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Drop in bankruptcies may be due to broader health insurance

Recent statistics suggest that the Affordable Care Act, commonly known as "Obamacare," may have helped some families in Tennessee and across the country avoid bankruptcy.

Over the last six years, the country has seen about a 50 percent decline in the total number of personal and family bankruptcy filings. There are many reasons why this might be the case. Since 2005, tougher bankruptcy laws have been in place, making it more difficult to file for bankruptcy or less attractive to do so. Moreover, no one would argue that the economy has been improving of late, and people have been able to get back to normal after the so-called "Great Recession."

However, nearly every expert asked in one survey stated that medical expenses were a leading cause of bankruptcies, but seem to be playing lesser of a role in forcing families into financial crises. Medical bills had a tendency to surprise families since they were often unexpected, big bills that families simply could not plan for. Moreover, a serious medical condition is often accompanied by a job loss, which means a person has a huge bill to pay with no means to pay it.

With the Affordable Care Act, some families that formerly would have been stuck paying out-of-pocket got some relief. For example, the ACA prevented insurance companies from refusing to cover "pre-existing conditions" and also eliminated the practice of imposing limits on the amount of benefits insurance companies would be wiling to pay over the course of a year or a patient's lifetime.

Even if the Affordable Care Act has helped, it is still a sad truth that many hardworking Tennessee families wind up with serious financial problems after a big medical expense. These families should continue to consider bankruptcy an option.

Source: ABC 27 News, "Medical bankruptcies decline," July 21, 2017

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