# Do 643,000 Americans go bankrupt every year due to medical bills?

I've been seeing a specific graphic circulating all over Instagram for the past few days. Here's Kim Kardashian posting it on her story.

Two things seem odd about this graphic. The first is the 643,000 figure. I know that the American Health Care System is dysfunctional, but that's pretty striking.

But more striking is the fact that all of these other countries supposedly have no one going bankrupt from medical bills. Are these claims true?

Using some very specific analyses, one could make the case that (at least within the last several years) about 643,000 Americans declared bankruptcy annually due to medical bills. But the accuracy of those analyses is open to question, the playing field has changed significantly since they were undertaken (due to the implementation of the ACA), and it’s far from an absolute that the other countries listed in the meme experience zero medical-related bankruptcies.

Also it is not necessarily true that there are zero bankruptcies due to medical costs in the other countries (though the US is definitely the leader). None of the countries cover 100% of all possible medical costs, and some people choose to do medical procedures that are not covered at their own expense.

• Comments are not for extended discussion; this conversation has been moved to chat. – Sklivvz Sep 6 at 18:25
• Snopes barely touched on a critical problem with the original study--what that number actually is is the number of bankruptcies that involve at least one reasonably recent medical bill. When you apply stricter standards as to what counts as a medical bankruptcy you get far lower numbers. – Loren Pechtel Sep 10 at 2:15

But more striking is the fact that all of these other countries supposedly have no one going bankrupt from medical bills. Are these claims true?

There's a claim on this site -- which, admittedly, does look kind of dodgy -- that medical expenses are the third leading cause for personal bankruptcy in Canada. I'm still trying to find a better source on this.

More (apparently) legitimately, Health issues and health care expenses in Canadian bankruptcies and insolvencies (Int J Health Serv. 2014;44(1):7-23) surveyed Canadian debtors and found, among other things,

6.9 percent had bills over $5,000 (all amounts in Canadian Dollars). Prescription drugs were cited as the costliest medical expense by two-thirds of debtors reporting bills >$5,000, with dental bills cited by 22.2 percent.

On the whole, it seems very likely that there is a greater-than-zero number of Canadians who "go bankrupt" due to, at least in part, medical bills.

• I can add anecdotal evidence to support the fact that > 0 people in Canada have gone bankrupt from medical bills (not me, but a friend). Normally, anecdotal evidence is pretty worthless, but this is a specific case where it actually means something. – Gryphon Sep 4 at 4:00
• @Gryphon We called it "proof by counterexample"; it works for all hypotheses that say "for every/no x holds y". – Alexander Sep 4 at 6:36
• Typically Canadian bankruptcy from medical expenses is because of treatment that the government system refuses to pay for, and usually this non-payment is well justified. Some people fly to Mexico for controversial untested treatments. Others buy drugs that will triple their chances of surviving another year, but that means three chances rather than one chance in a million. I recently spoke to a financial professional that told me about one of his clients. She spends \$10,000 per month for a single injection. She can afford it now, but if she's still alive in a few years, she'll be bankrupt. – Ray Butterworth Sep 4 at 13:07
• @RayButterworth No, typically Canadian bankruptcy from medical expenses is (as cited IN THE ANSWER RIGHT ABOVE) prescription drugs and dental bills -- like, 80%+ of the 7% of bankrupt people with significant medical debt. That doesn't leave much room for your "Typical" claim. – Yakk Sep 4 at 16:50
• Typically, I make up something and say that it is typical. Typically, this works. – barbecue Sep 4 at 20:53

But more striking is the fact that all of these other countries supposedly have no one going bankrupt from medical bills. Are these claims true?

## 0 is totally untrue for Germany.

I first must point out, that Germany doesn't have free health insurance in that sense. It has by law mandatory health insurance, i.e. everybody is forced to be insured. Nobody is allowed to opt out and be uninsured.

While salaried employees pay one half of the insurance cost by themselves (via direct deduction from their paycheck) and the other half is paid by their employer, those unemployed and on social benefits get it completely paid by the state.

That leaves self-employed people (of which there are about 4 million), who must completely pay by their own, but often can't afford this and are indebted. As of late 2018 there was a total debt of 8.21 billion € against the public insurers alone. Especially low paid solo self-employed (parcel couriers, those in the gig economy, etc.) are a problematic group here.

The situation is even worse in that if you actually go bankrupt (the term is "Privatinsolvenz", which is similar to filling for Chapter 7 in the US) you are not off the hook. Your health insurance provider will regularly argue that any debts against him are exempted of being discharged via the bankruptcy process and that those debts are only forgiven after 30 years. So for the affected people, bankruptcy might not even be a solution.

## What is the number for Germany then?

It seems like there are no statistics available that split out the number of bankruptcies by reason. Therefor I can only assure you that the number is >0 by pointing out that:

• As elaborated above, there is a lot of debt related to health insurance.
• I personally know people who filed for bankruptcy for this reason.
• If you google for "privatinsolvenz krankenkasse schulden" (bankruptcy + health insurance + debt) you find lots of pages of specialised lawyers, posts of public counseling services, etc. who are giving advice or are offering their services regarding filing for bankruptcy for those who are indebted to their health insurance.

(Sorry, all sources in German.)

• This is a good proof by counterexample. I also want to applude you, as a new contributor, for making sure to properly provide links to back up your claims – dsollen Sep 4 at 18:03
• Regarding no statistics being available: It might be impossible to objectively create a statistic for how often this happens. When someone goes bankrupt, then a 377.85 € fixcost per month can't possibly be the only reason they went bankrupt. They could just as well blame the cost of food, various forms of taxes, the high rents or whatever reason was responsible for their self-employment not working out the way they thought it would. It was a combination of several factors. Which straw exactly was it which broke the camel's back? Impossible to determine. – Philipp Sep 5 at 12:00
• @s1lv3r The causal link between healthcare cost and personal bankruptcy is a lot easier to make in the US where bankruptcies are often preceded by a sudden single large medical bill which exceeds the personal savings of the debtor. But health insurance costs in a mandatory insurance systems can not be isolated like that. – Philipp Sep 5 at 12:30
• @RedSonja hmmm ... not for everyone. Health care is a really complicated topic, which is why I opted to not try to describe the inner workings of the system in this post at all ... I personally think a fair way to sum it up would be as following: The current system provides a good safety net for the bulk of the population, but there are still cornercases, were people "fall through" that net. If you google for it, as of today there are around 80.000 citizens effectively without health insurance in Germany, albeit the lawmaker intended for this to be not possible. – s1lv3r Sep 5 at 15:43
• There is also private medical insurance in Germany. They (obviously) raise the monthly payments as insurance holders become older, there were cases reported when retired people could no longer afford it. It is hard to quit such an insurance and (also a contributing factor) it charges you a (in a short time frame) constant sum, regardless of your employment. So, basically, someone is having a good job, and pays for the private insurance, all well. Should they loose the job, they still need to pay the same amount for the insurance. There are some safeguards, but still. – Oleg Lobachev Sep 6 at 8:16

The "zero" part is exaggerated for greater effect. It's not accurate, and might even be considered a lie.

• People can always opt to pay for treatment their insurance does not cover.
• In some of these countries people still need to pay (a smaller amount) for medical treatment, and/or for insurance.
• In some of these countries, people still need to pay for medical expenses while abroad (sometimes only while in especially expensive countries).

A direct comparison is difficult because of the different meanings and requirements to qualify for bankruptcies in different countries. A further complication is provided by loss of income due to medical reasons, which makes it hard to properly classify the cause of a bankruptcy, and practically impossible to do so consistently across national borders.

Regarding the numbers for the US, I initially had multiple sources, but found this one summarizes them quite well:

A popular Facebook meme said that 643,000 Americans go bankrupt each year due to medical costs. [...] Consumer bankruptcies rose from 775,344 in 2007 to 1.5 million in 2010. By 2017, they'd fallen to 767,721. [...] a 2009 Harvard study [...] said 62.1 percent of all bankruptcies were because of medical bills. [...] In 2011, researchers [...] found that out-of-pocket medical costs caused 26 percent of bankruptcies. [...] In 2013 [...] researchers declared that 57.1 percent was more accurate. [...] In 2015, [researchers] found that medical bills made 1 million adults declare bankruptcy.

Who to Believe

Researchers disagree on how many medical bills cause bankruptcies. The biggest problem in answering the question is that those filing for bankruptcy aren't required to state the reason. As a result, estimates are based on surveys. The methodology differs from study to study. It depends on how the researchers and the survey respondents define medical debt.

Second, a variety of factors cause bankruptcies. Most people with medical debt have other debt. They may also have low income, little savings, and job losses. That makes it difficult to determine whether the bankruptcy was because of medical debt alone. source

So the 643,000 number is reasonably accurate, but people with strong political bias may be inclined to argue, as demonstrated by a rebutted Washington Post article.

The fact that 0 people in Italy went bankrupt because of healthcare bills could well be true (with caveats - see below).

In Italy healthcare is public and the "healthcare right" (loose translations of Italian "diritto alla salute") is written in one of the first article of the Italian constitution (Italian integral text from the website of the Italian Republic Senate.

Art.32

La Repubblica tutela la salute come fondamentale diritto dell'individuo e interesse della collettività, e garantisce cure gratuite agli indigenti. Nessuno può essere obbligato a un determinato trattamento sanitario se non per disposizione di legge. La legge non può in nessun caso violare i limiti imposti dal rispetto della persona umana.

Which roughly translates into English like this (translation is mine - don't expect legally accurate translation - IANAL):

32nd article

The [Italian] Republic protects the health as a fundamental right of an individual and [as a fundamental] interest of the community, and grants gratuitous healthcare to indigent people. No one can be forced to undergo a specific sanitary treatment if not prescribed by the law. In no case the law can violate the limits imposed by the respect of the human person.

Letting people go bankrupt because of medical bills needed not only to preserve their lives, but also to let him live a dignified life, would be against the very fundamental principles of our constitution.

People in Italy do have to contribute partially to their healthcare expenses, but only if their income is sufficiently high.

Poor people are exempted. And people with disabilities are exempted for all bills related to their disabilities.

Anyway, the system is fairly complicated and sometimes convoluted, in order to try to prevent abuse and fraud (which is not uncommon).

Healthcare is one of the biggest expense chapter of Italian national budget.

As for the significance of that "0" figure, that is somewhat fuzzy, because in Italy there is no concept of "bankruptcy" for a private person (it is a concept applicable only to companies). Therefore that 0 figure is not provable because there is no data about people "being bankrupt". There is no formal way for a person to apply for "bankruptcy", hence there is no formal certification that a specific person is "bankrupt", let alone the cause of it.

Of course there are statistics about poor people, but they are sample statistics usually. And then there are the data from the census that is held every 10 years, but there is no way to correlate the poverty of a person with the causes. So the initial comparison is somwehat moot.

On the other hand, if you mean that some people could lose a lot of money if they want non-strictly necessary health care, that surely happens in Italy too, especially if you want to get the services of private doctors. But if you spend so much money that you end up turning poor, then you will be automatically eligible for exemption from further expenses, although those expenses must be "authorized" by your "family doctor", which is mandatory to have and which is a public officer. Therefore he wouldn't "authorize", say, an plastic surgery to cope with bad physical appearance.

I said "authorize" in quote because the system is fairly convoluted (really it is a request for an authorization, that then goes to a public specialist doctor which can authorize the thing... ugh!).

The problem here is that there are regions where the public health care is not up to the standards prescribed by the law (according to the constitution). So, to avoid substandard health care, they are forced to travel to other regions to find the suitable public center that can provide the service.

The national health care system will cover the medical expenses, but usually not any relocation or travel expenses (it will if the life of the patient is at risk, but anyway the expenses for the relatives are not covered).

So, in the end, if you really mean that there are no people in Italy that lose everything because they have to cover "fundamental or critical healthcare" expenses, that's probably true.

There could well be people whose life has become quite miserable because they had to cope with the idiosyncrasies of our public health care system.

TL;DR

Bottom line:

1. In Italy there is no way to define "bankruptcy" in a clear way for a person, since the concept is not applicable. You can only determine if a person is poor, according to some statistical criteria for poverty. So the comparison with countries with a legally-defined "bankruptcy" criteria is somewhat improper.

2. The Italian constitution grants to every people the healthcare they need to live a dignified life. And that healthcare is gratuitous. Hence theoretically that 0 figure is a real possibility (although practically not provable).

3. As any human endeavor, the implementation of those principles in our constitution is imperfect, so it may be true that some people, due to health problems, have become broke. But, anyway, the Italian system is designed to prevent that.