Will the Affordable Care Act lead to fewer personal bankruptcy filings?
The number of Massachusetts residents who seek personal bankruptcy protection has dropped significantly, and that may be due the state’s 2005 law that made health insurance mandatory, Daniel Austin, a Northeastern University Law professor, told the Wall Street Journal’s Bankruptcy Beat blog.
After the recent U.S. Supreme Court finding that the Affordable Care Act allows subsidies for low-income people who purchase health insurance through federal exchanges, bankruptcy filings across the country may drop, according to the article. It notes that various studies show medical debt is a frequent reason many people seek bankruptcy protection.
Austin studied the debts of Massachusetts residents who filed for bankruptcy between 2005 and 2013, and found that most had approximately $3,000 in medical debt. Comparatively, according to his 2014 study, filers elsewhere had an average of $8,594 in medical debt.
Also, the study found that between 3 and 9 percent of Massachusetts personal bankruptcies were filed because of medical debt. Comparatively, between 18 and 25 percent of all U.S. bankruptcies were filed because of medical debt. The primary reason Massachusetts residents sought bankruptcy protection was for job loss, according to the article.
Austin’s study took data from 5,400 bankruptcy cases. He also relied on approximately 380 survey responses from lawyers and people who were granted bankruptcy protection.