Medical Bills And Bankruptcy - Here We Go Again

Once again we get an advocacy study claiming that high medical expenses are driving people into bankruptcy [and Megan McArdle doesn't like it].

Back in 2005 Prof. Elizabeth Warren made a similar claim during the debate on the revised bankruptcy bill, which was refuted by Todd Zywicki.

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 medical debts, the team at Harvard Law School, Harvard Medical School and Ohio University reported in the American Journal of Medicine.

"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:

Moreover, it is well-understood that debtors who are falling into bankruptcy pick and choose which debts they pay, paying down their mortgage or nondischargeable debts for instance, while not paying their unsecured debts, such as medical and credit card debt. So the fact that the medical debts were unpaid says little, because it may reflect strategic payment of debts prior to bankruptcy.

Just to emphasize the obvious - in many of these medical bankruptcies, it is not the high cost of health care that leads to bankruptcy; it is the loss of employment income due to disability.  Since this is an advocacy piece the authors obscure that point, but this does appear in the Q&A (my emphasis):

8- Would health reform eliminate the problem of medical bankruptcy?

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.

And one last caveat from the Zywicki rebuttal - alcoholism and drug addiction are considered to be a medical reason for bankruptcy, as are other things.  From Zywicki:

First, consider the self-identified filers. Among the self-identified factors that are listed as "medical" causes of bankruptcy in Exhibit 2 of the article are the following: illness or injury, birth/addition of new family member, death in family, alcohol or drug addiction, uncontrolled gambling. First, it is surely open to question whether uncontrolled gambling or a death in the family really should count as a "medical" problem. More generally, the category "illness or injury" is very broadly defined in the study, and there is no apparent limit on the time frame over which the illness or injury occurred, or the severity. So classifying all of these factors as medical problems that have "caused" bankruptcy certainly seems open to question.

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.

Comments

[Danube of Thought]

"Palestinians must abandon violence."

I thought we weren't supposed to impose our values on others.

[Danube of Thought]

I saw the Rasmussen numbers and came immediately to post them here, but was beaten to that happy task. The overall "at least somewhat approve" is down to 45% as well.

Can it possibly be that people are getting very weary of having this guy trash the US to every asshole in the world? And the moral equivalence drumbeat is perhaps becoming extremely tiresome as well...

[Danube of Thought]

Neo, what is the source of that "with/without recovery plan" graph? As I read the thing, it appears that "jobs saved" is a large negative number.

[Porchlight]

Can it possibly be that people are getting very weary of having this guy trash the US to every asshole in the world?

FWIW Rasmussen seems to attribute the slide to the GM news, DoT. I don't know if I buy that. Maybe it was the speech.

[clarice]

Maybe it's becoming clear even to the stupids that Ibama prefers waltzing about making vapid self-praising speeches to governing.

[Rick Ballard]

Porchlight,

3 day average - the speech could only have had a minor impact. The Ogabe power grab may finally be attracting some attention among the Muddle. I wouldn't bet on it but there is always the chance that they finally noticed the taste of the new cud.

[Bill in AZ]

there is always the chance that they finally noticed the taste of the new cud.

Green Compost? From the decaying "Less than Expected" job market?

[Porchlight]

Thanks, Rick, I'd forgotten about the average. It will be interesting (I hope) to see what transpires in the next few weeks. Today's unemployment news isn't going to help.

Clarice, I think that Obama believes that making speeches *is* governing.

[Ignatz]

--So you are satisfied with a 'reach-around' when yer healthcare professional buggers you?--

Hope clarice keeps her pistolas holstered but I feel a need to respond to this idiocy addressed to me by Cleo.

As many here know my wife was darn near dead from breast cancer three years ago. Couldn't walk from bed to the bathroom on her own. Stage four, throughout her thoracic skeleton. Stage five is dead.
Far from "buggering" us, her healthcare professionals saved her life with the quick and efficient application of chemo, regardless of the cost. Our insurer, blue shield, has not denied her any care she has needed.
She is now healthy, productive and happy.

In Canada or Britain the simple fact is I would quite probably have already buried her because they would not have wasted the resources on a stage four patient or she would have had to wait so long she would have already been dead before she was at the head of the line.

So Cleo you can take your bullshit idealogy and shove it up your ass because it kills people like my wife.

I said it before and I'll say it again,
WAFI. W(hat) A F(***ing) I(diot)

[Porchlight]

Thanks, Ignatz - much needed and well done.

What an incredible story. God bless you and your wife and the miracles of Western medicine, especially US medicine.

[Rick Ballard]

DoT,

The chart linked by Neo came from this blog which appends this note:

*As always, this chart was constructed by overlaying the actual economic data on top of the chart made by Obama’s economic team to market his stimulus plan.

There's some discussion in comments there about the State Run Media pimping the itty bitty, teeny tiny, "green shoots" aspect in a manner slightly different than the approach used in reporting the "jobless recovery" of '02-'04.

I think 11% unemployment is a very real possibility. I'd put a 40% probability on it at the moment. Ogabe's Team TurboZero is just that good.

[Pofarmer]

The drop in employment was lower than anticipated.

It really cracks me up. I can remember under GWB when unimployment going from 5.7% to 5.6% was "worse than expected job growth." Now hitting 9.4% unemployment is "better than expected unemployment growth." I mean, really, WTF? It's SUMMER! Unemployment should be DROPPING. Instead, it's just not going UP as fast. WHOOO-HOOOOO. Let's see what it looks like in the fall when summer industries normally lay off.

[RichatUF]

Pofarmer-

Or when the dealership closings start hitting the numbers. Wanted to ask Rick if he thought the numbers were a bit odd between the establishment survey and the household survey, nothing jumped out at me, though government employment was flat. I don't recall a nearly 400k gap between the 2 numbers in recent memory (companies dumping ICs and small businesses closing?), but I'm too lazy to dig through the tables.

[Danube of Thought]

Well. In an attempt to revive the drumbeat, I give you the following quote (forgot the source):

" The group [Indiana pensioners]argues that the U.S. government's intervention in the bankruptcy is unconstitutional, since the proposed plan will pay back unsecured lenders before those that were secured."

No mention of why that would be unconstitutional, but at least it's something. I guess the 2nd Circuit hearing will be over within a few hours.

[Danube of Thought]

Thanks, RickB. I sure would like to see the original chart used by the Obama team.

[clarice]

DoT--Don't you suppose the Due Process argument is assumed?

[Fresh Air]

Retail sales are in the dumper again, after one strong month of tax refund checks going towards stuff. There's an 11-month backlog of unsold homes and the foreclosure wave is only about half-started. With the big companies not buying the greenshoots malarkey, it's up to the little guys to jump-start the economy. Unfortunately the little guys (a) can't get credit; and (b) are about to be taxed to the bejeezus at both the federal and state levels.

Nice going, Zero. Carter will be sleeping soundly and thinking of you the moment they put pennies on his eyelids.

[Rick Ballard]

Rich,

Gotta run but it ain't the dealerships - it's the plants that aren't going to reopen after "summer break". And the suppliers plants. And the suppliers to the suppliers plants.

I believe the consumer can sock away over $1T in savings rather than the current $620B with just a little more effort. And I believe they will too. There's nothing wrong with a moribund $143 trillion economy. Aside from the job losses, bankruptcies, foreclosures and coming inflation, everything is just peachy in Ogabeland.

[JM Hanes]

DOT:

"I sure would like to see the original chart used by the Obama team."

You can find the original on page 5 of the Romer Projections PDF put out last January. The blogger copied it directly and is superimposing dots for the actual monthly unemployment numbers as they come in.

'The drop in employment was lower than anticipated."

Just imagine the victory celebrations if the number stays at 9.4% in June. Obama will probably ask for another Prime Time Presser.

[Fresh Air]

Rick--

Here's your summary of state disaster areas.

Excerpt: The number of states experiencing revenue shortfalls increased in fiscal 2009. Revenues from all sources which include sales, personal income, corporate income and all other taxes and fees exceed expectations in two states, are on target in ten states, and are below expectations in thirty eight states. This is in contrast to fiscal 2008 when twenty-five states reported that revenue collections exceeded estimates.

The Mediacrats aren't even thinking about this stuff. The combined shock of the end of the Bush tax rates and the beginning of the Zero-Blue State Alliance for Sharing the Wealth (TM), will be beyond crippling.

[tld]

We are a conservative, Christian family who was raised NEVER to declare bankruptcy. After a lot of crying, agonizing, harassing phone calls, and straight talk from a home mortgage loan agent we filed for bankruptcy. It was the most upsetting thing I had ever done. Medical bills also have a trickle down effect on your other finances and the bill collectors always want more, more and more. My dad believed that if you paid them something every month that they would leave you alone. They didn't. We bought a house six years ago and have never looked back. We continue to have serious medical problems and have trouble paying all the bills but we live with the best medical system in the world and I would not change it for anything. One of my co-workers said we should not have to go bankrupt in America because of medical bills. I replied to her that is the cost of FREEDOM and we will live with that happily. It does no good to downplay these studies because my guess is they are true. I have met many people with chronic health issues and/or disabled family members who can never escape the vicious cycle that medical problems bring even with private health insurance. The question should always be to liberals who hold up studies like this that we should have socialized medicine; Is socialized medicine better for sick people?? I think not.

[JM Hanes]

Sue:

"Go Cheney"

Amazing what happens when he's actually free to speak his mind again, isn't it"

My guy is doing yeoman's work too:

GOP members on the Intelligence Committee on Thursday told The Hill in on-the-record interviews that they were informed that the controversial methods have led to information that prevented terrorist attacks.

When told of the GOP claims, Democrats strongly criticized the members who revealed information that was provided at the closed House Intelligence Subcommittee on Oversight and Investigations hearing. Democrats on the panel said they could not respond substantively, pointing out that the hearing was closed.

[...]

“Democrats weren’t sure what they were going to get,” said Rep. Pete Hoekstra (Mich.), ranking Republican on the Intelligence panel, referring to information on the merits of enhanced interrogation techniques. “Now that they know what they’ve got, they don’t want to talk about it.”

In other encouraging news, E.J. Dionne declares defeat:

A media environment that tilts to the right is obscuring what President Obama stands for and closing off political options that should be part of the public discussion.

Yes, you read that correctly: If you doubt that there is a conservative inclination in the media, consider which arguments you hear regularly and which you don't. When Rush Limbaugh sneezes or Newt Gingrich tweets, their views ricochet from the Internet to cable television and into the traditional media. It is remarkable how successful they are in setting what passes for the news agenda.

Pretty ironic when Dionne, of all people, writes a must-read for the conservative Chicken Littles trying to tamp down the rhetoric. Rahm's oh-so-clever campaign to raise Rush's profile is working out oh-so-well, isn't it? Dionne, of course, is really bemoaning the fact that lefty critics aren't getting much play. I'd saw drawing more attention to that crowd holds real promise too.

[ben]

Conservatives are winning!!!
Well, in the UK, Labour is getting a drubbing losing everywhere.

http://news.bbc.co.uk/2/shared/bsp/hi/elections/local_council/09/map/html/map.stm

[JM Hanes]

MayBee deserves a shout out too for what she and her lifeguard at the pool have accomplished! Newsbusters reports that:

The network evening newscasts on Thursday gave positive reviews to President Obama's speech in Cairo, with the NBC Nightly News the most glowingly positive with ABC giving the most attention to skeptics in the Muslim world.

Together they are changing MSM culture, one network at a time.

[jimmyk]

If you doubt that there is a conservative inclination in the media, consider which arguments you hear regularly and which you don't. When Rush Limbaugh sneezes or Newt Gingrich tweets, their views ricochet from the Internet to cable television and into the traditional media.

The irony is that this statement indicates the opposite of Dionne's claim. What it shows is that the public is starved for what Rush and Newt offer, and the reason their views "ricochet" is because of the emptiness of the MSM echo chamber. Leftwing pundits' views can't ricochet because the media is already saturated with them.

[Sue]

Oh, I suspect JMH is on the right trail, wondering about Rham. He has to be wondering what the hell happened. Polls don't lie. Rush is hated. ::grin::

[jimmyk]

The number of states experiencing revenue shortfalls increased in fiscal 2009.

The NY Times reports that income tax revenue for NY State is off, year-to-date, by 49%. That's not a typo. That's what you get when the parasites put in a progressive tax system (on top of the already hyper-progressive system of the Federal parasites) that feeds off the highest earners. Talk about leverage.

LUN

[PaulL]

Bill in AZ: It's about damn time!

[PaulL]

Not all UAW members are happy with Obama now. As a matter of fact, those who have been told that their jobs will soon be gone, and those who have already lost them, are shell-shocked. Obama was supposed to save them.

It's one thing to be 100% Democrat when you have a job. It's another thing when you've been told your skill at your trade is no longer needed and you have no prospects of using it anywhere in the country.

[Old Lurker]

Steph, after all that surgery, how is your child?

[Danube of Thought]

Thanks, JMH--got it scanned and saved for future reference. I wish the contrast between the projections and the reality were getting more (i.e., at least some) coverage.

[Danube of Thought]

This is a cut-and-paste of a post concerning Trolls. I’ll re-post it (with my JOM colleagues’ indulgence) from time to time as appropriate.

This site is occasionally infected with one or more Trolls. After gentle prodding by Clarice a year or so ago, I came to the realization that the only cure for this infection is to ignore the Troll altogether. The ones who appear at JOM all have the intellect and the mindset of the juvenile delinquent: there is no effort at substantive engagement; rather, the aim is simple disruption. But the only way they succeed at disruption is when they elicit responses. I strongly recommend ignoring them altogether.

I have learned to recognize their posts immediately, and to scroll past them as one side-steps dog droppings on the pavement. The difficulty is that there is no easy way to recognize and avoid the JOMers’ responses. When one gets bogged down in them, the Troll has successfully disrupted and hijacked the thread. Please make no effort to respond in any way to these fools.

[Fresh Air]

jimmyk--

FIFTY PERCENT down in NY! That's what happens when you kill the Golden Goose. I'm sure New Jersey and Connecticut will be happy to take the trailer trash investment bankers who aren't good enough for New York.

Maybe Nanny Bloomberg will reinstate smoking everywhere to stimulate the restaurant business. Wouldn't want to be an innkeeper in Manhattan right now.

[Fresh Air]

PaulL--

What will happen will all the bureaucrats who belong to AFSCME and SEIU get pink slips?

Anyone who thinks the Mediacrats will go to the barricades in 2010 is crazy. But every conservative who draws breath will be voting. This could be a wipeout worse than the one the GOP faced in 1974.

[Old Lurker]

I'm with DoT re Trolls.

[Old Lurker]

JimmyK.

That NY stat is wild. Too bad Obama's next trick is going to be to nationalize those states so the prudent one's can pay for the spendthrifts. Boy I hope somebody pushes back on that.

Time for Texas to start packing?

[clarice]

I blogged this post on AT and here is an interesting comment we received:
" Posted by: Butternut
Jun 05, 11:36 AM Report Abuse
Reply

--------------------------------------------------------------------------------

I am one of the evil doers who would be sending those with health insurance into bankruptcy over medical debt. For 15 years we have been doing internal studies on our debtors who file bankruptcy. We collect nothing but medical debt (mostly with lawsuits) and want to know the effect our collection efforts have on our debtors. We have consistently found that between two and three percent of OUR debtors who filed bankruptcy did so primarily because of medical debt. Credit cards, credit cards, credit cards and dumb mortgages are the cause of bankruptcy, not medical debt. "

[Danube of Thought]

Let us suppose, just for the sake of argument, that medical debt contributes to a significant number of bankruptcies.

What, if anything, does that tell us about what we should do to change the manner in which everyone else provides for his or her health care without going bankrupt? (Does it even tell us anything about what, if anything, we should do about those who do go bankrupt?)

Or are we simply to conclude that, because some people go bankrupt because of these costs, a single-payer system should therefore be implemented? What about those who go bankrupt because of legal gambling losses? Frivolous and undisciplined use of credit cards? Chronic aversion to gainful employment? Bad luck?

There seems to be a slice of our population who believe that everyone should be insured by everyone else against any form of hardship. Maybe that's where we're going.

[Stephanie]

Thanks for asking OL... if I hadn't told you about the situation, looking at her, you would never know. She literally had no roof of her mouth but no lip or gum was involved. The docs think the skin just didn't close and the hard palate never formed.

Now she has a nice pharangeal flap in the back of her throat(she has a hole in the back of her throat, on purpose) and I am guaranteed one frantic call from the school clinic a year demanding I take her to the hospital to fix an "accident she must have had" at school with a pencil....

[Fresh Air]

DoT--

Yes. And by extension, it means a National Lottery will solve all our gambling problems.

[Old Lurker]

That sounds great, Steph. Tough few years, I'll bet!

[Old Lurker]

FA...those lotteries are meant to solve the SCHOOL problems, doncha know. In Maryland we need a lottery and now we need Slot Machines both.

[daddy]

"The NY Times reports that income tax revenue for NY State is off, year-to-date, by 49%."

So when is the Governor going to propose doubling taxes? (49% X 2) = 98%. Problem solved.

[Fresh Air]

Daddy--

Congratulations. You live in one of only two states that is exceeding its projections for revenue collections.

[Stephanie]

Is Texas the other?

[jimmyk]

I'm guessing North Dakota, but I'm not sure where FA is getting that info. It's not in the LUNed article.

[Jane]

I saw Rick Perry yesterday. Texas has a surplus. Last year they were responsible for 70% of all new jobs. He arrived on the job with a deficit and cut taxes drastically. I want to move there.

[Melinda Romanoff]

Stephanie-

ND is definitely one of the winners, due to the Natural Gas fields.

[Fresh Air]

The other one is Oklahoma, if anyone still cares.

[pearl]

Freshwater pearls
Pearl necklace
Cultured pearl
Pearl ring