Safeguarding American Patients: A National Regression Analysis and State-Focused Case Study of Health Insurance Coverage and Medical Bankruptcy

Abstract

Over time, have medical bankruptcies been more common in states where the uninsured rate is higher? While seemingly an intuitive “yes”, the answer to this question is decidedly more complicated.

Regulatory and market pressures to constrain growing premium costs are transforming health insurance plans, yielding a system that increasingly places cost-sharing responsibilities on patients when they access needed medical care. Out-of-pocket expenses for insured patients are on the rise as a result. Moreover, prior studies have estimated that up to three-quarters of medical bankruptcy filers had health insurance. Policymakers at both the state and federal levels who support coverage expansion, however, base their belief on the notion that not having insurance leaves American households one illness away from bankruptcy.

This thesis evaluates how health insurance affects personal financial outcomes, as measured by medical bankruptcy. To do so, it employs a mixed-methods approach. First, it examines the history of health reform and personal bankruptcy in the United States, with attention to the successes and shortcomings of the Patient Protection and Affordable Care Act of 2010 (ACA). Next, this thesis uses a fixed-effects regression model to quantify the relationship between state-level uninsured rates and population-adjusted medical bankruptcy filings, with data from 2006 through 2015 to cover the years before and after the ACA’s enactment. Then, it analyzes the Chapter 58 reform bill in Massachusetts as a case study of coverage expansion decoupled from medical bankruptcy decline.

The statistical model shows that, after accounting for potentially confounding economic characteristics including unemployment, consumer spending, and median household income, a 1% increase in the uninsured rate corresponds with a 0.17% increase in population-adjusted medical bankruptcy (p = 1.79 x 10-4). The qualitative case study on Chapter 58, however, reveals that strong consumer protections are necessary on top of coverage expansion to insulate household budgets from financial catastrophe. Despite halving the uninsured rate after 2006, pre-ACA Massachusetts lacked a ban on lifetime limits to reduce out-of- pocket expenses for patients with expensive diseases, contributing to the state’s persistent medical bankruptcy until the national reform included such a prohibition.

The thesis concludes with policy reflections, offering and analyzing proposals such as advanceable tax credits and disclosure requirements to address high- deductible health plans and “surprise” out-of-network medical bills. Finally, using the insights gleaned from the preceding analysis, it remarks on recent legislative proposals to remake American healthcare