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.