At the Roots of the Financial Crisis: Insufficient Health Coverage

CNN has a Classroom Edition [1] teaching kids that, “Home loans gone bad are wrecking the U.S. economy.” Articles in The New York Times [2] proclaim that, “Housing is at the root of the financial crisis,” and Time magazine [3] declares “It’s the Housing Market, Stupid.”

And the crisis keeps mounting. The Associated Press [4] (AP) is reporting that “the number of homeowners ensnared in the foreclosure crisis grew by more than 70 percent in the third quarter of this year compared with the same period in 2007.” The AP article blames a “combination of sinking home values, tighter mortgage lending criteria and an economy that many economists think has already slipped into recession.”

Certainly unregulated predatory lending practices [5] have had a hand in the crisis as well.

But a Harvard study [6] “Get Sick, Get Out: The Medical Causes of Home Foreclosures,” published in Health Matrix this year found a major culprit in this crisis that has been ignored by media pundits and our political leaders. The study surveyed homeowners going through foreclosures in four states and found that half of all foreclosures have medical causes.

Christopher T. Robertson, the study’s lead author, estimates that “medical crises put 1.5 million Americans in jeopardy of losing their homes last year.” This conclusion comes from these findings:

• Half of all respondents (49%) indicated that their foreclosure was caused in part by a medical problem, including illness or injuries (32%), unmanageable medical bills (23%), lost work due to a medical problem (27%), or caring for sick family members (14%).
• Seven in ten respondents (69%) reported experiencing at least one of the following: paying more than $2,000 of medical bills out of pocket (37%); losing two or more weeks of work because of injury or illness (30%); being currently disabled and unable to work (8%); and using their home equity to pay medical bills (13%).

This is not the first study to link medical costs to economic troubles. A 2005 study [7] published in Health Affairs, “Illness And Injury As Contributors To Bankruptcy,” found that half of all bankruptcies in the United States are caused by medical bills. Even more surprising, the study discovered that three-fourths of those bankrupted had health insurance at the time they got sick or injured.

Clearly the mounting burden of high out-of-pocket medical costs cannot be ignored much longer. It is affecting millions of families across the country as well as the economy at large.

Contact your legislators today [8] and ask them which side they are on. Are they on the side that supports quality, affordable health care we call can count on? Or are they on the side that advocates leaving us alone to fend for ourselves in the complicated, unregulated health insurance market?