Friday, August 29, 2008

Medical Bankruptcy (Revisited)

Many people are struggling to pay their bills, including health care bills. They rock along living paycheck to paycheck and then sudden illness or an accident happens.

We have looked at medical bankruptcy before, here and here, but perhaps it is time to revisit.

An article from CNN lists the 5 mistakes you make that can land you in debt. Good information, but it comes up short.

The lead in is a wake up call to most people.

It took the Trim family of Arlington, Texas, three hours to go $15,000 into debt.

That's some shopping spree.

How did they rack up that much debt?

That didn't even count bills from the doctors and the ambulance service. Plus, Trim, who has insurance, owed more than $1,100 in copayments from when he'd had kidney stones earlier in the year.

Which leads us to the question of the hour. Did he have insurance?

His son did not have insurance. Trim said it was "very expensive" to add him to his own policy at the private school where he's an IT director. His wife, Gayle, had just started a job as an executive assistant at a commercial real estate company and wasn't yet eligible for insurance.

While much is made about those who lack health insurance, this story has a mixed message.

In addition to the $15k trip to the ER the Trimm's had $1,100 in unpaid COPAYMENTS from earlier in the year when they (presumably) had health insurance.

For some at least the issue is not having health insurance or not, it is a problem of living paycheck to paycheck.

Four-in-ten workers (41 percent) say they often or always live paycheck to paycheck, according to's latest survey.

Failing to plan for events such as the car breaking down, a major appliance that gives up the ghost, or a medical emergency.

Because workers' paychecks are often spent before they even hit the bank, saving is often not an option. One-in-five said they don't set aside any money for savings each month. Twenty-eight percent save $100 or less per month and 16 percent save less than $50.

According to Znet, 77% of households have cable, satellite or both.

And there is credit card debt.

According to Cardweb, 61% of consumers carry over debt from one month to the next, 31% pay their cards off each month and 7% of households don't have a credit card. The average balance of those who carry a balance is $9,900.

Maybe the problem isn't so much who has health insurance and who doesn't, but who is doing a better job of managing their income.

But the American public isn't the only one who can't manage money.

During each of the last 5 years Congress has spent in excess of $500,000,000 MORE than it took in. The total debt owed by government agencies exceeds $9.3 TRILLION.

It get's worse.

According to USA Today US household's share of the national debt is a staggering $516,348!

Modern accounting requires that corporations, state governments and local governments count expenses immediately when a transaction occurs, even if the payment will be made later.

The federal government does not follow the rule, so promises for Social Security and Medicare don't show up when the government reports its financial condition.

We are a nation of glutton's and suffering from financial obesity. The issue of unpaid medical bills is only the tip of the iceberg.

On top of all this we are in an election year and politician's, including those running for Congress, are promising more and more while they can't cover their existing debts.

This is a train wreck.
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