Medicare aimed to improve access to medical care and to reduce out-of-pocket costs for individuals over the age of 65, many of whom had low income, high medical expenses, and no health insurance. On July 1, 1966, all 19 million Americans aged 65 years and older became eligible for Medicare. Within a year after the rapid implementation of Medicare, the personal bankruptcy rate began a gradual decline that lasted until 1974. The objective of this project is to determine the extent to which the implementation of Medicare contributed to the decline in the bankruptcy rate by reducing medical debt. To augment publicly available aggregate data, this dissertation will use newly collected data from original bankruptcy court case files from the 1960s and 1970s.
Because out-of-pocket medical expenses have risen more than 73% since 1996, medical debt and medical bankruptcy have become important areas of research. Medical debt has been shown to be one of the leading reasons that individuals file for personal bankruptcy; however, estimates of the fraction of bankruptcies that are due to medical debt range from 17% to 62.1%. The estimates are imprecise in part because today much medical debt is subsumed in credit card debt. Because credit cards were not widely used in the 1960s, the new data from court case files will allow a more accurate view of the medical debt of petitioners for bankruptcy.
Bankruptcy can be considered a form of insurance. It transfers risk of loss from the debtors to the creditors in exchange for higher interest rates. Though it is occasionally noted that both bankruptcy and Medicare are forms of insurance that protect people from loss due to medical debt, no study has looked at the impact one has on the other. Understanding how health insurance can affect bankruptcy is critical to designing a package of policies that reduces economic vulnerability.
Specifically, this project examines how the implementation of the first public health insurance program in the United States decreased medical debt under bankruptcy by examining three different aspects of bankruptcy: - State bankruptcy rates, - medical debt among petitioners for bankruptcy, and - the demographic characteristics of petitioners. The results will show whether Medicare effectively reduced the burden of medical debt on those over 65. Moreover, the results will increase understanding of the mechanisms through which public health insurance can affect medical debt among the population of people who file for bankruptcy. Therefore, it will inform future work on how health insurance more generally affects medical debt.
Understanding how health insurance can affect medical debt under bankruptcy is critical to the analysis of the benefits of public health insurance and to designing policy that may lower personal bankruptcy rates. Understanding how the implementation of Medicare affected medical debt is critical to designing policy such that individuals do not have to declare bankruptcy as a result of illness or injury. In order to make informed decisions about the future of the Medicare program, policy makers need to understand Medicare's past benefits, including whom it helped.
Medicare aimed to improve access to medical care and to reduce out-of-pocket costs for individuals over the age of 65, many of whom had low income, high medical expenses, and no health insurance. On July 1, 1966, all 19 million Americans aged 65 years and older became eligible for Medicare. Within a year after the rapid implementation of Medicare, the personal bankruptcy rate began a gradual decline that lasted until 1974. The objective of this project is to determine the extent to which the implementation of Medicare contributed to the decline in the bankruptcy rate by reducing medical debt. To augment publicly available aggregate data, this dissertation used new data collected from original bankruptcy court case files from the 1960s and 1970s. Specifically, this project examines how the implementation of the first public health insurance program in the United States decreased medical debt under bankruptcy by examining three different aspects of bankruptcy: state bankruptcy rates, medical debt among petitioners for bankruptcy, and the demographic characteristics of petitioners. The results will show whether Medicare effectively reduced the burden of medical debt on those over 65. Moreover, the results will increase understanding of the mechanisms through which public health insurance can affect medical debt among the population of people who file for bankruptcy. Therefore, it will inform future work on how health insurance more generally affects medical debt. Initial results show that Medicare contributed to the decrease in personal bankruptcies. States with the highest proportion of individuals over 65 had lower bankruptcy rates after implementation than states with the lowest proportion of individuals over 65. Additionally, there was a larger drop in the bankruptcy rate for the states with the highest proportion of individuals over 65. The implementation of Medicare reduced the age of petitioners, suggesting that the implementation of Medicare kept individuals over 65 out of bankruptcy court. Furthermore, the results imply that Medicare had its strongest effect on access to health care. Medicare-eligible bankrupts filing immediately after the introduction of Medicare had fewer medical debts because they were less likely to have received care. Medical-eligible filers who came to court three or more years after the implementation of Medicare had more medical debts because they were more likely to have sought and received care. Understanding how health insurance can affect medical debt under bankruptcy is critical to understanding the benefits of public health insurance and to designing policy that may lower personal bankruptcy rates. Understanding how the implementation of Medicare affected medical debt is critical to designing policy such that individuals do not have to declare bankruptcy as a result of illness or injury. In order to make informed decisions about the future of the Medicare program, policy makers need to understand Medicare’s past benefits, including whom it helped.
