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Credit Slips from Getting Sick?

posted by Melissa Jacoby

Everyone is talking about household medical debt this week. American Enterprise Institute Research Fellow Aparna Mathur has just issued a report finding that “nearly 27% of bankruptcy filings are a consequence of primarily medical debt” based on an analysis of data from the Panel Study of Income Dynamics. Meanwhile, over at the Center for American Progress, we can find the results of a poll in which 44% reported being worried about falling deeply into debt because of medical expenses – more than were worried about being hurt or killed in a terrorist attack or losing a home in a natural disaster.

Medical debt deserves a prominent place on the public's radar screen and on the research agenda of scholars from a variety of disciplines.  Still, a slight reframing of the problem is in order.  Incurrence of catastrophic medical expenses is a serious policy issue but a rather rare event.  Flowing far more commonly from medical problems is the incurrence of non-catastrophic (but still substantial) out-of-pocket health and incidental expenses coupled with income loss, various opportunity costs, and the price of credit used to smooth consumption when household savings are not up to the task.  It is this more subtle and complex combination that is heightening financial risk for many American households.


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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless ([email protected]) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.