Biggest cause of personal bankruptcy: Medical bills

Royal Oak, Michigan -- 10/13/09 -- Kevin and Michele Thomas at their home. Unemployed and uninsured Michele needed emergency gall bladder surgery rece...
Kevin and Michele Thomas of Michigan at their home in 2009. Unemployed and uninsured Michele needed emergency gall bladder surgery and ended up with thousands of dollars in bills they couldn't pay. They are among millions of Americans who have struggled to pay medical bills. John Makely / Today

Get the latest from TODAY

Sign up for our newsletter

Rising medical bills are expected to push 1.7 million American households into bankruptcy this year—making health expenses the single biggest cause of such filings, outpacing bankruptcies due to credit-card bills or unpaid mortgages, according to new data. Even having health insurance doesn't shield consumers against financial hardships.

NerdWallet Health, a division of the price-comparison website, analyzed data from the U.S. Census, Centers for Disease Control, the federal court system and the Commonwealth Fund, a private foundation that promotes access, quality and efficiency in the health-care system.

"Medical bills can completely overwhelm a family when illness strikes,” NerdWallet Health Vice President Christina LaMontagne said in a statement. She added that 25 million people hesitate to take their medications to control medical costs.

"That statistic is actually quite troubling," LaMontagne said. Delaying needed medication is a short-term fix that could trigger result in expensive visits to the emergency room and ambulance visits, she said.

Even those who don’t file for bankruptcy struggle to pay their bills. NerdWallet found that about 56 million adults—more than 20 percent of the population between the ages of 19 and 64—will grapple with payments.

Not all health insurance plans will ease the pain. NerdWallet estimates that nearly 10 million adults with year-round health insurance coverage will still accumulate medical bills they can't pay off this year.

High-deductible insurance plans requiring consumers to pay more out-of-pocket costs are a challenge for many households.

Trending stories,celebrity news and all the best of TODAY.

"With an average American family bringing home $50,000 in income, a high medical bill and a high-deductible insurance plan can quickly become something they are unable to pay," LaMontagne said. "If you have an out-of-pocket maximum of $5,000 or $10,000, that's really tough," he said.

The analysis of rising health costs is the first of its kind for NerdWallet.

(Read More: Making a Case for Self-Funded Health-Care Plans)

Obamacare 'Not a Panacea'

With millions buried under medical bills, more insured under the Affordable Care Act will not completely solve that problem, LaMontagne said.

While health-care reform will indeed give more people coverage—NerdWallet’s data shows that millions of Americans, who do have year-round coverage, are still overwhelmed by mounting bills, she said.

(Read More: Health-Care Cost Inflation Slows)

The number of households forecast to file for medical-related bankruptcies this year is slightly lower than those at the height of the recession. Despite the anticipated 2013 dip, such bankruptcies represent about three out of every five filings.

"A lot of Americans probably think about bankruptcy as coming from unpaid credit-card debt or mortgages," LaMontagne said. "But the root cause of all those troubles may well be medical bills."

Not surprisingly, more than 11 million people will take on additional credit-card debt to cover mounting medical bills, LaMontagne said. Because credit cards often charge high interest rates for unpaid balances, debt only mounts, creating a vicious cycle for consumers.

Meanwhile, NerdWallet found, 15 million people will deplete their savings to cover medical bills. Another 10 million will be unable to pay for necessities such as rent, food and utilities because of those bills.

More from TODAYMoney:

Follow TODAYMoney on Twitter and Facebook