Disability Issues

WASHINGTON (Reuters) – Medical bills are involved in more than 60 percent of U.S. personal bankruptcies, an increase of 50 percent in just six years, U.S. researchers reported on Thursday.

More than 75 percent of these bankrupt families had health insurance but still were overwhelmed by their medical debts, the team at Harvard Law School, Harvard Medical School and Ohio University reported in the American Journal of Medicine.

“Using a conservative definition, 62.1 percent of all bankruptcies in 2007 were medical; 92 percent of these medical debtors had medical debts over $5,000, or 10 percent of pretax family income,” the researchers wrote.

“Most medical debtors were well-educated, owned homes and had middle-class occupations.”
The researchers surveyed 2,134 random families who filed for bankruptcy between January and April in 2007, before the current recession began.

They used public bankruptcy court records and survey 1,032 respondents by telephone.

While only 29 percent directly blamed medical bills for their bankruptcy, 62 percent had medical bills that totaled more than 10 percent of family income, said an illness was responsible, had lost income due to illness or some other medical factor.

“Among common diagnoses, nonstroke neurologic illnesses such as multiple sclerosis were associated with the highest out-of-pocket expenditures (mean $34,167), followed by diabetes ($26,971), injuries ($25,096), stroke ($23,380), mental illnesses ($23,178), and heart disease ($21,955),” the researchers wrote.

http://news.yahoo.com/s/nm/20090604/us_nm/us_healthcare_bankruptcy

At the height of the housing boom in 2004, 42% of American families (both current owners and renters) were unable to afford to purchase a modestly priced home with standard underwriting, according to a May 2009 report published the U.S. Census Bureau. The study, which looked at the barriers to homeownership, concludes that few renters in 2004 would have been able to purchase a modestly priced home due in large part to their growing debt burden. The study also concludes that lower home prices and large upfront cash grants for downpayments, as opposed to lower interest rates, would have had the most significant impact on affordability. Given developments in mortgages and home prices in recent years, these findings are relevant to the current housing crisis.

Affordability was defined as the ability to qualify for a conventional 30-year-fixed mortgage with a downpayment of 5%. The report found four main conditions negatively affecting a family’s ability to buy a home: a lack of cash or assets necessary for a downpayment, poor credit history, insufficient income with which to make monthly mortgage payments, and any other types of debt that would reduce income availability. 

The data show that these conditions mostly affect renters, only 8% of whom would have been able to afford a home purchase in both 2002 and 2004. Conventional mortgage underwriting allocates 28% of total income toward mortgage payments, and no more than 36% of total income for all debt payments. This total debt includes expected mortgage payments as well as debts such as student loans, car notes and credit cards. Thirty percent of the renters in the study had sufficient income to qualify them for a mortgage, but too high of a debt level.

The article simulated the effects on affordability of lowering interest rates or lowering downpayments. Interest rate simulations did not show a significant effect on affordability. Downpayment assistance was tested on the sample of respondents in incremental award amounts ranging from $2,500 to $10,000. The ability of renters to purchase upon the receipt of $2,500 in downpayment assistance showed an increase of 1%. However, had renters been given $10,000 in downpayment assistance, their ability to become homeowners increased by as much as 12%. That amounts to about 5.1 million renters who would have been able to purchase a home in 2004 had they received a significant amount of down payment assistance.

In general, the upfront cost of housing was the most important. The study considered a ‘modestly priced” home to be among the 25% least expensive owner-occupied homes in the area where a family lives. Buying a less expensive “low-priced” home drastically increased the percentage of families who were able to purchase, from 58% to 80%. A low priced home is considered to be one that is less expensive than 90% of the other homes in a neighborhood.

The report, Who Could Afford to Buy a Home in 2004? can be found at

http://www.census.gov/prod/2009pubs/h121-09-01.pdf

It appears that landlords and real estate rental/lease management companies require a gross income of three times the rental amount. This requirement will make qualifying for leasing/renting difficult for persons on Social Security Disability.

In searched keywords a common phrase is ’section 8 housing disability’ which links to to blog.

I checked into HUD’s Section 8 Homeownership Assistance in my area, but it isn’t offered. There is HUD’s Section 8 Rental Assistance, but there is a waiting list to qualify which takes 3 years. There doesn’t seem to be set aside slots for Social Security disabled persons in either HUD program.

There is a First Time Home Buyer Program, but persons on Social Security Disability their income is generally too low to qualify for ownership of a decent livable residence.

I joined The National Low Income Housing Coalition. I have provided a link to their website from this blog in the right hand Links section.

Democrats who opposed many elements of the controversial prescription drug benefit from its passage in 2003 finally have the chance to overhaul it. But will they? Part D is now a huge program with hundreds of competing private plans that would be difficult to dismantle, experts say. Rather than replacing the private system with a drug benefit directly from Medicare, reformers are more likely to move bit by bit.

One proposal would let Medicare negotiate prices directly with drugmakers instead of having insurers do so separately. But it’s unclear how to do this. To negotiate effectively, an insurer must be able to refuse to cover a drug if its maker won’t accept the offered price. “I don’t see Medicare being prepared to do that,” Ginsburg says. “If an insurer excludes Lipitor, the beneficiary can choose another plan that covers it. But if Medicare excludes it, then that’s it—it’s not there” for any beneficiary.

Closing the hated doughnut hole—the coverage gap in Part D—would be popular with beneficiaries but is unlikely because it would cost $300 billion over 10 years.

http://bulletin.aarp.org/yourhealth/medicare/
articles/refining_medicare.html

People younger than 65 with disabilities are entitled to Medicare coverage, but only after they’ve received Social Security disability payments for two years. Forcing them to wait this long “results in these people having inadequate health care, falling into poverty or, ultimately, in death,” says the Baucus blueprint, which would begin to phase out the waiting period.

Advocates for the disabled, and AARP, have long recommended eliminating the 24-month wait. “It’s causing very great hardship,” says Rother.

Many advocates would also like disabled Medicare beneficiaries under 65 to have the same federally guaranteed right to buy medigap supplemental insurance, regardless of age or health condition, that those age 65 and older already have.

http://bulletin.aarp.org/yourhealth/medicare/
articles/refining_medicare.html