Friday, June 05, 2009

Diabetes & Bankruptcy: Average Diabetes Expenses Among Bankruptcy Filers is Second Highest Out-of-Pocket Expense Category at $26,971

My career in involves a lot of time doing research online looking for statistics, etc., so I spend a lot of time on the Internet. My own day-to-day diabetes care is a factor more often than I would like it to be, but that's just the way things are. But beyond my own daily care, it is not all the time that my research for work overlaps directly with diabetes. This is one such time.

As someone who works as a consultant for the consumer finance industry (primarily banks, but I've done work for a range of other companies such as Sony, Disney, etc.) and it's long been a been common knowledge that medical bills have long been a major factor behind consumer bankruptcies. That part is not really news, even if it doesn't get mentioned nearly as often as it needs to in the debate over healthcare reform in the United States.

One observation I've seen in spite of a major reform to bankruptcy law back in late 2005 (which banks lobbied legislators for years to put into law -- the idea behind that was supposed to be that by implementing means test to bankruptcy law, the bankruptcy courts could theoretically push more consumers into chapter 13 which obligates some repayment of debts rather than into chapter 7, in which consumers' debts are totally absolved). However, since that reform occurred, we've seen a steady increase in bankruptcies (albeit at a slower pace), and surprisingly, more have been chapter 7 filings, which was not expected by the banking industry. However, I had long suspected that healthcare expenses played a role in that, too. Hospital bills add up very quickly.

I'd pretty much assumed that catastrophic illnesses like cancer, heart attacks, and stroke were a major factor behind these filings because these things tend to happen suddenly and people are often in recovery for quite a while.

But a recent study published online in The American Journal of Medicine with data compiled by researchers at Harvard Law School, Harvard Medical School and Ohio University revealed that even among people with insurance, many are still left with medical bills that drive them into bankruptcy. The latest statistics show that in 2007, medical bills contributed to 62.1% of all bankruptcies. Between 2001 and 2007, the proportion of all bankruptcies attributable to medical problems rose by about 50%.

Contrary to my assumptions, chronic illnesses dominate the top 2 catagories, and to my surprise (and dismay), diabetes ranks second, following only nonstroke neurologic problems (i.e., multiple sclerosis). But the study also indicates that the health problems that left patients with the highest out-of-pocket medical expenses weren't dominated by catastrophic illnesses. The article reports that among common diagnoses, the health problems that left patients with the highest out-of-pocket expenses were ranked as follows:

#1) Neurologic (e.g., multiple sclerosis): $34,167
#2) Diabetes: $26,971
#3) Injuries: 25,096
#4) Stroke: $23,380
#5) Mental illnesses: $23,178
#6) Heart disease: $21,955

Also, it is important to keep in mind that among the other categories, diabetes is a leading contributor to the stroke and heart disease categories. These are some pretty astonishing figures!

Another interesting observation: hospital bills are, not surprisingly, the largest single out-of-pocket expense for 48.0% of patients who file for bankruptcy, but the second-largest category isn't doctor's bills, its for prescription drugs for 18.6%. Doctors' bills isn't far behind, accounting for 15.1%, and premiums accounting for 4.1%. The remainder cited expenses such as medical equipment and nursing homes.

As a person with type 1 diabetes myself, I must admit that while this disease is anything but cheap, even I was a bit surprised by some of these findings, especially considering that in February 2009, the American Diabetes Association and others were citing studies which showed many Americans with diabetes were skipping certain medical treatments, drugs etc. due to the cost.

Anyway, these statistics suggest that diabetes is contributing to many U.S. bankruptcy filings, and we can now quantify the out-of-pocket expenses among filers, too. The diabetes community should be citing these figures when we speak to our legislators on our support for healthcare reform. We now have hard data to back us up!


Scott K. Johnson said...

Wow! That is some very interesting stuff Scott! I too am surprised that the chronic stuff outranks the big cancers, etc.

Kevin said...

Not to say that annual expenditures on health care expenditures for diabetics aren't high, but these are not data you'd want to hold up to prove any point with.

I'm surprised your copious internet time didn't uncover
this scathing (and widely cited) critique of the paper.
(There are several follow-up posts related to this story that are worth reading, too).

Scott S said...

Kevin, I think it really depends on what we wish to prove! While the Atlantic's paper raises some legitimate criticisms of the methodology, when it comes to statistics: they can be manipulated to show whatever you'd like!

However, Congressmen/women find personal stories the most compelling, so I see no problem in using these statistics to encourage Congress to move on healthcare reforms -- Congress has not done a damn thing except TALK about reform since 1993, so they've had 16 years and the time for talking about doing something has long since past!!