Researchers with Harvard Medical School studied the relationship between illness, injury and bankruptcy among more than 1,700 individuals who had filed for personal bankruptcy in federal court in five states in spring and summer 2001.

Key Findings and Policy Implications
Among the researchers' key findings from an article in the February 2005 issue of Health Affairs:

• Medical problems contributed to about half of all bankruptcies.
• A lapse in health insurance coverage during the two years before filing for bankruptcy was a strong predictor for a medical cause of bankruptcy.
• Medical bankruptcy is the result of uncovered bills as well as lost income due to illness.
• Nearly 52 percent of the medical problems involved ongoing chronic illnesses.

The article also laid out a set of policy implications, including:

• Even brief lapses in insurance coverage may be ruinous and should not be taken lightly.
• Many health insurance policies are too skimpy in the face of serious illness.
• Even good employment-based coverage sometimes fails to protect families because illness may lead to job loss and a subsequent loss of coverage.
• Illness often leads to financial catastrophe through loss of income, as well as high medical bills.

Funding
The Robert Wood Johnson Foundation (RWJF) provided $293,507 to support this unsolicited project from May 2001 through July 2003. The Cambridge Medical Care Foundation is a nonprofit entity that receives and distributes grant funds in support of research conducted by faculty affiliated with the Cambridge Health Alliance (which includes the Harvard-affiliated Cambridge Hospital). The principal investigators have appointments at both Harvard and the Cambridge Health Alliance.