U.S. Medical Bankruptcies a Myth; Personal Bankruptcy Rate Higher in Canada

The Fraser Institute released a short study I conducted on health insurance and bankruptcy rates in Canada and the US.  The current debate about reforming US health care policy has included suggestions that nearly two-thirds of personal bankruptcies in the US result from uninsured medical expenses or loss of income due to illness. Advocates of socialized medicine argue that this would not occur if the US adopted a government-run health system similar to Canada’s.

However, if socialized medicine played a role in reducing personal bankruptcies, we would expect to see a lower rate of personal bankruptcy in Canada compared to the United States. But my study finds that the personal bankruptcy rate was actually higher in Canada in 2006 and 2007; that almost all debt among bankruptcy filers in both countries is comprised of non-medical debts; and that, despite having a government-run health system, 15% of bankrupt Canadian seniors cite medical reasons as the primary cause of their bankruptcy. The conclusion is that a government-run health system in the US will not reduce personal bankruptcies.