Medical debt is one of the leading causes of bankruptcy. This has been the case for many years, and it includes both people with insurance and without. Is it likely to change with the implementation of the federal Affordable Care Act (ACA)?
The ACA, otherwise known as Obamacare after the president who pushed for it, contains a new mandate for everyone to buy health insurance or face financial penalties. The law also contains numerous tax incentives and consequences regarding health insurance through employers.
In about two weeks, on October 1, the state-level “exchanges” where people can purchase health insurance under the ACA are due to begin enrolling members. In this post, let’s look at what this may look like in Texas – and how it could affect bankruptcy filings.
Texas is the state with the highest rate of people without health insurance in the country. That comes to about 6 million people. Many of those people still lack basic information about what the new health insurance exchange is supposed to do.
There is also considerable political resistance to the ACA, even though its key provisions were upheld last year on the U.S. Supreme Court. State government has not stepped forward to operate the insurance exchange in Texas. The federal government will play that role instead.
U.S. Senator Ted Cruz still has designs on somehow convincing Congress to defund the ACA. But even with the law on the books, many Texans do not know enough about it yet to be confident in selecting the right insurance option on the new exchange.
In terms of protecting themselves against catastrophic medical bills in the future, however, it makes sense for people without insurance to consider their options on the new exchange.
And for those who are already facing such bills, it makes sense to consider bankruptcy as a meaningful form of debt relief.
Source: Bloomberg, “Texans in Dark on Obamacare as Enrollment Startup Looms,” Alex Wayne, September 12, 2013