Medical expenses contributed to half of all personal bankruptcies in the U.S. in 2001, even though most of those debtors had health insurance when their medical problems began, according to a report published Wednesday.

In a study of a nationally representative sample of bankruptcy filers, researchers at Harvard University found that illness and medical bills helped spur between 46 percent and 54 percent of bankruptcies. In more than three quarters of these cases, people had health insurance at the time they or a family member became sick ill or suffered an injury.

That so many of those bankrupted by illness were initially insured, usually by a private health plan, is “absolutely surprising,” study co-author Dr. Steffie Woolhandler told Reuters Health.

“I think we should be very concerned because it means that really nobody is safe,” said Woolhandler, an associate professor of medicine at Harvard. While talk of the gaps in the U.S. healthcare system typically focuses on the estimated 45 million Americans who lack insurance at any point in time, the new findings highlight the problems faced by those with insurance, according to Woolhandler.

One common scenario cited by the study was that people fell into debt because a major medical condition keep them from working and they lost their employer-sponsored health coverage. In other cases, people who maintained their health coverage could not afford the steep out-of-pocket expenses that mark many lower-cost health plans - in the form of high deductibles, co-payments for covered services and full payment of services the plan does not cover.

Unlike their counterparts in Canada and most Western European nations, most Americans rely on their employers for health insurance. Woolhandler and her colleagues say their findings argue for a system of national health insurance to protect people from losing their coverage when they can’t work, and from “skimpy” employer-sponsored insurance.

They report the findings in the online edition of the journal Health Affairs.

The results come from a survey of nearly 1,800 people who filed for bankruptcy in 2001, 931 of whom were then interviewed in greater detail. The researchers also used court records to back up the information survey respondents provided.

Roughly half of the survey respondents said medical expenses had contributed to their bankruptcies - which, translated to a national scale, indicates that about 2 million Americans were affected by “medical bankruptcy” in 2001, according to Woolhandler and her colleagues.

Of medical debtors who initially had private insurance, one third lost coverage during the course of their illness, the researchers found. Overall, privately insured patients had paid an average of $13,460 in medical expenses since the start of their illness.

According to Woolhandler, the findings point to a major breakdown of the U.S. healthcare system. She argued that some form of universal health coverage is needed to correct it.

Woolhandler is co-founder of Physicians for a National Health Program, a group that advocates a “single-payer system” in which government funds pay for healthcare but the actual delivery of medical care remains mostly in private hands.

Critics of such a system, including some medical groups and the insurance industry, have charged that it would lead to long waits for health services and less autonomy for doctors and patients. The Association of American Physicians and Surgeons has come out strongly against a single-payer system, likening it to a giant HMO without competition.

SOURCE: Health Affairs, February 2, 2005.