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Interruption in Health Insurance Can Double Risk of Bankruptcy Filing, According to Study - ABI

People are twice as likely to file for bankruptcy if their health insurance has been interrupted, according to a new study published this week, MarketWatch.com reported. In fact, all it takes is a coverage gap within two years for the chance of bankruptcy to jump twofold, according to the study published by the American Bankruptcy Institute. “Continuing health insurance matters,” said Prof. Michael Sousa, one of the authors and an associate professor at the University of Denver Sturm College of Law. Prof. Brooke Gotberg, the other author on the latest study, and an associate professor at the University of Missouri Law School, said that the study underscored the importance of health insurance. “There’s general consensus if somebody has a horrible, unforeseen unmitigated medical emergency, that’s shouldn’t destroy their lives.” The researchers analyzed Bureau of Labor Statistics data of more than 12,500 people. They found a “strong association” between coverage interruptions and consumer bankruptcies. That link held true even when controlling for variables like earnings and debt-to-income ratio. From 2008 to 2014, 454 people in that sample declared bankruptcy. Divorce, health problems and lower incomes were usually factors at play when someone experienced interrupted health coverage, the study said. Many insurance plans are connected to an individual’s employment or that of his/her spouse. Plus, a health limitation can create employment instability, it added.

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