Since 2000, Harvard associate medical professors Steffie Woolhandler and David Himmelstein, along with Harvard law professor Elizabeth Warren and Ohio University sociology and anthropology professor Deborah Thorne, have been compiling data on bankruptcies in the United States. Their study, published on Feb. 2 by the medical policy journal Health Affairs, found that between 1981 and 2001, medical-related bankruptcies increased by 2,200 percent, an astonishing explosion in a relatively short period of time. This spike far outpaced the 360 percent growth in all personal bankruptcies during roughly the same period.

In addition, the study uncovered surprising information about the affected population. While poor, uninsured Americans have long been the most obvious victims of a defective healthcare system, it's the middle class that suffers most in this case, accounting for about 90 percent of all medical bankruptcies, says Warren.

"The people we found to be profoundly affected are not some distant underclass. They're the very heart of the middle class," Warren says. "These are educated Americans with decent jobs, homes and families. But one stumble, and they end up in complete financial collapse, wiped out by medical bills."

With so many middle-class American households potentially vulnerable, you might think politicians would seek a solution sensitive to their interests. Yet the momentum in Washington is in the opposite direction – toward bankruptcy "reform" that would make things worse for people who have been financially ruined by illness.

Until 25 years ago, filing for bankruptcy because of debts from a medical problem was virtually unheard of. In 1981, University of Texas law professors conducting bankruptcy research noticed that a handful of the debtors they were studying could never quite pay off their medical bills, but while these bills certainly didn't help, they weren't forcing people into bankruptcy.

Today, by contrast, medical-related debt is the second leading cause of personal bankruptcies, topped only by job loss. Edward Janger, a professor at Brooklyn Law School, gives two reasons for the change: First, there's been a dramatic rise in healthcare costs. In 2002 Americans paid an average of $5,440 in medical expenditures, up $419 from the previous year. A September 2004 study by Families USA found that 14.3 million Americans now hemorrhage more than a quarter of their earnings into healthcare costs.

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