What is a significant contributor to personal bankruptcies in the U.S.?

Medical debt is a significant contributor to personal bankruptcies in the U.S. because it often arises from high costs associated with healthcare services that individuals cannot pay out of pocket, even when they have insurance. Many individuals mistakenly assume that health insurance will cover all medical expenses, but high deductibles, copayments, and non-covered services can lead to substantial out-of-pocket costs. When these medical bills become unmanageable, individuals may struggle to meet their financial obligations, resulting in bankruptcy as a means to relieve those overwhelming debts.

This situation is further exacerbated by the fact that medical emergencies can occur unexpectedly, and many people do not have adequate savings to cover such expenses. Reports and studies reveal that a significant percentage of bankruptcies cite medical bills as a primary reason, highlighting the critical impact of healthcare costs on personal financial stability. The prevalence of high medical debt has become a serious issue, often leading individuals to forgo necessary medical treatment for fear of incurring further financial burden, thus creating a vicious cycle of health and financial instability.