A new analysis of the data used in a much-touted 2005 study shows medical expenses led to only 17 percent of personal bankruptcies, not the nearly 46 percent estimated by the original study’s authors, an article posted Tuesday on the journal Health Affairs’ Web site shows.
The first study, written by three Harvard University professors and a colleague at Ohio University, was released as Congress was debating major bankruptcy system reforms, and it was widely cited by consumer advocates in the fight against those reforms.
The study’s authors are also vocal supporters of national health care coverage, and the notion that middle-class, employed Americans were losing their homes, livelihoods and access to credit just because they’d gotten sick also became part of that policy debate.
But in an article titled “Medical Bankruptcy: Myth Versus Fact,” David Dranove, of Northwestern University’s Kellogg School of Management, and Michael L. Millenson, a consultant and visiting scholar at the Kellogg School, argue that that’s a fallacy.
“It is insufficient to show that medical problems are associated with bankruptcy,” they wrote. “One must determine whether, and to what extent, medical spending causes bankruptcies.”
To answer that question, they said, “we must identify those people who stated that illness or injury was a cause of bankruptcy and stated that medical bills contributed to bankruptcy.” By that measure, they found, 17 percent of the bankruptcy filers qualified.
“Even for that 17 percent,” they added, “we cannot state with any degree of certainty whether medical expenses were the most important cause of bankruptcy.” That would require more in-depth analysis, they said, and other studies have concluded that “medical debt is like any other debt – a cause but not the most important cause of bankruptcy.”
And disputing another claim made by the Harvard-Ohio team, Dranove and Millenson also characterized most of the bankruptcy filers as “marginally middle class” at best, noting their median income was only $25,000.
Just like the original study, Dranove and Millenson’s analysis immediately drew strong criticism. Health Affairs commissioned a response from the first study’s authors, and they argued that the Kellogg scholars had “manipulate[d] the data far beyond legitimate reinterpretation.”
They noted that the new analysis classified costs for medications and home care as “non-medical,” and that it excluded, for instance, “bankrupt families who took out second mortgages to pay medical bills [but] described their reasons for filing as ‘to save our home.’ ”
Ann Rhodes, of the local advocacy group Rhode Island for Health Care, said the impact of medical costs is real.
“We talk to Rhode Islanders every day who are struggling to afford the health care they need,” she said. “In fact, several [people] who are active in our organization had to sell their homes because of severe medical debt due.
The Health Affairs articles are available at www.healthaffairs.org.
