How Obamacare Helped Slash Personal Bankruptcy by 50%

Time.com ^ | May 4, 2017 | Allen St. John

[lowbridge]

Filings have dropped about 50%, from 1,536,799 in 2010 to 770,846 in 2016 (see chart, below). Those years also represent the time frame when the ACA took effect. Although courts never ask people to declare why they’re filing, many bankruptcy and legal experts agree that medical bills had been a leading cause of personal bankruptcy before public healthcare coverage expanded under the ACA. Unlike other causes of debt, medical bills are often unexpected, involuntary, and large.

-snip

So did the rise of the ACA—which helped some 20 million more Americans get health insurance—cause the decline in bankruptcies?

The many experts we interviewed also pointed to two other contributing factors: an improving economy and changes to bankruptcy laws in 2005 that made it more difficult and costly to file. However, they almost all agreed that expanded health coverage played a major role in the marked, recent decline.

Some of the most important financial protections of the ACA apply to all consumers, whether they get their coverage through ACA exchanges or the private insurance marketplace. These provisions include mandated coverage for pre-existing conditions and, on most covered benefits, an end to annual and lifetime coverage caps. Aspects of the law, including provisions for young people to be covered by a family policy until age 26, went into effect in 2010 and 2011, before the full rollout of the ACA in 2014.

[Vendome]

Zactly.

Any effects from ObamaCare didn’t start happening until 2014.

That is how the law was written so, this fanboy fiction is just anothed propoganda piece for their savior...

[mfish13]

Bankruptcies were due the the Clinton law basically putting the CRA on steroids. Janet Reno went around telling every bank to loan to anyone who wanted a house, whether they had a job, or whether they could afford the payments. It took a while but finally there was a down turn in the economy and bankruptcies soared. Poor George Bush, who was not at fault, was blamed and blamed by the press. Clinton got away with that one. Just like Hillary was to skate breaking the law with her email server later on.

[wjcsux]

A friend of mine is self-employed and does pretty well. His Zerocare costs for him and his family are exactly what you quoted. Prior to Zerocare, he had a catastrophic care policy that cost $250.00 per month and he paid for routine care out of his pocket as it should be.

[SoFloFreeper]

Oh yeah what a BOON the Death Panels are!

[Eagles6]

And that was years old.

[Fightin Whitey]

Yeah, of course, it transferred the deficit spending to the Feds (taxpayers)...duh, Time!

to the Feds and the insurance companies, to cover all the deadbeats.

We (two of us, no kids) now pay $13K for coverage, with a $2500 deductible for EACH of us...in other words $15K+ for catastrophic...total crap.

[irish guard]

What a steaming pile of horse pi$$. They picked 2010, just two years after the crash, when all the mortgage failures and installment car loans had defaulted and people were hitting the easy button to get out of their personal financial hell and then had the ball$ to point out that personal bankruptcy improved because of a different cause? Total garbage.

[Moonman62]

Filings have dropped about 50%, from 1,536,799 in 2010 to 770,846 in 2016 (see chart, below). Those years also represent the time frame when the ACA took effect.

...

Correlation isn’t causation. The economy and the real estate market were bad in 2009-2010.

I have seen recently that bad debts at hospitals are way up because so many people can’t pay their Obamacare deductibles.

[Boomer One]

Try low interest rates, easier credit, government subsidies/handouts, and forgiving banks afraid of lawsuits.

[jimfree]

Perhaps also some settling out of the bankruptcies caused by the subprime crisis.

[Pollster1]

http://www.dictionary.com/browse/post-hoc—ergo-propter-hoc

post hoc, ergo propter hoc
Latin. after this, therefore because of it: a formula designating an error in logic that accepts as a cause something that merely occurred earlier in time.

This is a classic error in logic several thousand years old. It’s not a surprise though. Carrie Fisher died, and now this error is common.

[joshua c]

This is cherry picking. Why did they pick 2010 as the comparative year?

And what happened right before 2010?

Something to do with mortgages that might have contributed to the spike.

[DoodleBob]

Post hoc, ergo propter hoc indeed.

What is needed in this analysis is a control group. Luckily (or unluckily for the citizenry of the Bay State), we have such a beast: the great state of Romneycare.

First, look at this graph:

Clearly, Mass. personal bankruptcies (Chapter 13) started falling after 2010. So did that for the US as a whole per Time. However, on a percentage basis, over the two-year time series presented, the eyeballed 20%+ decline in bankruptcies is in line with what you see in Time's chart. That is, personal bankruptcies in Mass, where they have Romneycare, fell in line with the US as a whole. Thus, it's hard to argue that that two year decline came from Obamacare.

Let's go a little further. Based on this study, the Mass avg decline in personal bankruptcies during the 2012-2014 period was greater than that for the nation as a whole. If Obamacare REALLY was helpful, I would expect a greater fall in bankruptcies nationally vs just in Mass.

But the REALLY BIG NEWS has been out there for a while. This issue of The American Journal of Medecine features an article entitled "Medical Bankruptcy in Massachusetts: Has Health Reform Made a Difference?" In short, NO. "Massachusetts' health reform has not decreased the number of medical bankruptcies, although the medical bankruptcy rate in the state was lower than the national rate both before and after the reform."

Finally, let's assume that Obamacare actually DID lessen the blow of medical costs such that people who would have had to file for medical cost-induced bankruptcy declined. In economics, we call this a transfer of wealth, and it would stand to reason that other consumers, at the margin, could have been pushed into bankruptcy due to tax increases or other negative Obamacare-related externalities.

Should we, as a society, be happy that Leviathan lifted some people out of the jaws of bankruptcy, only to drive others into bankruptcy due to Obamacare taxes etc? THAT is the argument that should be pushed into the faces of the people at Time.

[CincyRichieRich]

It also kept silverback gorillas out of every American’s backyard...did anyone hear of any such incident during Obamacare?

[NativeSon]

Well done and true. The first and foremost issue is the unConstitutional action by the gubmint. Then the continuing damage that Zerocare has done to the entire medical industry and to individuals.

If allowed to continue, not grow/expand/metastasize, the current gov involvement & actions will cause the decline of nearly all (worldwide) bio-pharmaceutical development.

[LS]

Thanks for this. I was at a loss as to how to respond. Never even thought of MA.

[Vendome]

Great analysis

[Kickass Conservative]

Obamacare has cost me about $30,000 so far and continues to cost an additional $1,000 a Month as far as the eye can see.

Maybe I should file for Bankruptcy. Oh that’s right, I worked and sacrificed my entire working career so Obamacare can take away the money I scrimped and saved for my old age.

No Bankruptcy for you... The Obamacare Nazi.

[Republican Wildcat]

Oh how ridiculous. Articles had been written about how the law had INCREASED the number of healthcare related bankruptcies because of the skyrocketing deductibles making it to where people who could afford healthcare before no longer could because their insurance covered virtually nothing. Now that efforts have been made to reverse the law that caused that, suddenly we get articles claiming the opposite effect.

[Republican Wildcat]

Right. This article is flat out lying - especially given there were reports of bankruptcies related to healthcare increasing due to the skyrocketing deductibles caused by Obamacare.