[Congressional Record (Bound Edition), Volume 151 (2005), Part 8]
[Senate]
[Pages 11537-11538]
[From the U.S. Government Publishing Office, www.gpo.gov]




                         BANKRUPTCY LEGISLATION

  Mr. KENNEDY. Mr. President, during the floor debate on the recently 
passed bankruptcy bill, an important letter from a number of medical 
and law professors regarding the high number of debtors who are forced 
into bankruptcy due to the cost of health care was discussed on 
numerous occasions. The letter was addressed to Senator Grassley and 
points out a number of the professors' concerns with the findings of 
the U.S. Trustee Program related to medical debt.
  Since it is such a valuable document, it is important that this 
letter be printed in the Record so that all people have access to it. 
Mr. President, I ask unanimous consent that the letter be printed in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                February 14, 2005.
     Hon. Charles E. Grassley,
     U.S. Senate,
     Washington, DC.
       Dear Senator Grassley: Thank you for distributing a copy of 
     the letter from the Office of Legislative Affairs with the 
     summary sheet on the medical debt findings from the U.S. 
     Trustee Program. Because each of us has devoted some years of 
     scholarly research to the questions about families in 
     financial trouble because of medical debts, we have been 
     asked to review this letter. We know that you are deeply 
     concerned about the families who file for bankruptcy in the 
     aftermath of a serious medical problem, and we are glad to 
     help in any way we can. We are also very glad that you have 
     encouraged the U.S. Trustee Program to produce additional 
     data related to this issue. Like earlier studies that also 
     used petition and schedule data to explore the role of 
     medical debt in bankruptcy, these data provide further 
     evidence of the large number of families that are facing 
     financial collapse following a serious medical problem. 
     Because of limitations in the data used, however, these 
     findings also significantly underreport both the breadth and 
     impact of medical bankruptcies.
       The U.S. Trustee sample is limited only to Chapter 7 cases. 
     In part because of time lost from work due to illness, 
     accidents and layoffs, on average, these families have an 
     annual median income of about $19,000. This means that the 
     average medical debt identified by the U.S. Trustee (average 
     $5000 for those with medical debt) is quite substantial for 
     many families trying to cope with medical problems. Earlier 
     reports from the U.S. Trustee's Chapter 7 data and 
     independent studies are consistent with the finding that 
     debts owed directly to medical providers appear in a 
     significant portion of the sampled cases and that the amounts 
     can be quite substantial.
       As helpful as these data may be, however, we are reminded 
     that they document only a small portion of the financial 
     difficulties facing families in the aftermath of serious 
     medical problems. As early as 1991, researchers recognized 
     that they could not rely on petition and schedule listings to 
     determine the amount of medical debt families incurred. 
     Petition data, like the kind used by the Office of the U.S. 
     Trustee, exclude:
       Prescription medications, which are charged on credit cards
       Doctors visits, rehabilitation treatments, and other 
     services charged on credit cards
       Medical supplies, crutches; needles, and the like that are 
     charged on credit cards
       Hospital bills that are charged on credit cards
       Second mortgages that people have put on their homes to pay 
     off hospital bills and other medical expenses
       Cash advances, bank overdrafts and payday loans that people 
     have incurred to pay for medical services when they are 
     delivered or to pay off medical bills that are outstanding
       Third party specialty lenders that some hospitals now steer 
     their patients toward when those patients are unable to pay.
       In addition, in our extensive work with court records we 
     have observed that even very sophisticated debtors do not 
     always list the original creditor on an account. Studies are 
     finding high rates of debt collector usage among medical 
     providers, and some collectors may have received assignment 
     of the debt. The petition data, however, necessarily conceal:
       Medical debts assigned to collectors that may be listed 
     under the collectors' or the collecting attorneys' names, 
     which may bear no medical reference whatsoever.
       Medical debts for which the debtor has been sued and an 
     attorney is now attempting to collect, for which the debtor 
     lists the name of the attorney.
       The petition data also exclude other expenses that bear 
     down on the families, including:
       Medical expenses that families struggled to pay off, 
     bankrupting themselves in the process by getting behind in 
     mortgage, car payments, and other necessary expenses.
       Direct but non-medical expenses of illness or injury, suh 
     as the labor and material costs of building a ramp onto a 
     home to make it wheelchair accessible, or the travel costs 
     associated with transporting a critically ill child to a 
     specialty facility.
       Debts owed to providers that patients and their families 
     omit from schedules (and thus generally are not discharged) 
     out of fear of losing medical care.
       Lost income of a sick person (or a caregiver), which may be 
     a major factor in medical-related bankruptcy.
       Debts for Chapter 13 filers, who were omitted from the U.S. 
     Trustee report, but who also have reported a high rate of 
     medical-related bankruptcy.
       The petition data also omit data about some of the most 
     pressing questions in health care policy debates. Petition 
     data do not capture systematic information on insurance 
     status, which is relevant to understanding the range of 
     families at risk of health-related financial disaster 
     including but not limited to bankruptcy. Similarly, petition 
     data have no information on the diagnoses of the ill or 
     injured people and the types of care and drugs they need, all 
     of which are relevant to recognizing the magnitude of the 
     problem.
       Because the petition data provide so little information 
     about medical bankruptcy, experienced empirical researchers 
     in this field have come to realize surveying the debtors 
     themselves is crucial to getting accurate data. The 2001 
     Consumer Bankruptcy Project study is the most extensive study 
     to date on this issue. It used written questionnaires, court 
     filing data, and detailed follow-up telephone interviews, a 
     combination that offers a much richer understanding of how 
     medical problems affect family finances. The survey 
     instruments were designed to capture more accurately the 
     direct costs of care by asking questions about medical debts 
     within the prior two years of filing, or since illness onset, 
     rather than being focused exclusively on what bills are 
     identifiable as of the date of the bankruptcy petition.
       When Mr. Moschella listed all the factors considered in the 
     study recently reported in Health Affairs, describing it as 
     using ``very broad definitions'' to describe medical 
     bankruptcies, he did not make it clear that we reported the 
     range of results that reflected inclusion or exclusion of 
     various factors. He thus gave the impression we lumped them 
     all together as ``medical bankruptcies.'' In fact, to 
     accommodate the variety in the ways a ``medical bankruptcy'' 
     might be defined, the recent Health Affairs paper reports a 
     range from 46.2% to 54.5%--for the estimated percentage of 
     bankruptcy filers affected by medical problems based on the 
     2001 study. The calculations of those numbers are explained 
     in detail, and information is available to make other 
     combinations. As the data from additional rounds of follow-up 
     telephone interviews are analyzed, we will be able to offer 
     an even more in-depth picture of these families' financial 
     circumstances and the role of illness or injury.
       Again, we extend our thanks to you for encouraging the 
     development of additional data relevant to medical-related 
     bankruptcy. We are prepared to assist your office in any way 
     to evaluate these data or to consider policy changes to help 
     families that currently are devastated financially by serious 
     acute or chronic medical problems in their households.
           Yours truly,
       Dr. David Himmelstein, Associate Professor of Medicine, 
     Harvard Medical School.
       Dr. Teresa Sullivan, Professor of Sociology, The University 
     of Texas at Austin, and Executive Vice Chancellor for 
     Academic Affairs, The University of Texas System.
       Professor Elizabeth Warren, Leo Gottlieb Professor of Law, 
     Harvard Law School.
       Dr. Steffie Woolhandler, Associate Professor of Medicine, 
     Harvard Medical School.
       Professor Melissa Jacoby, Associate Professor of Law, 
     School of Law, University of North Carolina at Chapel Hill.
       Dr. Deborah Thorne, Assistant Professor of Sociology, Ohio 
     University.
       Professor Jay Lawrence Westbrook, Benno C. Schmidt Chair of 
     Business, University of Texas School of Law.

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