Medically-related Personal Bankruptcy in the Medicare population

Jeffrey Jarvik, MD MPH, Radiology, Neurological Surgery and Health Services

Summary: Despite widespread access to Medicare and retirement benefits, a large number of the elderly perceive themselves to be financially at risk due to medical costs. Gaps in the Medicare program, such as lack of coverage for extended hospital stays, long-term care needs and, until recently, prescription drug costs may play a role in this financial hardship. Furthermore, since earnings from work account for an increasing proportion of elderly incomes, ill-health can also affect financial stability by curtailing work and reducing income. There are approximately 75,000 cases of elderly bankruptcy each year. In the period between 1991 and 2001, bankruptcy rates in the elderly rose by 200%, the fastest rate of increase of any age bracket. 47% of elderly debtors indicated injury or ill health as a major reason for bankruptcy, a much higher proportion than younger individuals. We propose a retrospective cohort study linking the Medicare denominator file and Part A claims data to bankruptcy databases to identify key demographics and socio-economic factors that put Medicare beneficiaries at risk of financial insolvency. The study will use these two databases to study medically-related bankruptcy. The study allows for the measurement of whether hospitalization of a Medicare beneficiary is associated with an increased risk of personal bankruptcy in subsequent years. In addition, the study will involve three specific sub-studies:

1. Estimate of the risk of bankruptcy in elderly and disabled Medicare beneficiaries between 1992 and 2006;
2. Determine whether there is an association between hospitalization and increased risk of bankruptcy in the Medicare population;
3. Identify the specific types of hospitalization that puts beneficiaries at highest risk of bankruptcy.

This project represents a unique opportunity to identify some of the key demographic and socio-economic factors that put some Medicare beneficiaries at high risk of financial insolvency and allow policy makers to have accurate information in the design of social safety nets to provide optimal protection for vulnerable populations.