Bankruptcy Rate Doubles With Cancer Diagnosis

Nick Mulcahy

May 15, 2013

Adults diagnosed with cancer are 2.65 times more likely to declare bankruptcy than adults without cancer, according to a new study.

In addition, bankruptcy rates are 2- to 5-fold higher among younger cancer patients than among older cancer patients, report the study authors, led by Scott Ramsey, MD, PhD, an internist and health economist at the Fred Hutchinson Cancer Research Center in Seattle, Washington.

Dr. Ramsey and colleagues used various databases to match cancer patients diagnosed from 1995 to 2009 with adults without cancer in western Washington.

Of 197,840 adults who were diagnosed with cancer in that region during the study period, 4408 (2.2%) filed for bankruptcy protection after diagnosis. Of the age- and sex-matched control population without cancer, only 2291 (1.1%) filed for bankruptcy.

"This study found strong evidence of a link between cancer diagnosis and increased risk of bankruptcy," the authors write in their paper, which was published online today in Health Affairs.

The relation between a cancer diagnosis and bankruptcy is less well understood than that between high medical expenses and the likelihood of a bankruptcy filing, according to a press statement.

"This is an important study," said Melissa Jacoby, JD, from the University of North Carolina School of Law in Chapel Hill, in an email to Medscape Medical News. She is is an expert in bankruptcy, but was not involved in this research.

The relative — not the absolute — rate of bankruptcy among cancer patients is most notable here, she said.

"Remember that bankruptcy filings, at any given snapshot in time, are a small proportion of the population," Dr. Jacoby pointed out. "The bankruptcy filing rates are significantly higher in the cancer patients than in the control group; that's the important takeaway message."

Furthermore, bankruptcy filings are "the tip of the iceberg" in terms of financial distress, she added. "Many people" qualify to file but do not for reasons that include being too broke for lawyer's fees. "Yes, you can be too cash-strapped to go bankrupt," Dr. Jacoby said.

Some people will go to great lengths to avoid bankruptcy, she explained. "They will sell property, deplete all savings, borrow from family and friends. Years later, they may ultimately have to file anyway."

 
It is death by a thousand cuts.
 

She noted that the financial effects of a cancer diagnosis include indirect costs, such as job loss, the related loss of insurance, and the cost of traveling to distant specialty facilities. The direct costs are typically cumulative. "It isn't necessarily just one giant catastrophic medical bill; it is death by a thousand cuts, so to speak. They pile up quickly."

Strong Evidence

Dr. Ramsey and colleagues analyzed data from the Cancer Surveillance System of Western Washington, a population-based cancer registry that is part of the National Cancer Institute's Surveillance, Epidemiology, and End Results (SEER) Program. They compared adults with cancer with a random sample of people without cancer matched for age, sex, and ZIP code.

The cancer and control cohorts were both linked to the records of the US Bankruptcy Court for the Western District of Washington; only chapter 7 and chapter 13 bankruptcy filings were included. Chapter 7 debtors liquidate assets such as bank accounts, investments, and second cars or homes to pay creditors and be discharged of debt; chapter 13 debtors pay back their debts over time and retain ownership of most assets.

This study provides the "strongest evidence we have between a disease and risk for severe financial distress," Dr. Ramsey said in the press statement. "I've not seen other studies that linked databases of this quality."

The authors found that bankruptcy filing rates differed "greatly" by age in the cancer patients. Younger people with cancer experienced the highest bankruptcy rates for all types of cancer. Bankruptcy filing rates were much lower for cancer patients 65 years and older than for those younger than 65 years.

There is an explanation for the age-related risk for bankruptcy, the authors note. "People age 65 or older generally have Medicare insurance and Social Security benefits.... It is likely that having stable insurance (specifically, coverage not tied to employment) plays a major role in mitigating the risk of bankruptcy," they state.

Table. Incidence of Bankruptcy 1 Year After a Cancer Diagnosis

Cancer Type Incidence (Per 1000 Person-Years), %
Thyroid 9.3
Lung 9.1
Uterine 6.8
Leukemia/lymphoma 6.2
Colorectal 5.9
Melanoma 5.7
Breast 5.7
Prostate 3.7

 

The high incidence of bankruptcy among patients with thyroid cancer could be related to the fact that thyroid cancer mainly affects younger women. "Compared to men, younger women are more likely to live in single-income households and to have lower wages and lower rates of employment, and therefore less access to high-quality health insurance — leaving them more financially vulnerable," the researchers explain.

For clinicians who want to inform patients about bankruptcy-related resources, Dr. Jacoby recommends the Access Project at Brandeis University in Boston, Massachusetts. She also pointed out that some cities in the United States have health law projects that might be helpful.

The US Congress has "made it difficult" to file for bankruptcy without legal representation because of complexities in the system, she added. "Some people do file without a lawyer, but they risk making mistakes that can substantially reduce the protection that bankruptcy offers."

The study was funded by the National Center on Minority Health and Health Disparities at the National Institutes of Health.

Health Affairs. Published online May 15, 2013. Abstract

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