Personal Bankruptcies to Rise Following Healthcare Cuts


Medicaid Funding Cuts Could Cause More Bankruptcies

The Republican-dominated Senate has revised President Donald Trump’s healthcare bill, and is proposing huge cuts to Medicaid. This would leave many Americans without health insurance, and could cause personal bankruptcies to rise once again.

Trump has repeatedly vowed to repeal former President Barack Obama’s Affordable Care Act (ACA) and replace it with his own American Health Care Act (AHCA). The AHCA proposes billions of dollars of spending cuts to Medicaid.

As a result of Trump’s proposed legislation, nearly 15 million Americans would no longer be enrolled in the so-called Obamacare program .

Further, the Congressional Budget Office (CBO) says that, if the Republicans’ healthcare bill becomes law, by 2026, about 22 million fewer Americans would have Medicaid coverage than if the current legislation stayed in place. This is because the federal spending cuts being proposed would reduce Medicaid funding by $772.0 billion by 2026.


If the Republicans pass their legislation, millions of Americans will no longer be able to pay their hefty medical bills. Experts say this would force many Americans to file for personal bankruptcy. Many of those who do not declare bankruptcy will be pushed into taking on heavy debt loads.

A professor of economics at Northwestern University, Matthew Notowidigdo, says that the negative consequence of Medicaid funding cuts is a “pretty robust fact.” Notowidigdo added, “If you were to roll back the Medicaid expansion, that’s going to lead to more bankruptcies.”

Lois Lupica, a bankruptcy expert and professor of law at the University of Maine, says that some sick Americans may defer their healthcare needs to avoid taking on debt, and in turn get even sicker.

“This will make a hugely negative impact on many American lives,” said Lupica. “It’s scary. If it ever gets to the point where it’s law, it will have ripple effects throughout the economy.”.

The Medicaid program is currently the largest health insurance program in America, and provides coverage to about 74 million low-income American adults, children, and elderly people—many of whom have long-term healthcare needs.

Personal bankruptcies by Americans fell from 1,536,799 filings in 2010 to about 770,846 filings in 2016. The reduction can partly be owed to the expansion of the Medicaid program under the Obama administration.


The Senate Health Care Bill Could Lead to More Personal Bankruptcies,” Money, June 26, 2017