Filings have dropped about 50 percent, 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.
“If you’re uninsured or underinsured, you can run up a huge debt in a short period of time,” says Lois Lupica, a bankruptcy expert and Maine Law Foundation Professor of Law at the University of Maine School of Law.
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 private insurance plans. These provisions include mandated coverage for pre-existing conditions and, on most covered benefits, an end to annual and lifetime coverage caps. Those aspects of the law, as well as 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.
“It’s absolutely remarkable,” says Jim Molleur, a Maine-based bankruptcy attorney with 20 years of experience. “We’re not getting people with big medical bills, chronically sick people who would hit those lifetime caps or be denied because of pre-existing conditions. They seemed to disappear almost overnight once ACA kicked in.”
The first attempt to repeal and replace the ACA, in March, failed to gain enough Congressional support and never came to a vote.
Then in April, details of a new replacement plan were released. Although President Donald Trump has said that this new version, like the first bill that was pulled from consideration, will cover pre-existing conditions, the revised law gives states broad latitude to allow insurance companies to increase rates for consumers with an existing illness.
A Rare and Costly Diagnosis
Since the start of the year, more than 2,000 consumers have answered an online questionnaire from Consumer Reports’ advocacy and mobilization team, sharing their experiences with the ACA. Katie Weber of Seattle was one of them...
THE COMPLETE STORY IS AVAILABLE: www.CR.org