Why not a medical bankruptcy provision in health care reform?

Grant Ellis
One problem yet to be addressed by any healthcare proposal is that of family financial ruin over illness. Given Obama's notion that "No one in America should go broke because they get sick," you'd think this would be a prime component of his plan. Instead, it's a problem ignored.I suggest a Medical Bankruptcy provision be included in any plan that makes it to the President's desk. In spite of my severe distaste for more federal meddling in health care, this may be a justifiable intrusion given that it would parallel existing federal bankruptcy law.

The idea here would be to secure a channel through which families would receive unique support via new federal bankruptcy law. In the absence of deep research, I'm going to speculate that a small one-size-fits-all rider attached to every medical insurance policy written in America could be used to fund the entire program, a program that would include low-cost loans and, in severe cases, debt "forgiveness" absent the stigma or credit damage that results from ordinary bankruptcy.

Administered by a Court Master, qualifying persons would prevail upon the court for an injunction that would essentially call a "time out" between debtor, creditor and health insurance company. That "time out" would give the Master the working room needed to assess the financial landscape. Upon assessment, the Master would then broker a final binding deal with the express intent of keeping all vested parties whole or nearly so. Note that any "award" would be structured to the pre-illness financial condition of the debtor to ensure that any/all rendered assistance would be based solely on medical-based merit.

Are there downsides to this proposal? Sure: prospects for fraud and abuse to name two. Still, if Medical Bankruptcy is the problem it's purported to be, a direct "fix" seems appropriate, even in the absence of a larger health care bill. On the other hand, if Medical Bankruptcy isn't the problem it's purported to be, the "fix" should be entirely manageable. Either way, we'll finally put an end to the debate regarding the number of bankruptcies that are directly attributable to medical costs.


One problem yet to be addressed by any healthcare proposal is that of family financial ruin over illness. Given Obama's notion that "No one in America should go broke because they get sick," you'd think this would be a prime component of his plan. Instead, it's a problem ignored.

I suggest a Medical Bankruptcy provision be included in any plan that makes it to the President's desk. In spite of my severe distaste for more federal meddling in health care, this may be a justifiable intrusion given that it would parallel existing federal bankruptcy law.

The idea here would be to secure a channel through which families would receive unique support via new federal bankruptcy law. In the absence of deep research, I'm going to speculate that a small one-size-fits-all rider attached to every medical insurance policy written in America could be used to fund the entire program, a program that would include low-cost loans and, in severe cases, debt "forgiveness" absent the stigma or credit damage that results from ordinary bankruptcy.

Administered by a Court Master, qualifying persons would prevail upon the court for an injunction that would essentially call a "time out" between debtor, creditor and health insurance company. That "time out" would give the Master the working room needed to assess the financial landscape. Upon assessment, the Master would then broker a final binding deal with the express intent of keeping all vested parties whole or nearly so. Note that any "award" would be structured to the pre-illness financial condition of the debtor to ensure that any/all rendered assistance would be based solely on medical-based merit.

Are there downsides to this proposal? Sure: prospects for fraud and abuse to name two. Still, if Medical Bankruptcy is the problem it's purported to be, a direct "fix" seems appropriate, even in the absence of a larger health care bill. On the other hand, if Medical Bankruptcy isn't the problem it's purported to be, the "fix" should be entirely manageable. Either way, we'll finally put an end to the debate regarding the number of bankruptcies that are directly attributable to medical costs.