Despite insurance, medical bills push family to bankruptcy

The pregnancy had seemed perfectly healthy. But moments after Ellie made her entrance into the world, doctors ordered her rushed to Winnie Palmer's neonatal intensive-care unit, fearing she'd had a seizure. Marsha didn't even have a chance to hold her daughter in her arms.

The day their daughter was born should have been one of the happiest of Simon and Marsha Sutherland's lives. Both previously married, they were having their first child together, a 6-pound, 10-ounce, dark-haired girl they would name Ellie Marguerite.

Ellie's birth on Aug. 30, 2007, began a 25-day, $74,000 stay in one of the most expensive places in any hospital. More daunting, it would launch a four-year journey of fear, hope, devotion and grief — a journey made all the more difficult by financial devastation.

Ultimately, it led two middle-class parents with good jobs, two major health-insurance policies and a house in suburbia into foreclosure and bankruptcy.

"To this day," Simon said, "we still have creditors calling us, wanting to talk to Ellie. They'll say things like, 'We want to discuss how she's going to take care of this overdue bill.' I just lose it."

Ellie Sutherland died June 26. She was two months shy of her fourth birthday.

Though financial failures often have been blamed on careless consumer borrowing or the widespread layoffs of the recession, the Sutherlands' financial storyline is strikingly common.

Two years ago, researchers at Harvard and Ohio universities reported that 62 percent of all bankruptcies were related to medical debt. An American family, they said, filed for bankruptcy in the aftermath of illness every 90 seconds — and three-quarters of those families had health insurance.

Although the data used for the study is now 4 years old, most experts interviewed said the problem is likely only to have worsened, at least until this year, as out-of-pocket medical costs have continued to spiral.

In addition, widespread layoffs have contributed to the rapid rise in uninsured Americans, who now number more than 59 million. For most of them, any major medical expense threatens to overwhelm their resources, leading to further bankruptcies and driving up costs for those who can pay. According to Families USA — a nonprofit, nonpartisan consumer-advocacy group — the shifting of uncompensated care onto insured patients results in a "hidden health tax."

For an average family health-insurance policy, that means an additional $1,017 a year in deductibles, copays and other out-of-pocket expenses.

Pointing fingers

When Marsha Sutherland became pregnant with Ellie, she was a full-time reading teacher at Windy Ridge School in southwest Orange County. Husband Simon was a manager of a chain pizzeria. Together, they made about $100,000 a year. Each had insurance.

She had two children from a previous marriage; he had three. They had a nice three-bedroom home with plans for a swimming pool — plans they put on hold when they found out about the pregnancy, long before they knew Ellie would have extensive needs.

For most of their daughter's life, Marsha and Simon would have no diagnosis. Ellie was nearly deaf, couldn't sit up and was prone to dangerously high fevers. Half her face had almost no muscle tone, and in the second year, she began scratching at her eyes and cheeks and biting her lip until she bled profusely.