Sen. Chuck Grassley today released a copy of the letter from the Department of Justice regarding a recently released study published in the Health Affairs journal.
Here is a copy of the letter.
U.S. Department of Justice
Office of Legislative Affairs
Office of tnc Assistant Attorney General, Washington, D.C.20530
The Honorable Charles E. Grassley
United States Senate
Washington, D.C. 20510
Dear Senator Grassley:
This responds to your letter, dated February 5,2005, requesting information from the Executive Office for United States Trustees (EOUST) concerning medical debts of those who file for bankruptcy protection and the recently published study in the Health Affairs journal ("MarketWatch: Illness and Injury As Contributors to Bankruptcy").
It is the practice of the U.S. Trustee Program (USTP) not to comment on data collected and analyses performed by outside researchers for reasons that include difficulties in verifying their data and research methodologies. It is noted in the cited study of 1,771 filers that very broad definitions of "medical bankruptcies" are used. The authors considered a "Major Medical Bankruptcy" to include cases in which debtor reported any of the following: illness or injury as a reason for filing bankruptcy; uncovered medical bills exceeding $1,000 in the past two years; loss of two weeks of work-related income due to illness or injury; or mortgage of home to pay medical bills. The authors considered "Any Medical Bankruptcy" to include cases containing any of the factors above or birth or death in the debtor's family or addiction or uncontrolled gambling.
Enclosed is a description of related USTP data and a summary of findings from analysis of a similar but larger sample of bankruptcy cases (5,203) utilizing data from official records during approximately the same time period as the study cited above. It should be noted that reported credit card debt also may reflect medical-related debts, but are not shown in these findings.
In general, the data describing medical-related expenses contained in official documents filed by chapter 7 debtors reveal that slightly more than 5 percent of their general unsecured debt is medical-related. The conclusion that almost 50 percent of consumer bankruptcies are "medical related" requires a broad definition and generally is not substantiated by the official documents filed by debtors.
We hope this information is responsive to your inquiry. If we can be of further assistance, please do not hesitate to contact this office.
Sincerely,
William E. Moschella
Assistant Attorney General
Enclosure
Summary of USTP Data and Findings on Medical Debt
USTP Data:
The USTP database contains 5,203 no asset chapter 7 cases that were closed between 2000 and 2002. The database includes cases filed in 48 states, Washington D.C. and Puerto Rico
proportionate to chapter 7 filings in each location. The database contains no cases from North
Carolina and Alabama, because those states are served by Bankruptcy Administrators. Nearly all of these cases had been filed about four months prior to closing.
On each petition we reviewed Schedule F of the petition to see if any medical debts were listed.
This would include where the creditor was a doctor, hospital or other treatment facility, medical
collection agency, or if the debt was in any way identifiable as being medical in origin.
This accounting would not have identified medical debts charged on credit cards, placed with
certain collection agencies, or paid prior to the bankruptcy filings.
Findings:
All Debtors (N ~ 5203)
54% listed no medical debt.
Medical debt accounted for 5.5% of the total general unsecured debt.
90.1% reported medical debts less than $5,000.
1% of cases accounted for 36.5% of the medical debt
Less than 10% of all cases represent 80% of all reported medical debt,
Cases Reporting Medical Debts (N = 2391):
Among the debtors reporting medical debt, the average medical debt was $4,978 per case.
78.4% reported medical debts below $5,000 (average of $ 1,212 for this group).
21.6% reported 80.9% of the total medical debt.
Medical debts accounted for 13.0% of the total general unsecured debt for those reporting medical debt.
