17.4.08

Health Insurance, Medical Emergencies and How They Contribute to the Foreclosure Crisis

By Nick Adama

Medical problems are the second most cited cause of homeowners falling behind on their payments and facing foreclosure (loss of income is first). The fact that so many people in the country are uninsured almost guarantees that they will face financial doom if faced with a sudden medical catastrophe. Even the ones who have insurance have to fight for coverage, and far too many conditions can be excluded under dozens of clauses and excuses used by insurers to maximize profits. So it is not surprising the problem with insurance is contributing to the foreclosure crisis.

People facing a medical emergency do not even really have a choice about paying for healthcare or keeping up on the mortgage. If an untreated emergency will result in their being severely disabled, disfigured, or unable to work, then there is a strong possibility they will not have the resources to continue paying the mortgage. For many homeowners who have an accident or need cancer treatments or just come down with a bad case of the flu when their immune system is least able to cope with the stress, it is not a matter of paying for the house or for their health -- health always comes first.

But the healthcare system in the country is in serious need of reform. No one quite knows whether to categorize it as socialized medicine or privatized insurance out of control. This system of government managed care and semi-socialized, semi-privatized insurance companies have caused tens of millions of productive workers to be uninsured and tens of millions more to have effectively no coverage even though they pay for nominal "insurance." Once they actually face a crisis, they realize how many exclusions were written into that expensive policy, especially if they are self-employed or covered under a personal plan instead of through their employer.

So the choice about health insurance as it stands right now is really between not paying for insurance, or paying for useless insurance that does not cover any actual catastrophic medical problem. Either way, if someone in the family gets sick or has an accident that requires intense medical care, the possibility is very low of making it through the medical and financial hardship without loads of debt, massive stress, and possible financial ruin.

Completely privatized care might not be good. Corporations have a tendency to run right over the people, especially if they are politically powerful, as the drug companies and insurance companies tend to be. Business is usually more efficient than government and competitive industries tend to lower prices; there is no reason healthcare and health insurance should be any different. But now all we have is huge corporations that work with government to keep prices high and exclude people from the system.

Completely socialized care might be even worse. Imagine sitting in a hospital run like the post office or the local Social Security Administration. Most government-run bureaucracies are filled with unhappy people doing as little as possible to get their paychecks, since they have no incentive to do a good job and provide better service than a competitor. Even the buildings these agencies are located in after often filled with nothing but walled-off locations so people can not see what their government workers are doing. The walls, on the other hand, often spew out loads of regulations and prohibitions, from no smoking, no drinking, no guns, and how to apply for food stamps. Hospitals should not be unhappy places filled with unhappy workers exhibiting unhappy messages.

But a combination of large insurance corporations working with large state and federal bureaucracies is corporatism, where the people only lose. This most resembles the situation we have now, and it is no wonder a medical emergency can lead to bankruptcy and the inability to stop foreclosure after recovery. People lose their health from the initial hardship and the stress of dealing with the insurance company for months after recover, they lose their money to the insurance companies and the healthcare providers whose services are not covered by the supposed insurance, and they far too often end up losing their homes to the banks that could care less.

It is not difficult to notice the connection between big government, big business, and the health insurance company fraud which makes having insurance even more expensive than not having it. Homeowners should be able to save up at least 3-6 months of their income to make it through a job loss or layoff period. If the mortgage and other debt makes this level of savings impossible, then selling the property and moving into more affordable housing should be considered. But it is the very rare homeowner who can afford several hundred thousand dollars to pay a catastrophic emergency or for long-term care. The fact that assumed insurance may not be there due to the profit maximization goals of insurers should not, however, be one of the leading causes of homeowners facing foreclosure and financial ruin.

The ForeclosureFish website has been created to provide homeowners in danger of losing their houses with relevant and important foreclosure advice and news. The site examines numerous methods that may be used to save a home, such as Chapter 7 and 13 bankruptcy, short sales, deed in lieu, loss mitigation, and more. Visit the site to read more articles about how foreclosure works and how the process may be avoided before it is too late: http://www.foreclosurefish.com/

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