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More on those "medical" bankruptcies

This isn't the first time we've noticed Todd Zywicki's and Gail Heriot's critique of this study, but it's back in the news:

The study's central findings ["Illness and Injury as Contributors to Bankruptcy," 2005, by Harvard profs David Himmelstein and Elizabeth Warren] were that 54� percent of all bankruptcies have a "medical cause" and 46.2 percent of all bankruptcies have a "major medical cause." ...[T]he only way to make such a claim is to gerrymander the definition of medical bankruptcies to generate the desired results. ...

For example, the study classifies uncontrolled gambling, drug or alcohol addiction, and the birth or adoption of a child as "a medical cause." There are indeed situations in which a researcher may legitimately classify those conditions as "medical," but a study used to prove Americans are going bankrupt as a result of crushing medical debt is not one of them.

A father who has gambled away his family's mortgage payment is not the victim of crushing medical bills. Similarly, new parents who find they can no longer afford their previous lifestyle now that one of them has to stay home with the baby will usually find the obstetrician's bill the least of their problems....

The authors also classified bankruptcies as having a "major medical cause" if the debtors had more than $1,000 in accumulated, out-of-pocket medical expenses (uncovered by insurance) over the course of the two years prior to the bankruptcy, even if the debtors did not cite illness or injury as among the reasons for their bankruptcy.... A bankruptcy with $1,001 in uncovered medical expenses and $50,000 on a Bloomingdale's card would constitute a "medical bankruptcy" in their study.

The sequel: Profs. Himmelstein and Warren have just presented their study in testimony before an admiring House subcommittee building the case for further government intervention into health finance. Prof. Zywicki and Heriot take a severe tone in this Washington Times op-ed, while Josh Wright comments at Truth on the Market. Prof. Warren replies here, and her ally Bob Lawless, of Credit Slips, here.

More: See also this article by David Dranove and Michael L. Millenson which ran in Health Affairs last year (h/t reader Linda Gorman).



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.