Give or Take a Million

Give or Take a Million August 28, 2008

Last night I while I was watching coverage of the Democratic convention, I saw an ad promoting an increased government role in health care. The ad depicted a woman and her father, and told the story of how her mother’s illness had driven the family into bankruptcy despite their having health insurance. At the end of the ad, text flashes across the screen saying: 1.85 Million Americans Go Bankrupt Due To Medical Bills In One Year.

Something about that number didn’t sit right with me. After looking around a bit, I found some statistics on bankruptcy in the U.S. According to those numbers, there were 850,912 bankruptcies in the United States in 2007, just under 30,000 of which were business bankruptcies. I’ll admit that math is not my strong suit, but it’s hard for me to see how you could have 1.85 million people a year declaring bankruptcy due to medical bills when the total number of bankruptcies is a million less than that.

According to the same statistics, the only year in which total bankruptcies exceeded 1.85 million was 2005. That year there were 39,201 business bankruptcies and 2,039,214 non-business bankruptcies, for a grand total of 2,078,415. For the statistic cited in the ad I watched to be true even of that year, one would have to believe that more than 90% of bankruptcies in 2005 were due to medical bills, which seems unlikely.

While I was looking around at bankruptcy statistics, I found this paper by David Dranove and Michael Millenson of Northwestern. The paper looked at a different claim, similar to but far less severe than the one in the convention ad, that medical problems contributed to 54.5% of the 1.5 million personal bankruptcies in 2001. According to Dranove and Millenson, even this lesser figure was inaccurate, as it counted as a “bankruptcy due to medical bills” anyone who had out-of-pocket medical bills totaling more than $1,000 in the two years prior to filing for bankruptcy, and in 90% of cases (according to a separate analysis by the DOJ) bankruptcy filers had medical debt of less than $5,000. Ultimately, the paper concludes that medical bills were a contributing factor in around 17% of bankruptcies.

The ad was run by the AARP. I wasn’t able to find anything on their cite sourcing the statistic. I would assume (though I may be wrong) that the statistic wasn’t made up out of whole cloth. There is, I presume, some way of contorting the numbers and parsing the ad’s wording so that what it says is technically true. But I would also assume (though I may be wrong) that whatever the basis for the claim made in the ad, it was highly misleading at the very least. I also have little doubt that the people behind the ad feel little to no sense of shame about the ad’s misleading nature. They undoubtedly think they are acting for a good cause, and it is a sad fact about human nature that when people believe they are acting for a righteous cause, they often believe that anything they do to advance that cause is justified.

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  • S.B.

    Hey, this is an example of Democrats focusing “on the issues,” as MM says. Of course, focusing on issues isn’t a good thing if you’re lying.

  • Kurt

    I think the math works out if families declaring bankruptcy averaged 2.4 people. So 750,000 bankruptcies (in part or whole due to medical bills) would mean about 1.85 Million Americans Go Bankrupt Due To Medical Bills In One Year.

  • Dan

    There is another number goof that they made. Hillary said that there are now 47 million uninsured. Well, the day before the news said that the number of uninsured was down to 37 million. That means that there are fewer uninsured now under Bush than there were when Clinton was president.
    And, Hillary had 8 years in the white house and didn’t make any prgress towards universal healthcare. So why do we think that it could or should happen now?

  • love the girls

    Medical bankruptcies do happen, and even if the number was 3 million or 30 million a year, that is not an argument either for or against universal health care.

    And it’s especially not and argument for universal health care at the federal level.

    It is an argument against unrealistic expectations by Americans who demand to consume more than they produce. And as is typical, universal health care is just another demand without a corresponding production to pay for it.

  • Katerina

    Don’t get stuck in the math. Don’t get stuck in the statistics. Numbers dehumanize people.

  • Winston D

    Please tell me that was a drily ironic statement Katerina. Please?

    Otherwise it sounds like you object not only to complaints about lying advertisements, but also to the type of basic analysis necessary to formulating public policy. Identifying the contours of a problem is the first step towards addressing it. How could a politician choose between two options for healthcare reform without having accurate statistics or estimates based on reliable statistics about its effect on people?

  • blackadderiv

    Kat,

    If one wants to try and make the case for more government involvement in health care without using numbers and statistics, they are free to try to do so. But if people are going to use numbers and statistics, they shouldn’t use misleading ones.

  • Mark DeFrancisis

    This probably has to do with the rewriting of bankruptcy law that took place whenever the Republicans also controlled Congresss, a couple of years ago– making it scandalously more creditor friendly. 😉

    And when will debtors prisons return? We will wait and see what the ‘law and order’ party says next week. Maybe they secretly have in mind transferring these debtors to undisclosed jails in foreiogn lands. Another creative DOJ could categorize them with those who suffered similar fates recently…

  • Katerina

    I take this post in the context of the rest of Blackadder’s posts on healthcare. If this post would be made in the context of the daily tragedy that families go through for the lack of health care insurance or for the lack of money to pay co-pays, then I would be more understanding and accepting of the numbers. It seems, Blackadder, that you start with a premise and look for numbers to prove it. I’m only inviting you to know the stories behind the numbers: the story of my coworker’s dad who is 60 years old and fell down from a tree and broke several bones. His health insurance company rejected his claim for physical therapy. He can’t afford it so he is not being treated properly. Or take his daughter who is in her mid 30s and has two children and has the beginning of cervical cancer and her insurance company declined to pay for two of her mandatory treatments a year. They would only pay for one. She doesn’t have money to pay for them, so she’s only getting one. Tell me about their stories. Tell me about the lives behind the numbers and then I can be more understanding.

  • Number of uninsured:

    http://www.philly.com/inquirer/world_us/27520064.html (2007=47 mill, 2008 45.7 mill)

    Round to 50 million and make the US population at 300 mill, that is one in 6.

    The way a medical bankruptcy happens begins with a chronic illness that becomes debilitating. Preventing work. ( And most of the folks who have difficulties with insurance work.) Then the bills pile up and folks fall way behind.

    “Love the girls” participates in the routine victim blaming: that the awful thing that happened is because the person for whom the disaster occurred is at fault. Victim blaming-very classy. Very family-friendly.

  • Katerina

    Yes, public policy is much determined by numbers and statistics, but the numbers by themselves are devoid of meaning. They are, sometimes, misleading. Christians don’t get stuck in the numbers. When we talk of moral questions, we don’t talk in terms of statistics. We take them and use them to understand the problem, but the center of moral questions always remains the human person.

  • Winston D

    Right, the moral judgments that should guide public policy are not empirical. That doesn’t mean that numbers are not important to the difficult task of applying moral judgments to specific public policies. I guess your position is that they are on the side of the angels, so it does not matter if their numbers are right or not (the inconvenient truth defense), but as BA said, if they are going to use numbers, they should be correct.

  • This is the year of St. Paul One of the interesting things about Paul, as noted by scholar NT Wright is that he created faith communities, worshipping communities integrating wealth and poverty.

    That arrangement has changed. Wealth secludes itself in its own parishes, poverty in its own parishes.

    If one does not know anyone without health insurance, than this says something about one’s “circles.” We’re talking about 1 in 6 Americans. Who’s in our social circles? And, considering that most children, due to federal legislation working to ensure most children, these uninsured are almost all adults. Increasing the proportion of adults.

    I know lots of stories.

  • blackadderiv

    When I offer personal stories (such as this one) of the failings of government involvement in health care, I am liable to be told that anecdotes don’t prove anything, as every system has its failings. Yet when I criticize the misleading statistics used to support more government involvement, I am told that numbers dehumanize people.

    I would agree that political questions always have a moral dimension and that at the center of that should be the dignity of the human person. But while moral principle is an essential part of public policy, it cannot be the whole of it. As Etienne Gilson said, piety is no substitute for technique. We need numbers and statistics, facts and theory, in order to be able to figure out what policies will truly to the best job of promoting human flourishing.

  • Katerina

    Well, you offer personal stories of the failings of government involvement in healthcare but not the personal stories of the failings of privatized health care as it stands for the vast majority of Americans 🙂 I was hoping you would do the latter, since that is what affects most of us.

    But while moral principle is an essential part of public policy, it cannot be the whole of it.

    This just doesn’t sound right. But let me think more about it while I look like I’m getting work done here in the office 😉

  • Morning’s Minion

    One of the leading expert in personal bankruptcy is Elizabeth Warren of Harvard Law School. She found that half of all bankruptcies are precipitated by illness or medical bills. I think the 1.85 million is consistent with Warren’s research (and may even draw on it)– and it includes dependents as well as those who file for bankruptcy.

    So what’s going on? Well, the lack of health insurance is one major issue. But 75 percent of these poeple had health insurance. There are two further factors: chronic underinsurance (high co-payments, deductibles, exclusions from coverage) and employment. For a large number of people were too sick to work, and lost their jobs. And with the jobs gone, employers cancel coverage.

    Want more statistics? 20 percent went without food. One third had utilities shut off. Two-thirds skipped going to the doctor. These are the statistics, from a highly reputable study. Not lies, as SB would like to believe.

  • jonathanjones02

    We need numbers and statistics, facts and theory, in order to be able to figure out what policies will truly to the best job of promoting human flourishing.

    Yes – and we also should be unafraid of generalizations. “On the average” can be an instructive and useful measure in social science.

  • love the girls

    Daniel H Conway writes : ““Love the girls” participates in the routine victim blaming: that the awful thing that happened is because the person for whom the disaster occurred is at fault. Victim blaming-very classy. Very family-friendly.”

    I see how you could draw that conclusion, but a better reading is : American society (as a whole), lives in pursuit of luxuries while expecting others to pay for their necessities.

    Health insurance doesn’t stop medical bankruptcy. It still happens because the insurance doesn’t pay the mortgage etc, thus medical bankruptcy is rather meaningless, but if it does have meaning it’s that the person who went through it was not able to make payments on all his other expenses. Either through no fault of his own or through his own extravagance of living beyond his means.

  • blackadderiv

    The paper by Dranove and Millenson I linked to is addressed to the Warren number.

  • Btw, this may surprise some, but European countries tend to have far, far stricter bankruptcy laws. No 7 years and all is forgiven. Confiscation of your income down to what is called in Austria “Existenzminimum’. Officers of the court come and take your stuff – everything except bed and other vital piece. And then you continue on the legal minimum, no matter how much money you make.

  • Morning’s Minion

    Actually, Gerald is sort of right. Bankruptcy laws are much tougher, and it’s rare that you can successfully walk away from debt. If you default on a house in the UK, you will be liable for that debt pretty much forever. But here is the big difference: nobody in Europe goes bankrupt due to medical bills, because they have sane and humane single=payer systems.

  • T. Shaw

    From the US Census Bur.:

    Facts: In 2007, about 254,000,000 (85% of all Americans) of us had health insurance coverage. The number without insurance improved to 45.7 million (COINCIDENCE: about the number of US murdered unborn since 1973) from 47 million in 2006.

    Facts: About 54% of uninsured are aged 18 to 34, and many of them voluntarily chose to forgo health coverage. My son’s best friend opted out of PAID health coverage for the $$$.

    Facts: Health insurance is more expensive than it needs to be due to regulation and other market interference. People who are covered through their employers — 59% in 2007 — and pay no taxes on the value of the benefit.

    MM: Approximately 98% of the population is not terminally ill. The last thing on the mind of someone who’s dying of cancer, or whatever, is his/her financial condition. If bankrupt, they qualify for medicaid. The health care is paid by the taxpayer.

    It appears this problem of the health uninsured may not be as large as election-year opportunists want it.

  • T. Shaw

    Plus, about 298,000,000 Americans did not declare bankruptcy last year.

  • Policraticus

    ESTIMATION (typically done in informal conversations at the breakfast table)

  • T. Shaw

    PS: Joe Biden was one of the leading cheerleaders for Bush’s execrable Bankruptcy Bill!!!!

    That’s because he’s in the tank for the (DE credit card) banks.

  • Policraticus

    I found Blackadder’s approach to this interesting…he has a gut feeling and then “searches.” So far so good. Methodologically, I wonder how many statistics were passed over before those that support that gut feeling were found. A quick search online reveals that the links given were selected over against many others that speak against Blackadder’s gut reaction.

  • blackadderiv

    Policraticus,

    I found a several different sources on the number-of-bankruptcies statistic. I went with the one I did because the data was given annually, rather than by quarter, which is what the ad used. The other sources I found agree with the numbers given in my post.

    I actually wasn’t able to find much on the statistic given in the ad itself. Goggling “1.85 million Americans go bankrupt due to medical bills in one year” turned up no hits, and as I said in my post, I wasn’t able to find any explanation of the number on the DividedWeFail website. (If you were able to find someone on this point, as your comment suggests, please let me know).

    The reason the statistic stuck out to me is that I remembered reading somewhere that there were around 2 million bankruptcies a year in the U.S. and it didn’t seem likely that almost all of those would have been due to medical bills. As it turns out, of course, there are now less than a million bankruptcies a year, which makes the number mathematically impossible.

    Would I have been as curious about the number if I had seen it back when I supported single-payer? Probably not. Human beings tend to be suspicious of claims that go against other things they believe and credulous towards claims that confirm what they already believe. It would be foolish of me to deny that I am subject to this same problem. This is one of the reasons why arguing with people who have different views can be helpful, as they can often do a better job of pointing out the weak points and/or inconsistencies in one’s own views than one could if left to his own devices (of course, arguments have a tendency to degenerate into name calling and retrenchment, but that’s another story).

  • “Love the girls:”

    “I see how you could draw that conclusion, but a better reading is : American society (as a whole), lives in pursuit of luxuries while expecting others to pay for their necessities.”

    On this we would agree. In a society with a Playstation and cable in nearly every home, that the community’s common wealth (and in this case health) is often the last thing anyone wants to pay for. More likely we pursue the overindulgence of entertainment.

    Thank you. Something to think about.

  • Winston D

    How delightfully subtle Policraticus is in making accusations of bad faith. The precise number is not all that important; either way it’s terrible that x% of the population enters bankruptcy because of medical bills. If numbers are used, though, they should be correct.

    It’s surprising that Poli would go so far as to insinuate bad faith in service of such a small point, particularly since BA provided links to academic research on the subject from well-regarded scholars.

  • All this talk about how a single payer health care system is required to prevent bankruptcy got me curious about what Canada’s personal bankruptcy rate is. According to BankruptcyCanada.com there were 79,796 consumer bankruptcies in Canada in 2007.

    http://www.bankruptcycanada.com/bankstats1.htm

    The Canadian population is 33,390,000 as of July 2007. That produces a bankruptcy rate of 0.24%.

    The US population was 301,140,000 in July 2007, and there were 822,590 personal bankruptcies in 2007, so the US bankruptcy rate is 0.27%.

    That’s a difference of 0.03% or 3 in 10,000 people.

  • And Poli: Are you claiming that Blackadder passed over many different numbers which suggested that the number of bankcruptcies last year was something other than the number that he gave? It’s not a statistic that there could be a whole lot of uncertainty about. What exactly do you think was passed over here in order to substantiate a gut feeling? If the number of actual bankruptcies is far less than the number claimed to result from medical bills, then clearly something is wrong.

  • I found Blackadder’s approach to this interesting…he has a gut feeling and then “searches.” So far so good. Methodologically, I wonder how many statistics were passed over before those that support that gut feeling were found.

    Isn’t this nothing more than testing a hypothesis? The only way it’s problematic is if he’s deliberately selective in his testing, ignoring evidence to the contrary. It doesn’t appear that it was the case.

  • Magdalena

    My experience with the uninsured and medical hospitals seems to be so different from other people’s. My sister had almost no income last year and is unable to work a job where she will get benefits. All of this is actually a result of her chronic and incurable disease. She is an adult and basically has no resources. She lives with our parents and that is the reason she is not homeless.

    Her (very expensive) medical care is provided free of charge by the Cleveland Clinic, which is one of the finest hospitals in the country. There was not even any suggestion that she go into any debt at all. There is actually a sliding scale they use to determine how much you have to be responsible for, and they just have her fill out paperwork every three months about her continuing inability to pay. The horrible, eeeevil drug companies also send her the (very expensive) medication she needs absolutely free of charge.

    When she was first diagnosed with her disorder our whole family was bracing because we had heard all the horror stories about how people get into hundreds of thousands of dollars of debt with no insurance, how you can’t get the care you need, etc. etc. If anything her doctors have pushed for a higher standard of care (more tests, different therapies, more consultations) than even we ourselves wanted for her. We have been incredibly pleased with the system.

    But there are so many annecdotes that illustrate problems in the system. Why the difference? Are all of these people at the not-so-sweet spot on the scale where they make too much money to qualify for financial assistance but too little to buy their own insurance or pay for the care out of pocket? My experience has been so different that it just surprises the heck out of me.

  • Magdalena,

    I’m glad to hear about your sister. That is very rare when I compare to the stories by my coworkers, friends, family and their families. I very much doubt that your sister’s case is frequent, because drug companies cannot just send medication for free to everybody or clinics taking the full load of a patient’s treatment. Everybody would go out of business, because the system is not set up to work that way.

    Are all of these people at the not-so-sweet spot on the scale where they make too much money to qualify for financial assistance but too little to buy their own insurance or pay for the care out of pocket?

    I made $60,000 a few years ago and had very good health insurance from a Top 10 Fortune 500 company. I started having chest pains and had to go to the doctor many times to get tests done. Thankfully it was nothing bad and it turned out to be a swollen chest tissue. But I almost felt sick when I started getting the bills: the co-pays were killing me–thousands and thousands and thousands of dollars. I lived with my parents at the time so I was OK, but how can a single woman making over $60,000 apply for financial assistance? IF you’re insured, what kills you are the co-pays.

  • Magdalena

    There are similar situations at my company, which is also a Fortune 100 with awesome health insurance. The co-pays can be really high. But most of the plans have a built in trigger, I forget what it’s called an out of pocket limit or something? Which means that your out of pocket expenses for the whole year can’t be over a certain amount. And most of them are around $2,000. Now $2,000 is not chump change by any stretch of the imagination, and certain things like emergeny room vists aren’t covered etc, but it is unlikely to bankrupt anybody. Maybe my company just manages to wrangle really good terms. Not everybody is as fortunate.

    A lot of people at the Cleveland Clinic seemed to be getting some kind of assistance including drug assistance. They actually had an entire department dedicated to helping people handle the financial aspect of their medical issues. We met with one of the counselors several times and she was helpful, did not condescend to us or anything. Then again it is a really nice hospital and a very-well endowed not-for-profit, its legal name is the Cleveland Clinic FOUNDATION. They probably have a lot of resources other places don’t have.

  • love the girls

    Katerina writes : “how can a single woman making over $60,000 apply for financial assistance? ”

    $60,000 a year with no dependents, perhaps you should cut back on your extravagances.

    I know a number of men raising families on that, they need assistance.

  • S.B.

    One of the leading expert in personal bankruptcy is Elizabeth Warren of Harvard Law School. She found that half of all bankruptcies are precipitated by illness or medical bills

    You ought to be less trusting in any statistic that seems convenient. See http://volokh.com/posts/1108558247.shtml

  • HA

    You ought to be less trusting in any statistic that seems convenient.

    Perhaps his source was selected “over against many others” that went against what his “gut feeling” told him.

    I’ve heard that kind of thing happens around here.