Consumer Bankruptcy

Alexandria, Va. — The American Bankruptcy Institute’s (ABI’s) Anthony H.N. Schnelling Endowment Fund has commissioned a study to examine whether the expansion of Medicaid through the Affordable Care Act (ACA) has had a correlative effect on the rate of consumer bankruptcy filings across the country. “Consumer Bankruptcy and The Patient Protection and Affordable Care Act: Placebo or Panacea?” will be the first mixed-methods study to determine what effect the ACA’s expanded Medicaid coverage has had on consumer bankruptcies. The data collection will take place over 2-3 years, and the results will be published in the ABI Law Review.

The principal researchers for the study are Prof. Brook E. Gotberg of the University of Missouri School of Law and Prof. Michael D. Sousa of the University of Denver Sturm College of Law. Prof. Gotberg teaches bankruptcy, secured transactions and securities regulations with a focus on debtor and creditor relations, both in and out of bankruptcy. Prof. Sousa teaches bankruptcy, commercial law and business reorganizations. He focuses his scholarship on the consumer bankruptcy system largely through an interdisciplinary lens, applying sociological theory and methods to study various aspects of the consumer bankruptcy system. Neither researcher is associated with any group or agency that is interested in the issues involved in the study.

The high cost of medical care and its potential financial devastation for individuals and families helped lead to the passage of the Patient Protection and Affordable Care Act in 2010. The new study will investigate the effects of Medicaid expansion through the ACA on rates of consumer bankruptcy in two comparative states: Colorado and Missouri. In addition to being where the researchers are located, the states will provide both good test cases and control groups: Colorado expanded its Medicaid coverage through the Affordable Care Act, while Missouri declined to expand coverage.

“While a few empirical studies have examined medical debt as a causal factor in the consumer bankruptcy system, most have focused on the same statistic, namely, the percentage of consumer bankruptcies attributable to medical debt,” according to Gotberg and Sousa. “While this figure is significant, there is an arguably more important research question: whether expanded health insurance coverage has any effect on the rate of consumer bankruptcy filings.”

Created in 1989, the ABI Endowment Fund provides a secure financial base for insolvency research and education. Projects eligible for funding include research relating to bankruptcy or insolvency; surveys or other analytical investigation; the education of judges, court personnel, other governmental personnel and the general public; scholarships or other educational grants; and any other projects with a material research or educational benefit to the bankruptcy and insolvency community. More than $2 million in grants and scholarships has been awarded. 

###

ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 12,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional conference information, visit http://www.abi.org/calendar-of-events.