Patterico's Pontifications


Researchers: 62% of 2007 Bankruptcies are Medical

Filed under: General — DRJ @ 7:29 am

[Guest post by DRJ]

Asserting that medical bills are involved in more than 60% of American bankruptcies, researchers from Harvard Law School, Harvard Medical School and Ohio University are doing their part to help Barack Obama get nationalized health care:

Using a conservative definition, 62.1 percent of all bankruptcies in 2007 were medical; 92 percent of these medical debtors had medical debts over $5,000, or 10 percent of pretax family income,” the researchers wrote.
The researchers, whose work was paid for by the Robert Wood Johnson Foundation, said the share of bankruptcies that could be blamed on medical problems rose by 50 percent from 2001 to 2007.”

The study was based on public bankruptcy records for 2,134 random families who filed for bankruptcy between January and April 2007, with telephone surveys of 1,032 respondents. The debtors’ locations and bankruptcy district(s) are not stated in the article.

However, while the researchers may be certain that medical costs caused over 60% of the bankruptcies, the debtors aren’t so certain:

While only 29 percent directly blamed medical bills for their bankruptcy, 62 percent had medical bills that totaled more than 10 percent of family income, said an illness was responsible, had lost income due to illness or some other medical factor.”

Bankruptcy court statistics show there were 850,912 bankruptcies filed in the United States during the 2007 calendar year and 193,641 bankruptcies filed during the first quarter of 2007, the period covered by this study. Thus, the study of 2,134 families is based on 1.1% of all bankruptcies filed in the first quarter of 2007 and on .25% of all bankruptcies filed in calendar year 2007. Furthermore, the telephone survey of 1,032 respondents represents .53% of all bankruptcies filed in the first quarter of 2007 and .12% of all bankruptcies filed during the 2007 calendar year.

Those don’t strike me as significant samples or data from a sustained period of time that would justify sweeping changes to America’s health care system. I guess that’s why I’m not a medical reseacher, because researchers Dr. David Himmelstein and Dr. Steffie Woolhandler conclude that “[o]nly single-payer national health insurance can make universal, comprehensive coverage affordable by saving the hundreds of billions we now waste on insurance overhead and bureaucracy.”

By the way, Dr. Himmelstein is described as an advocate for a single-payer health insurance program for the United States.


48 Responses to “Researchers: 62% of 2007 Bankruptcies are Medical”

  1. Typical survey, conclusion first, research after. I’m sure if data did not back their desired result it would have been expanded until it did. Or discarded and new data obtained.

    Ken Hahn (44f1af)

  2. I demand a check from Obama. In the 27 years my first wife and I were married, we incurred over a quarter million dollars in medical debt, of which insurance only covered about 70%. When she passed away, the medical bills for that emergency trip to the hosp, ambulance care etc was almost $8,000.00.

    Three years ago I had lung cancer with all the associated costs and a corporate restructuring 5 years ago with a $60,000.00 debt which I just paid off. OK, now, everyone should feel sorry for me and send me a check for mega bucks.


    GM Roper (85dcd7)

  3. How will transferring the cost to a broke government solve this? I’m afraid the government will just let them die instead because it’s cheaper. If it’s a choice between being bankrupt or dead, which is better?

    zmdavid (b1d3da)

  4. Nah, Obama will actually usher in an era of taking responsibility for your actions. Look how well the health systems run in Canada and England.

    Hopefully your care will be dictated by your habits. Smokers, soda drinkers, fat slobs, alcoholics and the like have no reason to live anyway and their early demises would lower overall health costs. We should all strive to emulate Duh-1. Oh, he smokes? Of course he’s under enormous pressures, given all the grief and problems W left for him to cope with now.

    I have my health insurance provided by the taxpayers of Pa. as a retirement benefit. Since I retired, I’ve not used it for those past 18 years at all. I’m one of those idiots who have little faith in the medical industry. Yes, I know there may yet come a time when I need said care. But how many people abuse the system and seek out lots of drugs? I know several people who are liberally prescribed potent pain killers, which they turn around and sell to junkies. IMHO, government control will only drive up costs and lower service, bring on rationing and a bureaucratic layer of arsehole drones who will decide what they think you deserve, with costs containment at the forefront. Of course the managers will certainly deserve fat annual bonuses, resort trips to discuss the health care situation, etc.

    aoibhneas (55634c)

  5. I think they can get a reasonably accurate statistical analysis based on those percentages.

    What is inaccurate is their definition of bankruptcy due to medical bills. No one declares bankruptcy because they have 10% of their annual income in debt. That level of debt is HEALTHY. Your credit score goes up if you’re paying your monthly minimum amounts.

    What I would be interested in is the ratio of medical debt to other debt. That would be a true indicator. They even admit that 8% of the people classified as having a bankruptcy due to medical bills owed less than $5000. Who goes through bankruptcy for less than $5,000?!?

    Newtons.bit (a67c58)

  6. Interesting. You can only take medical deductions on your taxes for those expenses you pay over 7.5% of your AGI.
    So somewhere between 7.5% and 10%, the expenses become onerous.

    I imagine Congress could just make more of the medical expenses tax deductible to ease the burden, no?

    MayBee (7ea07e)

  7. The vast majority of personal bankrupties are related to over extensions of credit for non essential purchases. While medical bankruptcies certainly exist and are a big problem, they are far from the bulk of most bankruptcies.

    Joe (17aeff)

  8. Based on the wide divide between what the researchers said and what the respondents themselves said, it’s pretty obvioius what the researchers did:

    They looked at the bankruptcies and called them “medical bankruptcies” if there were ANY medical bills at all in the list of debts owed.

    Make the researchers specifically define how they determined what constituted a “medical bankruptcy” and the “study” will fall apart under its own weight.

    Jim B (3552e7)

  9. Am I missing something?

    Are medical bankruptcies caused by a lack of medical insurance, or by a person’s sudden inability to work?

    Are we all going to get long term disability insurance in addition to our government health care?

    Amphipolis (fdbc48)

  10. I could take the same study and call it “Housing Bankruptcies” or “Food Bankruptcies”

    When you are broke you are broke — whether the marginal dollar earned would have gone to the Cardiologist versus dinner at Chili’s is a consumer’s choice.

    Usual crap from the left.

    HeavenSent (1e97ff)

  11. What they don’t account for is that if you’ve been using your home equity as “income” and are leveraged to the hilt, lose your job and THEN have a medical problem, it’s not really a “medical” bankruptcy.

    When it comes to answering these kinds of questions people lie like hell. Yeah, it was medical problems. Or, “I had to pay my mother’s medical bills..” Yeah right.

    cassandra (5a5d33)

  12. echoing JimB: They’re blurring the distinction between ‘involved in’ and ’caused’. Sure, they owed medical bills, but they also likely owed consumer debt, mortgages, car loans, student debt, back taxes ans so on… why not claim that those ’caused’ the bankruptcy?

    And they’re lumping those who lost income due to medical conditions (for example, by not working) in with those who couldn’t pay their medical bill, in order to magnify the alleged crisis.

    Furthermore, a single payer program won’t eliminate medical care-related bankruptcies… unless such a plan covered 100% of medical expenses incurred and wrote sick people a check in lieu of a paycheck. Otherwise, you’re still going to have people owe money for the unreimbursed portion of their medical care and people who fall behind on their bills because they’re unable to work… and some percentage of those people will end up filing bankruptcy.

    steve sturm (369bc6)

  13. Lies, Damn Lies, Statistics, & Slanted Research!

    Anything in support of Teh Narrative.

    AD - RtR/OS! (1f03ac)

  14. The 10% figure is arbitrary. As some here point out–the discrepancy between the self-reporting of test subjects with the researcher’s conclusions regarding the contribution of medical bills to bankruptcy makes it pretty clear what happened.

    They compiled their facts, set a debt level that got them to the desired 60%, and then announced their results.

    tim maguire (4a98f0)

  15. Lies, Damn Lies, Statistics, & Slanted Research!

    Is any research non-suspect these days? Tell me the name of the group putting out a so-called study and I know what the ‘scientific’ findings will report.

    steve sturm (369bc6)

  16. Sample size calculations are pretty intricate things and can usually be trusted. Of course, The Lancet’s massive sampling error when calulating Iraqi civilian deaths shows us that we need to be vigilant — especially when dealing with surveys likely to be used for political purposes. Nevertheless, it’s hard to imagine that someone would make such a basic error knowing the study would receive heightened scrutiny.

    Pigilito (5a1996)

  17. Would price controls on health care reduce bankruptcies?

    Michael Ejercito (365b6d)

  18. I actually practice in bankruptcy and this study is complete bunk. I’ve filed a lot of bankruptcy petitions that include medical bills, in only a handful of cases were the medical bills what drove the debtors into filing bankruptcy. And in all of those few cases, it was that the medical conditions also resulted in loss of employment income.

    Utter bunk.

    SPQR (72771e)

  19. It was a medical bankruptcy…I was sick of making those payments!


    poon (093c46)

  20. This is BS. Just because a certain percentage of filers have unpaid medical expenses doesn’t translate into a finding that the bankruptcy was caused by those expenses.

    I’m sure about 99% of bankruptcy filers have unpaid consumer debts as well. Would they say 99% of all bankruptcies were caused by credit card bills?

    I’d like to see an informal survey here of any attorneys that specialize in bankruptcy filings, and find out from them what their anecdotal views are on the primary cause of their clients’ decisions to file. I suspect it’s consumer debts and a failed business ventures more than anything else.

    I’d also like to see a breakdown in terms of age and income. Is the current surge in bankruptcies distributed equally across all age groups and income levels — excluding the “rich”?

    Wouldn’t people in their late-40s to late 50’s be more prone to health related bankruptcies? Not yet eligible for Medicare but more likely to suffer significant health problems?

    WLS Shipwrecked (53653f)

  21. I really want to know how they define illness. I remember that Elizabeth Warren included gambling additions, alcoholism and drug problems in her definition of illnesses. So if somebody spent his mortgage payment at Vegas – it was a medical problem.
    She also counted all families with a baby in the last two years as medical. Obviously, kids are free if you have good health insurance.

    Rachel (4375f4)

  22. The only thing price controls will do, is what they always do:
    Restrict the supply of providers as those who don’t want to play the game, take their talents elsewhere;
    plus, they increase demand, which will then require some form of rationing.
    So, you end up with fewer medical providers being forced to deal with a greater number of patients, but with greater restrictions on the proceedures that may be used after you get to the head of the line (if you live that long).

    AD - RtR/OS! (1f03ac)

  23. Restrict the supply of providers as those who don’t want to play the game, take their talents elsewhere;
    plus, they increase demand, which will then require some form of rationing.

    I can understand how supply will be restricted, since fewer people will be willing to become doctors.

    I do not understand how demand would be affected, since people are not going to choose to get cancer or have heart attacks simply because medical care is cheaper.

    Michael Ejercito (365b6d)

  24. There are lots of medical issues that people decide are optional.

    SPQR (72771e)

  25. 1. everybody has medical bills
    2. if you are over extended what do you pay last?
    3. not necessarily the root cause only a sympton

    correlation is not cause …

    Rob S (2c81ba)

  26. David Himmelstein and Steffie Woolhandler have been advocates for single payer for at least 20 years. Every study they publish is slanted to support their conclusions. Bankruptcy is a strategy for the young uninsured who have trauma. I know that well.

    We used to ask for a deposit equal to the insurance deductible for elective surgery. I loved writing the refund checks because it meant we had been paid in full. That was in the 70s. I remember one day when the office manager came to me and said a patient of my partner’s was objecting to the deposit. He had assured her that we wouldn’t insist. I looked at her file. Her occupation was “bankruptcy consultant.” You can guess the rest. He did her surgery, a little hernia repair and she promptly declared BK. I suspect she had made a bunch of other optional purchases in getting ready for the big day.

    I am in favor of health care reform and think a bare bones plan that included catastrophic coverage would not be that expensive. The reason goes back to the actuarial basis of insurance. You can insure unusual events, like motorcycle crashes, at reasonable cost because they are rare. It is prepaid care that is expensive and this is what happened in the 80s.

    Mike K (2cf494)

  27. I do not understand how demand would be affected, since people are not going to choose to get cancer or have heart attacks simply because medical care is cheaper.

    Comment by Michael Ejercito

    Those conditions are what can be insured for reasonable costs. The optional events are what are breaking the bank. You might want to read this. Jack Wennberg is the reason I went to Dartmouth. He is a great guy although his point of view is influenced by being an academic.

    Mike K (2cf494)

  28. ME…it is a simple matter of supply & demand.
    When the cost of something is held down, demand will expand.
    Just look back to the gasoline “crisis'” of the Seventies, where govt was holding down the retail cost of gasoline, and was restricting the distribution of supplies to retail outlets, resulting in crushing demand, and subsequent rationing (odd-even, etc).
    When RR signed, as one of his first acts 20 Jan 81, the complete decontrol of petroleum, he ended the restrictions and allowed the market to adjust for changes in supply by using price mechanisms.
    Now, when supplies are tight, prices rise, and consumers cut back. We don’t have lines of cars at gas stations anymore (which was consumers topping-up their tanks because of concerns of availability, for the most part) since the consumer knows that gas is available when he needs it, it is just a matter of cost.
    Of course, BHO has re-inserted the govt into the equation by his restrictions on not only off-shore exploration and production, but on on-shore production also, which partly explains the virtual doubling in retail gas costs since his election – and it’s only going to get worse as the “dreamers” implement their agenda of moving the Little-People from the cars to mass-transit, and reducing everyone’s “carbon footprint”.
    When they institute “National Health Care”, we will see a drop in life expectancy as the elderly are allowed to die because it will be too expensive to treat them.

    AD - RtR/OS! (1f03ac)

  29. Left unsaid is whether government health care would address this problem which seems to be caused by a person’s sudden disability, not his lack of health care.

    Add the word government to anything and it becomes godlike.

    Amphipolis (fdbc48)

  30. I never met a broke-ass whining deadbeat that didn’t claim he “got sick” or “got hurt” and couldn’t work.

    This, I assume, is a medical bankruptcy, right?

    spongeworthy (c2e8fe)

  31. What this study actually shows is that under our current system, people actually receive medical care whether they can pay for it or not.

    The debts cancelled in bankruptcy are no longer a problem for the debtor, it is a problem for the creditor. I don’t hear the medical creditors (doctors and hospitals) clamoring for nationalized healthcare, and they are the ones losing money to bankruptcies.

    Mike S (d3f5fd)

  32. Comment by Mike S — 6/4/2009 @ 11:41 am

    As we all should know by now, it has never been about money, or care, but is one of control.

    AD - RtR/OS! (1f03ac)

  33. I imagine more than 60% of bankruptcies also have a mortgages as a component. Does that mean the government should guarantee everyone access to a home along with health care? Welcome to the USSA.

    Ray (9c6b5f)

  34. Where does the Constitution authorize this?

    Thomas Jackson (8ffd46)

  35. Authorize what, Thomas?

    SPQR (72771e)

  36. “By the way, Dr. Himmelstein is described as an advocate for a single-payer health insurance program for the United States.”…since he has volunteered I suggest he get off of his as# and start writing the checks. Single payer health insurance is a great idea, so long as the good Dr. is the payer.

    Edward Lunny (331570)

  37. Just look back to the gasoline “crisis’” of the Seventies, where govt was holding down the retail cost of gasoline, and was restricting the distribution of supplies to retail outlets, resulting in crushing demand, and subsequent rationing (odd-even, etc).

    I can understand people using more gas is gas is cheaper.

    But if medical care is cheaper, people are not going to get more cancer or have more heart attacks.

    Michael Ejercito (833607)

  38. It is not the care for cancer victims or those with heart attacks that overwhelm the health-care system, it is people who insist on going to the doctor for a case of the sniffles instead of going to the pharmacy and buying some Contac.

    AD - RtR/OS! (1f03ac)

  39. The distressing about this study is it will reported as Gospel by every newspaper in the country tomorrow.

    AJ Lynch (e54992)

  40. Everyone discharges medical debts in BK. But that’s a totally different story than a BK being caused by medical bills. Of course, the “researchers” did not address this cause and effect relationship.

    But Todd Zywicki Does.

    Patricia (2183bb)

  41. My own experience working in the welfare system was that “poor” people with large families tended to make use of the “free” healthcare whenever possible. I wonder just how many otherwise healthy people had pain medications prescribed and the turned around to sell it for a pretty penny?

    I know people on Medicaid in Fla. who shop around for pain clinics, sell their candy and also hit the ERs often for some kind of satisfaction also. Regarding the much increased regressive taxes on cigarettes, the poor are still smoking and turning to some truly awful tobacco products. One acquaintance with little money is now into 72mm Marlboros that run $2.97 a pack in discount stores. I don’t think that reflects the new added $1 tax either. I don’t know how anyone getting $650 in SSI disability and $180 in food stamps can afford to smoke, but at least the taxpayers provide the “free” healthcare when all that nicotine takes effect over time.
    So it seems to me that the middle class will be the ones getting the financial and rationing reaming of “free” healthcare.

    aoibhneas (55634c)

  42. Stop Whingeing And Pay Up, Losers!…

    JustOneMinute has a great post on medical bills and bankruptcy. They take note of an advocacy study intended to form opinion, not report facts, and point out that
    even if it is true that people who go bankrupt had serious medical problems first, it d…

    Pursuing Holiness (e6211d)

  43. […] Patterico is on this, too. Asserting that medical bills are involved in more than 60% of American bankruptcies, researchers […]

    Stop Whingeing And Pay Up, Losers! : Pursuing Holiness (e6211d)

  44. We’ve seen these BS studies before. They’re sort of like those Lancet studies on Iraqi casualties, purely agenda driven with worthless methodology and conclusions.

    daleyrocks (5d22c0)

  45. But if medical care is cheaper, people are not going to get more cancer or have more heart attacks.

    But they probably will exploit it to an even greater degree than what’s true today…, November 16, 2007

    A new Consumer Reports investigation, published in the November issue, identifies 10 “Overused Tests and Treatments” and spells out how consumers can navigate a health-care system that rewards costly — and often unnecessary — tests and procedures and de-emphasizes preventive care.

    The CR investigation identifies three main problems in the U.S. health-care system: unnecessary tests and treatments; costly new drugs that are often no better than the older, cheaper ones; and a glaring under-appreciation for preventive care.

    For consumers unfamiliar with the term “fee for service,” CR explains: Because the vast majority of doctors and hospitals are paid on a piecework basis, the more services they provide, such as blood tests, surgeries, MRIs, and CT scans, the more money they make.

    Experts estimate that the nation’s $2 trillion annual health-care tab is one-third to one-half higher than need be, in part because of overuse of expensive treatments and unnecessary care.

    The pharmaceutical industry spends an estimated $29.9 billion a year promoting newer brand name prescription drugs. But CR notes that despite the billions spent on promotional activities such as direct-to-consumer ads, free samples, and showering physicians with gifts and cash, newer drugs aren’t always better. In fact, for a manufacturer to secure FDA approval of a new drug, it need only prove that the drug works better than a sugar pill, not that it’s better than other remedies. So most of the “new” drugs that the FDA approves—75 percent in 2005—are me-too versions of existing remedies rather than genuine breakthroughs.

    One can only imagine how much sloppier and indulgent the medical system will become when it’s managed and dominated by bureaucrats — and a bureaucracy — mirroring the phenomenon of a combination of a local welfare office, a free health clinic and the DMV.

    Mark (411533)

  46. Mark…think of the known waste and abuse in the Medicare/Medicaid systems and just expand it exponentially.
    The Feds have proven to be completely ineffective in eliminating W&A in the M/M systems, and they now have the hubris to think they can control costs system-wide in a non-competitive environement.
    Not only are the stupid, they’re morons too.

    AD - RtR/OS! (1f03ac)

  47. A Major Reason Why We Get Bad Policy…

    As the US Congress grapples with health care reform, I wonder how much of the debate will be formed by deeply flawed studies, or at least dubious “facts”. A new study on the prevalence of households driven into bankruptcy by……

    Fish Fear Me (0436bf)

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