Wrong Way to Ease Medical Debts
Aparna Mathur, a resident scholar with the conservative American Enterprise Institute, testifying about a bill to amend federal bankruptcy law to allow people with medical debt to exempt as much as $250,000 of their home or burial plot’s value from the estate in bankruptcy:
By allowing debtors to file as medical debtors irrespective of whether medical debts are actually driving the household to bankruptcy…the Medical Bankruptcy Fairness Act would essentially be providing relief from credit card debt rather than medical debts.
I agree with Mathur.
I also agree with Mathur, but you have to remember that most hospital charges are phoney numbers. Were I a judge I wouldn’t make anyone paying his own bills pay more than the lowest price charged any payer.
The definition of medical debt is not addressed in the linked testimony. The last time I saw a formal definition of “medical debt” it included any expense related to birth, death, drug or alcohol addition, uncontrolled gambling, loss of at least 2 weeks of work-related income due to illness or injury by anyone in the household, out-of-pocket medical bills of $1,000 in the two years before filing by anyone in the household, and mortgaging a home to pay medical bills.
With criteria like this, the question is whether there are any households that wouldn’t qualify as medical debtors?
I too agree. People that are facing bankruptcy now have an incentive to go out and run up a few medical bills to qualify under the “medical debt” category.
The political need here is to ramp up the proportion of bankruptcies that are “medical” because the “research” that is cited in favor of a tsunami of medical bankruptcies is bunkum (http://tinyurl.com/n4j545). In other words, the purpose of the bill is not to protect the medically bankrupt (whatever that means) but to create more medical bankrupts.
A few moments of reflection results in a number of unintended (well, perhaps not “unintended” so much as “unadvertised”). To wit:
People entering financial distress incurring medical debt notwithstanding their medical needs (as Virginia suggests).
People with medical debt buying houses bigger than people without medical debt.
People with medical debt leveraging their houses more than people without medical debt.
People who have cash to pay medical bills incurring medical debt instead.
A sub-industry of financial planners designing strategies to maximize these outcomes and others which I haven’t thought of yet!