Unemployment and Catastrophic Medical Expenses Not Factors for Active Duty Military Personnel
The 23.6 percent increase in personal bankruptcy filings for the U.S.
population may not result in a similar increase in bankruptcies for
active duty military personnel because (1) an increase in civilian
unemployment for fiscal years 1999 through 2003 was not a factor for
active duty military personnel and (2) all active duty military
personnel and their families have medical coverage. Unemployment and
medical expenses have been shown to be related to bankruptcy filing.
The relationship between filing for bankruptcy and unemployment is
illustrated by the findings from one study in which over two-thirds of
the individuals filing for bankruptcy had job-related financial stress,
with layoffs being identified as a major factor.[Footnote 7] For each
of the fiscal years from 1999 through 2003, an increase or a decrease
in the total number of U.S. personal bankruptcy filings was accompanied
by an increase or a decrease in the unemployment rate for the same
fiscal year (see table 1). In contrast to the changing unemployment
picture for civilians, active duty military members--by definition--
were employed for each of the 5 years, in the sense that each military
member received a regular salary while on active duty.[Footnote 8]
Table 1: Changes in Bankruptcy Filings and Overall Unemployment in the
U.S. Population for Fiscal Years 1999-2003:
Number of bankruptcy filings
Percent change from fiscal year 1999
Unemployment rate on September 30
Percent change from fiscal year 1999
Sources: Administrative Office of the U.S. Courts for number of
bankruptcy filings; GAO's analysis of court data for the percent change
in bankruptcies; and GAO's analysis of unemployment rates from the U.S.
Department of Labor, Bureau of Labor Statistics.
DOD provides employee benefits that include health coverage to more
than 1.3 million active duty service members and their nearly 2 million
spouses and other dependents. The health care for active duty service
members and their dependents costs the federal government about $9
billion per year. For active duty service members, this benefit offers
care in military treatment facilities and does not require enrollment
fees or co-payments for care or drugs obtained from military treatment
facilities.[Footnote 9] In addition, legislation in 2000 eliminated co-
payments for the families of many active duty military personnel.
Medical coverage for all DOD active duty personnel and dependents is
unlike the coverage for the population in a study that found
approximately one household in five citing medical-related problems
(e.g., medical costs and loss of income during illness or accident) as
a reason for filing bankruptcy.[Footnote 10] Given that health coverage
can be a benefit offered as part of employment compensation, a higher
unemployment rate may indicate that more of the U.S. population was
placed at risk for medical expenses.
 See Teresa A. Sullivan, Elizabeth Warren, and Jay Lawrence
Westbrook, The Fragile Middle Class: Americans in Debt (New Haven,
Conn.: Yale University Press, 2000). The authors noted that job-related
financial stress was implicated in over two-thirds of the more than
2,400 bankruptcy filings they examined. They also noted that while
layoffs were a major factor in the decision to file for bankruptcy,
other serious job-related trouble could result even if workers had a
job, because the job may change and both income and benefits may erode.
 Active duty military families may, however, be influenced by
civilian unemployment trends if spouses of military personnel become
 If military treatment facilities are not available or if service
member families choose to use civilian doctors or medical facilities,
two other health care programs provide service member families with
extensive coverage for medical costs, including a $1,000 annual
catastrophic cost cap.
 See Sullivan et al., The Fragile Middle Class: Americans in Debt.