Managing Medical Bills on the Brink of Bankruptcy

60 Pages Posted: 26 Jun 2009 Last revised: 29 Sep 2010

See all articles by Melissa B. Jacoby

Melissa B. Jacoby

University of North Carolina School of Law

Mirya R. Holman

Tulane University - Department of Political Science

Date Written: May 11, 2010


The Patient Protection and Affordable Care Act of 2010 aims to expand coverage for the uninsured and regulate out-of-pocket expenses to some extent. Yet, this new law does not change the assumption that patients often will owe some money directly to medical providers. Health care practice management experts frequently advise providers on how to encourage patients to pay these amounts early. Yet, there has been virtually no systematic study of how financially-strapped families manage out-of-pocket medical expenses of various sizes, and the implications of those choices for their medical providers.

This article offers one of the first examinations of this issue using a nationally representative dataset of personal bankruptcy filers. We find that financially distressed families significantly reduce their liability to medical providers before filing for bankruptcy. Credit cards and home equity lines of credit play an important role in shielding providers from the full consequences of being creditors in bankruptcy. We also find different patterns of medical bill management based on demographic characteristics such as homeownership, racial identity, and age.

Our findings have implications for health policy as well as for bankruptcy policy. But they also have methodological consequences for measuring medical burden: one cannot measure how medical bills contribute to financial distress by looking only at bankruptcy court records because they do not produce an accurate count of medical debt. Yet, this is something that government representatives and private scholars repeatedly attempt to do in discussions of bankruptcy and health care reform.

Keywords: bankruptcy, health care, medical care, medical practice management, reluctant creditors, consumer law, credit cards, home equity loans, chapter 7, chapter 13

JEL Classification: D18,I11,I18,J15, J16, K32

Suggested Citation

Jacoby, Melissa B. and Holman, Mirya R., Managing Medical Bills on the Brink of Bankruptcy (May 11, 2010). Yale Journal of Health Policy, Law, and Ethics, Vol. 10, No, 2, p. 239, 2010, UNC Legal Studies Research Paper No. 1425814, Available at SSRN:

Melissa B. Jacoby (Contact Author)

University of North Carolina School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States

Mirya R. Holman

Tulane University - Department of Political Science ( email )

Tulane University
316 Norman Mayer Building
New Orleans, LA 70118
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
PlumX Metrics