The particularly alarming news from the new study is that not even people with health insurance can escape financial disaster:
More than 75 percent of these bankrupt families had health insurance but still were overwhelmed by their Harvard Law School, and Ohio University reported in the American Journal of Medicine., the team at
"Unless you're Warren Buffett, your family is just one serious illness away from bankruptcy," Harvard's Dr. David Himmelstein, an advocate for a single-payer health insurance program for the United States, said in a statement.
Of course, this reverses the horse and cart - even if it is true that people who go bankrupt had serious medical problems first, it does not follow that everyone with a serious medical problem goes bankrupt.
In any case, among the many excellent points made by Prof. Zywicki was this:
Many debtors described a complex web of problems involving illness, work, and family. Separating medical from other causes of bankruptcy is difficult. Hence, we cannot presume that eliminating the medical antecedents of bankruptcy would have prevented all of the filings we classified as “medical bankruptcies.” The high rate of insurance among the medical bankrupts suggests that any health reform that fails to improve existing private coverage is unlikely to make a major impact on medical bankruptcy. Moreover, our data also highlight the need for improved disability coverage.
I don't think National Health will prevent drunks from getting fired.
TIMING IS EVERYTHING: The authors of the current study make much of the fact that the proportion of what they define as medical bankruptcies rose dramatically from 42.6% in their 2001 study to 62% in 2007, from which they infer that health care costs are even more out of control than previously.
However, nothing I see in the study to suggest that the authors made any attempt to control for the vagaries of the business cycle. Let's imagine that there are two types of bankruptcies - "medical" bankruptcies, caused by unexpected illness, will be weakly correlated with the business cycle; "normal" bankruptcies, caused by the failure of a small business or the loss of a job, will be highly correlated with the general business cycle.
Back in 2001 the tech bubble had just burst, the S&P 500 fell for most of the year, and we experienced the 9/11 attacks - without looking it up I will bet that was not a great year for small businesses or jobholders.
Conversely, the S&P 500 rose in 2005, rose in 2006, and was still rising in the January to April 2007 period of the second study; let's bet that the business environment was favorable to small businesses and jobholders.
And a caveat - the 2005 bankruptcy reform did change the filing rules for everyone, which complicates the direct comparison of the two time periods.
That said, we would expect that medical bankruptcies ought to be a higher proportion of bankruptcies in 2007, not because medical bankruptcies have risen from their trend line but because "normal" business-cycle-related bankruptcies were down.
Oh, well - this advocacy study will no doubt be recycled endlessly as conventional wisdom.