or sign-up for inadequate coverage which increases their risk of medical debt and eventual bankruptcy.
2. The rising numbers of job losses are leaving more workers uninsured. Eventually these workers get sick, rack up large amounts of medical debt and are forced to file bankruptcy for relief.
3. Even for unemployed workers who want to continue their coverage under a former employer’s health insurance program, COBRA is an expensive option.  Even with subsidies many workers are forced to choose between paying for health insurance and paying the mortgage.
4. Finally, a growing number of Americans are finding themselves uninsurable because of pre-existing conditions.  Those Americans are either stuck paying exorbitantly high premiums or risking medical debt and bankruptcy by forgoing health insurance coverage.

About Reed Allmand

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Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

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