COST: Health Care's Role in the Mortgage Meltdown

Here's some preliminary but quite striking data (which we read on the Health Care Policy and Marketplace Review blog) on how the health care crisis is fueling the mortgage fiasco. Many of the people who are losing their homes aren't irresponsible buyers who got subprime mortgages for homes they should never have bought. They are people who could have managed to stay afloat in their homes if they hadn't had a health care crisis that did them in financially. Here's what one study in four states by Christopher Robertson, Richard Egelhof and Michael Hoke found:

Our evidence suggests that medical disruptions are a major contributor to mortgage default, often striking in combination with other factors. Half of all respondents (49%) indicated that their foreclosure was caused in part by a medical problem, including illness or injuries (32%), unmanageable medical bills (23%), lost work due to a medical problem (27%), or caring for sick family members (14%). We also examined objective indicia of medical disruptions in the previous two years, including those respondents paying more than $2,000 of medical bills out of pocket (37%), those losing two or more weeks of work because of injury or illness (30%), those currently disabled and unable to work (8%), and those who used their home equity to pay medical bills (13%). Altogether, we found that about 7 in 10 of our respondents either self-reported a medical cause of foreclosure, or experienced one of these indicia of medical disruptions in the years before foreclosure. In many cases, homeowners were hit with a perfect storm of factors—a few thousand dollars of medical bills, a few weeks of missed work, and perhaps a divorce or rising interest rate - all combined to push them over the edge into foreclosure."

This study is a limited snapshot, from 2006. But we suspect that as more people feel the economic pinch, as more people lose their jobs (and their employer-based insurance) as more people see their nest eggs and savings evaporate in the falling market, we'll see more links between a frail housing market and a flawed health care system. More proof, as if we needed it, that fixing our economy means fixing health care.