Now, it is possible that this is true. The fact that it seems to disagree with every other study I've ever read that is not authored by Elizabeth Warren, and also, the self-reports of the people in her study (only about a third of whom attribute their bankruptcy to a health problem) could just be a fluke. It doesn't necessarily mean that it's wrong.
Yet upon closer examination, it turns out that it is not just wrong, but actively, aggressively wrong. Warren and her co-authors have obscured important and obvious facts that call the integrity of the work into serious question.
The text itself raises a huge red flags. It's hard to believe that more than half of people who have been pushed into bankruptcy by a medical issue don't understand this fact. Perhaps they are not the brightest bulbs on the Christmas tree, but could it really be true that most people catapaulted into a financial crisis by their medical bills don't even notice that health care expenses are their main problem?
My radar is further engaged by the fact that they're implying a really astonishing surge in medical-bill-driven bankruptcies, in a healthcare environment that just didn't change all that massively. Their study opens:
As recently as 1981, only 8% of families filing for bankruptcy did so in the aftermath of a serious medical problem. By contrast, our 2001 study in 5 states found that illness or medical bills contributed to about half of bankruptcies.
Since then, the number of un- and underinsured Americans have grown, health costs have increased, and Congress tightened the bankruptcy laws.
In those six years, the percentage of uninsured families ground upward, and health care cost continued to rise at about twice the rate of inflation. But a 2.5% real annual increase in the cost of a budget item that accounts for something like 5% of annual household expenditures shouldn't make the bankruptcy stats jump that much.
Perhaps there was a big increase in the volatility of those expenditures, with the average growing slowly, but a larger number of people being hit by truly massive bills? Perhaps, but I'm aware of no data that show it. Yes, people complain about deductible increases and more cost-shifting, but a $500 or $1000 increase in the annual deductible won't tip any family into bankruptcy, and the complaints about denied claims go back long before 2001. For this to be causing such a huge surge in bankruptcies, health care companies would have had to discover some extraordinarily clever new way to deny people health care benefits without being sued, or fired by the companies who buy their insurance. If they have, it hasn't been a prominent feature in the recent health-care debate. As far as I know, they're still using the same old strategy of outlasting and/or confusing their patients.
Yet Warren, et al. claim their current results both show a dramatic increase, and are in robust agreement with their earlier study. How could steadily, moderately rising medical bills, a roughly static business and legislative environment, and a small increase in the uninsured, possibly have driven up bankruptcies so massively?
Answer: they didn't. What Warren et. al. neglect to mention is that bankruptcies fell between 2001 and 2007. In fact, they were cut in half. Going by the numbers Warren et. al. provide, medical bankruptcies actually fell by almost 220,000 between 2001 and 2007, a fact that they not only fail to mention, but deliberately obscure.
Are Warren, et. al. unaware that bankruptcies fell by half? No bankruptcy analyst could possibly be unaware of this fact; it has been the most talked-about phenomenon in the bankruptcy area since the 2005 law was passed. Moreover, they're clearly familiar with the filings data, because they use it to make their point:
The number of filings spiked in mid-2005 in anticipation of the new law, then plummeted. Since hten, filings have increased each quarter. They are likely to exceed one million households in 2008, representing about 2.7 million people.
What's left out here? That in 2001, 1.45 million households filed for bankruptcy. In 2007, that number was 727,167. Had their paper done the basic arithmetic, readers would easily have seen that their own numbers imply a decrease in medical bankruptcies, from about 750,000 to slightly over 500,000. Yet their paper does not merely ignore this fact; it uses language that seems deliberately designed to conceal it. I invite any of my readers to scan the paper for any hint that medical bankruptcies had fallen significantly over 6 years.
This is elementary social science. A huge change in the composition of your sample needs to be noted. It certainly should not be artfully disguised. If the 2005 bankruptcy form made it more difficult to file bankruptcy, the people who still file bankruptcy will largely be those who are forced to it by events totally beyond their control. Medical bankruptcies seem to fill that bill.
Yet even so, their own work shows medical bankruptcies falling in the years between 2001 and 2007, which would seem to invalidate, not support, the claim that half of all bankruptcies in 2001 were driven by medical events beyond the household's control.
Elementary googling reveals that the two doctors who co-authored this study are prominent spokespeople for Physicians for a National Health Program, and thus have an obvious agenda, one that Elizabeth Warren has not been shy about sharing. The American Journal of Medicine, which published this study, seems to have flunked Peer Review 101--I sure hope they're more careful about controlling for background conditions when they're talking about cures for cancer Also wearing duncecaps are the journalists who are already uncritically parroting it.
There is, of course, a large amount of terrible advocacy masquerading of social science out there, and too many journals and journalists abet it. But this is particularly troubling because Elizabeth Warren is now in charge of overseeing the TARP program for Congress. What other inconvenient facts is she shielding us from?
Gah! Copyright violation!
I'm sure one of the facts she's hiding from us is that health-related bankruptcies are the few that judges will grant these days due to the very same law you talk about in your piece.
Oh and our banks are insolvent.
Why don't you go after the big fish and leave this woman alone, putz.
Warren's the law professor Obama chose to oversee TARP. If a law professor cannot properly employ logical thinking, you have to question his/her competence on anything.
If MSM ever picked up on Warren's agenda, I, for one, would only need to be soothed by the warming pleasurable baritones of Obama.
Warren's the law professor Obama chose to oversee TARP.
Warren was chosen by Harry Reid, not Obama.
And deciding whether or not to implement a national health program isn't a big fish?
I don't understand this. Comparing total 2001 and 2007 numbers aren't an apples to apples comparison; the law has been radically changed to a higher threshold, so we expect 2007 to be lower. If it wasn't then something would be up.
Also, 2001 was the busting of the tech bubble and 9/11; it was a terrible year for the economy. 2007 was at the height of the boom. It also suffered was an overhang, where many people strategically declared bankruptcy in 2005 (600K in October alone) to avoid the new law, so many people who would have limped to 2007 called it quits there. Comparing the peak to the valley and only looking at total numbers seems like a sneak.
The relevant question for total would be are bankruptcies rising from 2006-2008, and they clearly are. You should revisit this in 6 months. My projections are at least 1.5m for 2009, beating 2001 even with the new law in effect.
"The relevant question for total would be are bankruptcies rising from 2006-2008, and they clearly are." And she brings this up, in the passage you quote.
No, it wouldn't. The relevant question is, are bankruptcies being driven higher by medical bills, as their paper very clearly implies. The relevant answer is, they are lower, not higher. A higher proportion of medical bills may or may not be medically related; their data collection method isn't great. But the increase in that proportion could be--indeed, is more likely to be--driven by the fall in other kinds of bankruptcies, than by the rise in medically driven bankruptcies.
By "driven higher," do you mean an increase in the number of bankruptcies?
The number of medical bankruptcies *fell*. Their paper implies, while never quite saying, that it *rose*.
Doesn't the paper say the percentage of medical bankruptcies rose, not the number? The study says "Since 2001, the proportion of all bankruptcies attributable
to medical problems has increased by 50%. Nearly two
thirds of all bankruptcies are now linked to illness." (bolding is mine)
This post is totally bizarre. The study is not misleading on its face or obviously wrong. It's talking about what are the major drivers of growth in bankruptcies since 2005. Obviously the 2005 reform cut down on the number of filings. That's not at issue. At issue is what is causing the new growth post-2005. The study talks about percentages and proportions. It's not comparing absolute number of medical bankruptcies today with those 5 years ago. That would be apples to oranges.
Their paper says the proportion of bankruptcies due to medical costs are higher, not that there were more bankruptcies.
So look at the proportions: # of bankruptcies in 2001 vs. 2007 for the five states over the number of "medical bankruptcies" for the same years.
This proportion-versus-number thing is an irrelevant distinction, given the affiliations of the authors. How can it NOT be important to note that while PROPORTIONATELY, medical bankruptcies may account for more now than in some other time period (this is a nod to the purported aim of the study), ABSOLUTE NUMBERS of bankruptcies from this cause have fallen significantly? And not only not to note it but to obscure that fact - how can that NOT be "advocacy masquerading as science," as Megan says?
If it hadn't been noted, Megan could not have sourced it from the study paper. She didn't provide external numbers as the basis for her critique.
And what Megan also fails to note is that bankruptcy is the extreme end of the curve-- outliers -- so the report indicates a growing proportion of Americans facing severe financial difficulty due to medical costs. How can this NOT be relevant to the topic of health care?
Megan wants to compare direct numbers, the report investigates an indicator of a trend. Which is more meaningful when it comes to determining public policy?
I can't cite an empirical study--but I can certainly cite my own experiences as a health insurance consumer in the period in question. Perhaps others interested in this subject can contribute more information.
In the early 2000s Medicare changed reimbursement rules--effectively ending the traditional practice of many health providers who would accept whatever payment your insurance company made, and forgive the balance. All of a sudden the marginally insured (typically those people employed by small businesses, or paying for their own coverage) discovered that doctors and (in my case, particularly) hospitals were pursuing them for big balances that their insurance companies refused to pay.
In 2002, despite paying over $550 per month for family coverage, I had over $9,000 in unreimbursed medical expenses. This was a staggering increase--despite no change in the insurance carrier--from as recently as 1999.
In particular, in April of 2002 my daughter fell off her horse at a competition in southern New Jersey. The emergency room charged us almost $3,500 just for walking in the door. My health insurance provider said that the "reasonable and customary" charge was $120, and paid 80% of that. The hospital corporation came after me with lawyers.
The big difference, overall, was that providers that used to wink at the "co-pay" were now sending you to collection agencies.
This issue of unreimbursed medical expenses, despite paying for health insurance, was a significant factor in my decision shutting down my firm and taking a job with a client. As an employee I get health insurance coverage with a Blue Cross/Blue Shield affiliate--whose marketplace dominance allows them to continue to require providers to take what BC/BS pays and forgive the balance. (I don't understand why this is not a blatant case of collusion in restraint of trade between BC/BS and the providers, but that's another topic for another time.)
In addition to my "day job", I have also been a church deacon--in that role I have helped families sort out their financial woes, and skyrocketing unreimbursed medical costs are certainly a major issue for most of those families. It isn't a case of a catastrophic illness--all you have to do is be rendered unconscious in an accident (e.g. a child taking a hard fall from a bike), and by the time you wake up the hospital, the ER med/surg firm, the radiologist, the ambulance provider, and the hospital pharmacy will have combined to put you well into four figures of unplanned debt, only a small fraction of which will be covered by insurance.
I can't point to an empirical study--and I'm not sure that I buy a number as large (or suspiciously round) as 70%. But I am entirely prepared to believe that a rapid increase in unreimbursed medical expenses pushes people into bankruptcy. It certainly fits with my own experience.
The number of medical bankruptcies *fell*. Their paper implies, while never quite saying, that it *rose*.
One of the points that they make is that there are plenty of financial failures that don't end up converting into bankruptcy filings. They aren't so much interested in bankruptcies per se, so much as they are with the disruptive impacts of high health care costs.
Bankruptcy is one measure, but it isn't the only measure. A tougher bankruptcy law results in fewer people being able to seek recourse in the legal system. Just because they can't go to court doesn't mean that they suddenly became affluent and that health care costs were made irrelevant.
If you look at health care costs as a percentage of GDP, they have been steadily climbing for the last 70 years.
Above, you reference 1981. In that year 6.9% of our total GDP and 11.2% of the consumption component of GDP were attributable to medical care. By 2008, those figures became 12.5% and 17.7%, respectively.
This is becoming a crippling chunk of our economy. And since all of us know that this figure is not evenly distributed among households (averages don't count for much when we're focusing on the outliers), you can guess that these costs can absolutely torpedo that proportion of the population which incurs a disproportionate amount of these expenses and have to pay them out of pocket.
It's especially bad when these bills are accompanied by a loss of income. If you get so sick that you can no longer work, you have the privilege of generating expenses AND simultaneously losing the stream of income and insurance coverage that would otherwise be used to pay for them. Surely, we can't expect good things to come of a combination of factors like that.
This study made Yahoo News headlines. Just in time for our national debate on healthcare reform. I can only imagine the GOP poll numbers if their studies were promoted like this.
I'm totally perplexed by this post:
RESULTS: Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income. The rest met criteria for
medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical bills. Most medical debtors were well educated, owned homes, and had middle-class occupations. Three quarters had health insurance. Using identical definitions in 2001 and 2007, the share of bankruptcies attributable to medical problems rose by 49.6%. In logistic regression analysis controlling for demographic factors, the odds that a bankruptcy had a medical cause was 2.38-fold higher in 2007 than in 2001.
CONCLUSIONS: Illness and medical bills contribute to a large and increasing share of US bankruptcies.
The study clearly says that the proportion of medical bankruptcy as a share of total bankruptcies has driven bankruptcies up. It's not saying that the NUMBER of medical bankruptcies has gone up over pre-2005 levels. Given that the number of bankruptcies has gone down since 2005, and everyone who knows anything about bankruptcy knows that fact, why would they need to say that if their study is about the proportion of medical bankruptcy as a part of the larger whole.
Also, how is the claim that medical bankruptcies are driving the growth in bankruptcies obviously bunk? The 2005 reform cut bankruptcies dramatically, largely by penalizing repeat filers and by further limiting cramdowns. Ok, fine. We're all aware of that. But the point is what is the current driver of the new growth in bankruptcy.
The study may be wrong, but it's not obviously wrong or misleading.
Perhaps the onus ought to be more on the reportage, then, giving the authors of the paper the benefit of the doubt about their assumption that their audience, like you, is already aware of salient bankruptcy facts. I (not being versed at all in bankruptcy law, policy, or stats) had no idea that bankruptcies overall had fallen. The implication to me was clearly that ohnoes, medical costs are driving EVER MORE people over the edge! Whereas apparently that statement may or may not be true. To me, probably not a member of the target audience, the study appears very misleading and agenda-driven indeed.
The decrease in non-medical bankruptcies is the most important cause of the phenomena which the paper is trying to estimate and find causation for. To not state that explicitly and discuss the implications of that fact is nothing short of deliberate obscurantism.
Yet even so, their own work shows medical bankruptcies falling in the years between 2001 and 2007, which would seem to invalidate, not support, the claim that half of all bankruptcies in 2001 were driven by medical events beyond the household's control.
You've lost me completely on this claim. I don't understand why what transpired after 2001 tells us anything about what happened during 2001.
The relevant question is, are bankruptcies being driven higher by medical bills, as their paper very clearly implies. The relevant answer is, they are lower, not higher. A higher proportion of medical bills may or may not be medically related...
Yes, Megan, but if the relative importance of medical related financial distress is increasing as a proportion of total bankruptcies, then might it not be valid to conclude that bankruptcies are indeed being driven higher by medical bills, in the sense that bankruptcies are being "driven higher" than they otherwise would be (if, say, we had UHC). Follow me?
It's talking about what are the major drivers of growth in bankruptcies since 2005. Obviously the 2005 reform cut down on the number of filings. That's not at issue. At issue is what is causing the new growth post-2005.
Bingo. Our hostess is playing "gotcha" about claims she believes are dodgy, when in fact they're not dodgy; from the evidence Megan provides, it looks to me the only thing Ms. Warren is guilty of is a failure to describe these findings in a manor maximally supportive of libertarians opposed to an expansion of social insurance.
No. When you compare your results to an earlier sample, and there's been an enormous, dramatic change in the sample composition, you have to mention it. The fact that you can read this paper without realizing that bankruptcies were higher is a problem.
Moreover, it's totally specious to say "this is about what drove the post 2005 bankruptcies, because the post-2005 bankruptcy increase was trivial compared to the earlier fall. What drove the increase is that a huge number of people filed bankruptcies right before the law took effect; there was a slow natural rebound. But there is no evidence that there were fresh medical bankruptcies being filed. Not only is there no evidence that there were fresh medical bankruptcies being filed; *there were fewer medical bankruptcies being filed*. At the very least, it is very likely that their proportion change picked up a change in the sample composition, rather than any cost factors driving medical bankruptcies, a possibility they don't even mention.
Even if one were to take the premise made by Warren as gospel, so what? Why is this a problem for the taxpayers? I fail to see how by government fiat ruining most people's medical health coverage is a legitimate role for the government? Bankruptcy clears the slate of debts that cannot be paid by the bankrupts, suffice to say the rest of us pay for this through higher costs to cover these losses and through taxes to cover those on medicaid and medicare or through government mandates. Do we really need to have what is with all of its flaws still the overall best health care system in the world destroy with this Marxist National Health Care idiocy?
Cap the physicians incomes and they will stop working when they hit their income level. Try to make them government employees the older ones with no debt and with not to long until retirement will simply give practicing. College kids will change their minds about medical school. The rest will become unionized bureaucrats. Just what we want in our health care providers. What we will have in a few years is a shortage of doctors coupled with rationing of care. The rich will simply go elsewhere for their care. The middle class will to have mortgage themselves to obtain the funds to go to India, Thailand or wherever qualified doctors and care is available at a price. I would not be surprised to see top American doctors working at centers in the Caribbean or elsewhere on a cash basis. Already Brits travel to India and Thailand for hip replacements and other chronic procedures instead of waiting for years for the government health to cover it. Canadians crossing the border for cardiac procedures not available on a timely basis at home. The probably irony is the US will probably still have among the best health care available but for only for foreigners with cash and the politically well connected after the Democrats implement their national health care.
Elizabeth Warren is now in charge of overseeing the TARP program for Congress
Why don't you go after the big fish and leave this woman alone, putz.
What on Earth is your definition of "big fish" that overseeing the TARP program doesn't meet?
Reading through the study, which is available in PDF form on that website I don't any the aggressively misleading or even passively misleading. The gist of the paper is that the proportion of bankruptcies due to medical issues increased over the 2001 data.
You're a misleading us when you say that bankruptcies declined from 2001-2007. Looking at the court data http://www.uscourts.gov/Press_Releases/bankruptcyfilings052606.html, and only looking at non-business bankruptcies, by these numbers there's an increase from overall from 2001-2006.
2001: 1,349,471
2002: 1,466,105
2003: 1,613,097
2004: 1,599,986
2005: 1,604,848
2006: 1,759,503
Your argument that the average increase in medical expenses doesn't explain the link with bankruptcies overlooks what appears to be real cause of medical bankruptcies. Not that your expenses rise year to year but you get a huge expense at once due to a medical crisis or accident.
I have to admit I just skimmed the paper, but two things I noticed.
First, she redefines medical-related bankruptcy as having debts of $5000 or 10% of family income. She packages this as conservative, but for dual-unemployed families (income zero), ANY medical debt is therefore medical-related. She has a series of OR conditions which are likely to inflate cases where a person has been sick but where it ISN'T related to their bankruptcy.
Then she runs logistic regression to predict medical bankruptcy (at least as she defines it). It's not totally clear to me what variables she used or the order they were entered-- forward stepwise basically leaves it to the computer. All those other predictors that were skipped need to be declared. There are tricks with collinearity you can pull with stepwise (or, really any regression) to inflate or deflate coefficients. I also don't see a test for homoscedasticity.
Most importantly, though, we don't see the questionnaire she used. I don't see any checks for common methods bias, and not knowing her operationalizations, we have to basically take them on faith. She also doesn't establish comparability with her 2001 study, which is the whole point of her paper.
With flaws like this, I'm surprised that the study made it through peer review. I don't see a fatal flaw, but the reviewers would be sure to demand these kinds of methodological checks, and at six pages, there's plenty of room for that last half-page.
She seems to define medical-related as "bankruptcies which occur due to medical conditions, have an impact on medical conditions, or occur adjacent to medical conditions". If I calculate "medical-related sunspots", would I get a similar high percentage of the population? This limits its utility for anything other than a stat that can be pasted out of context into a flyer or campaign mailing.
I should point out that by collecting three very different kinds of "medical-related" bankruptcy into one predictor, she makes it totally meaningless. People teetering on the edge of bankruptcy have ALL sources of debt very high. Delinquent housing debts, credit card debts, mall boutique debts, and utility bills. That's why they're filing for bankruptcy.
You're supposed to use controls and good operationalizations to eliminate those problems. That's why we use regression in the first place. But she doesn't use it that way, in fact she goes out of her way to avoid using it; and where she does use it, she employs stepwise regression, which explicitly doesn't help with this problem. We also don't know her questionnaire because she didn't include it, even in an appendix.
So the real litmus test for this is: if I go back to her sample and use her methodology to find the proportion of credit card debt-related bankruptcy, I would probably ALSO get 80% or 90%. Then, I could go back again and show that automobile-related bankruptcy is another 40%-60% of bankruptcies.
When you strip out the statistical obfuscation, you end up with a couple simple correlations between year and another variable that can best be described as "we don't know what this is".
Right! Who hasn't known the poor soul who lives so terribly close to the edge that an unexpected car repair constitutes a major threat to his/her livelihood? A friend of mine right now is living with her child on a couple of part-time jobs; she has no intention of trying to get private health insurance, even for her child, because she can get medical care at a nearby high-quality clinic for the kiddo, and she figures that SHE'S healthy, after all. She *could* prioritize differently - I've seen her closet and know her schedule - but the choice she's made is to roll the dice. My brother-in-law, another who never even looked at private insurance in his formerly patchwork career life because he was robustly healthy, had a terrible near-fatal accident that drove him into bankruptcy - but again, he *could* have prioritized differently; his former choices included surfing trips to Costa Rica several times a year and Apple-product upgrades whenever they came out.
Yes, I know that anecdote != data.
Anecdotes are data, just not terribly good or reliable data. But then neither is what is presented in this paper.
Ms. McArdle correct me if I am wrong, but federal law forbids balance billing so how is it that hospitals and physicians can pursue debt collection for the amounts the provider already agreed to accept from the insurer? If I am correct then there is something amiss in the medical bankruptcy claims?
Bob, there are a bunch of situations where the insured can end up balance billed. A non-exhaustive list:
- High deductible/co-insurance policies with high max pays. (If you buy a policy that has a $5,000 deductible and an 80/20 pay up to a max pay of $15,000, then get $55,000 or more in claims in a year, you are going to be billed for $15,000).
- Non-covered claims, like pre-existing conditions (in some cases).
- Treatment at doctors who don't accept the insurance carrier.
- Treatment that was refused preauthorization as not medically necessary, but which the patient decides they want anyway.
I'm 99.9% sure there's no federal law on balance billing. State laws vary (Schwarzenegger just outlawed it for ERs) and are always in flux, because the medical lobby wants balance billing and the insurance lobby opposes.
Your argument that the average increase in medical expenses doesn't explain the link with bankruptcies overlooks what appears to be real cause of medical bankruptcies. Not that your expenses rise year to year but you get a huge expense at once due to a medical crisis or accident.
Good point. As of 2000, there were over 105 million households in the US. Given the data above, perhaps 1-2% of households file bankruptcy in any given year.
Bankruptcy filers are clearly statistical outliers, so you can't just apply an average and be done with it. What would be interesting would be to examine the households of those who have medical expenses in the top 10th-20th percentiles, and find out how much they owed, how much they earned, and how they paid or didn't pay for it.
It would also be interesting to measure that against that those who were diagnosed as requiring costly care but who didn't receive it for lack of funds, and see how they compared to the group that actually got billed for it.
My guess is that you'll find that many households with high costs were the elderly receiving Medicare, probably in their last months of life. Their costs were covered by government, and their households were probably OK.
However, there will a segment of the group who were not old enough to be eligible for Medicare, who were simply blown out of the water by costs that they could not support, particularly if the illness was accompanied by a job and insurance loss.
There is probably also another group that didn't incur high costs because they never got care to begin with. Some of them are dead, others are incapacitated, and most of them are invisible and off the grid. How we'd quantify these people, I don't know.
Megan writes: "The number of medical bankruptcies *fell*. Their paper implies, while never quite saying, that it *rose*.
No, the paper implies no such thing. It says quite explicitly that bankruptcy filings plummeted. The point is that the proportion of medical bankruptcies rose.
Megan writes: A huge change in the composition of your sample needs to be noted. It certainly should not be artfully disguised.
It is noted and dismissed. The paper says: "It is implausible to ascribe the growing predominance of medical causes of bankruptcy to BAPCPA." Read whole graf for explanation. The plummeting is observed and rejected as an explanation for the new bias.
Megan writes: But a 2.5% real annual increase in the cost of a budget item that accounts for something like 5% of annual household expenditures shouldn't make the bankruptcy stats jump that much.
Of course it could. Distribution tails will do that. (No, Megan it's got nothing to do with volatility, which is a different concept, irrelevant to this point.)
Megan writes: Yet even so, their own work shows medical bankruptcies falling in the years between 2001 and 2007, which would seem to invalidate, not support, the claim that half of all bankruptcies in 2001 were driven by medical events beyond the household's control.
This a non-sequitur. There's zero inference between the 2 propositions.
Maybe Megan has a hunch there's something wrong with the study. Fine, she can say that. But this pseudo-scientific drivel is embarrassing. She sounds like a creationist. As to handing out duncecaps to her fellow journalists, no comment.
Megan writes: Warren and her co-authors have obscured important and obvious facts that call the integrity of the work into serious question.
Integrity... What a repugnant thing to say. This post is tabloid journalism.
Ouch. You could have been a little gentler... But I'm glad someone wrote this comment. Good work point out the main failures of the post. It's pretty embarrassing.
Warren and her co-authors have obscured important and obvious facts that call the integrity of the work into serious question.
Quite loathsome. And irresponsible. I don't understand what Megan was thinking.
Okay, do you read this paper and think, "Hey, medical bankruptcies fell 33% between 2001 and 2007, which kind of implies either that many of the 'medical bankruptcies' in 2001, or that medical bills have gotten easier to pay"?
No you do not.
You read this paper and think "Oh, my god, rising medical bills are pushing ever more people into bankruptcy!"
The proportion of a smaller, different population is not a relevant comparison unless you explain the fall, how the sample has changed, and why you don't think this matters.
I'm sure Warren, and you, understand this about companies: if your revenues fall by half, you haven't "grown" your medical sales business because it now accounts for 70%, rather than 50% of your revenue. And any attempt to explain this in terms of the growth in the market for medical goods is ridiculous. Your medical sales have fallen.
The paper doesn't say rising medical bills push more people into bankruptcy, it says people go bankrupt when they are hit with hospital bills they can't pay and prescription medicine they can't buy. Nobody's going to read that paper and think otherwise.
And is this a bigger or a smaller problem than it was in 2001, according to this paper?
Physicians who are up to date on their literature: what is the reputation of the "American Journal of Medicine"? This looks to me to be a low-quality journal (i.e. one that this pseudo-layman has never heard of), but I would like to hear a more objective and knowledgable source.
"American Journal of Medicine" has an impact factor of 4.5 or so. JAMA has an IF of 23 or so, Lancet something like 28, NEJM in the 50s.
I suspect that this article would not have survived more thorough peer review, but I could be wrong.
In particular, in April of 2002 my daughter fell off her horse at a competition in southern New Jersey.
Um...yeh...my heart weeps for you. If you can't afford decent health insurance you can't afford a f*cking HORSE.
Can't agree with you here.
1) Children have the amazing ability to get hurt. It could have happened on a friends bicycle or climbing a tree.
2) Even with very good insurance, there is a problem with getting the money out of the insurance company. I can see where John could be dismayed by the service provided by his insurance company. There is, as far as I can tell, no insurance that is entirely "decent" in this manner.
3) His work as deacon brings greater perspective. This is where the anecdotes start to morph into something resembling data.
Caveat: I still don't cotton to government health care, especially not "Single Payer"
Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income. The rest met criteria for
medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical bills.
This obscures rather than illuminates, doesn't it? Universal health care would tend to relieve people of those sudden, catastrophic expenses. But loss of income due to illness is another kettle of fish, with different policy implications (expansion of SSI benefits?) In any case, the former seems simpler to tackle than the latter.
Was there a statistics flu going around Cambridge this week? We caught up with another study - this one from across the river, on some apparent gender bias in Twitter preferences -- only to discover the dish'd run off with the spoon over thar as well. See what you think - http://bit.ly/7J9o3. The Chronicle of Higher Ed had its doubts, too - http://tinyurl.com/oqdl3l
What you have to understand is that a medical condition creates more than health costs.
Despite the fact that I am a military veteran with a covered condition, I still had to declare bankruptcy in 2003 because I could not work. The resulting loss of income, combined with the fact that my VA pension was set at a mere 20% disability post-surgery, meant that I could no longer pay my bills.
Incidentally, when I was finally able to start working again I lost my first sale because the customer's child was diagnosed with cancer; the surgeon, she told me, would not even see her child until the $3000 cash deposit was made. And they HAD insurance.
So beyond bankruptcy, medical costs have a huge economic cost in consumer spending.
Absolutely. And indeed, previous studies have shown that income loss is a bigger force driving medical bankruptcy than medical bills. I'm not arguing that medical events don't drive bankruptcy; I think they do. I'm arguing that medical bills aren't driving some huge spike in either medical or non-medical bankruptcies.
Megan-- do you deny that there are many people in this country that are incapable of getting health coverage because of their economic situation? Because if you don't, and are just quibbling about numbers, why? What does that accomplish for your opinion? I cannot for the life of me understand a moral compass that could find some material difference between 50 million people who are uninsured or underinsured, or 40 million, or 20 million or 5. Those people still exist, they still need health care, and they still can't get it.
It is a moral tragedy for people in a country this advanced, this powerful and this prosperous to be unable to secure health care. Period, end of story. Arguing about minutiae in the face of that tragedy doesn't help your cause. Although I've forgotten what, exactly, your purpose is, when it comes to arguing about health care.
So it's okay to write totally misleading studies as long as we cure a moral tragedy?
Do you know that there are 300 million people in this country who will die of something we can't cure? Now, to me, that's also a big tragedy. And I think that if the government strips all the profit out of inventing new drugs and medical equipment, medical innovation will grind to a shrieking halt, and we will lose billions, trillions, of life years from current and future Americans--not to mention people in other countries.
But that's not my point in writing about this study. My point in writing about this study is that it's egregiously misleading, and I don't think that respected academics should write things that are egregiously misleading. Great truths do not need to be sold with second-rate lies.
I think the fact you are focusing on Elizabeth Warren is telling. The corresponding (ie...main) author on the paper is David Himmelstein, Why pick on a coauthor, and not the main author, unless you have an axe to grind?
And when he becomes a high-profile government official, I promise you, I will focus on him instead.
Or to put it a different way, for the same reason that I talk about the famous economists whose names are on papers even when they're not the lead author; their presence on the paper is what makes it newsworthy. This study is going to get wide play because one of the authors is our TARP cop.
Delinquent housing debts, credit card debts, mall boutique debts, and utility bills. That's why they're filing for bankruptcy.
You're supposed to use controls and good operationalizations to eliminate those problems.
If you're going to be critical of methodology, you should take a bit more care with your own.
It's fallacious to assume that a delinquent housing payment, credit card debt, etc. is independent of the medical bills if the medical costs are the problem. In situations like this, most or all of the bills eventually become delinquent, because there is not enough money to pay all of the bills by the debtor, not just the medical expenses.
It comes down to marginal cost. If a costly medical event results in higher costs and possibly lower income, then we should expect to see all sorts of late and non-payments, and not just for the medical bills.
There seems to be this head-in-the-sand denial on the right that there is an issue here at all. Above, I referenced health care costs as percentages of consumer consumption and overall GDP, and it is clear that these costs are skyrocketing beyond the growth rate of national income, there's no doubt about it. We can also fairly surmise that these costs are not evenly distributed, so that there will be a percentage of that pool for whom the costs are extreme.
So why this propensity to not even admit to the problem? This is expensive stuff, whether or not you like Ms. Warren in particular. Just because you haven't personally been impacted doesn't mean that everything is rosy.
RW, you're right, it's really complicated. But it's complicated the other way: people who have an unaffordable house payment, car payment, etc., often skimp on medical bills they otherwise would have paid. If you stiff your doctors because 85% of your income is devoted to house, car, and credit cards, are you having a medical bankruptcy?
For these people who filed "medical bankruptcy", what percentage of their total debt was medical related? How much of their debt existed before the medical even that allegedly caused them to file bankruptcy? What percentage of their income was spent on luxury goods, a fancy car, a big house in a nice neighborhood, etc... as compared to medical bills?
If I recall, the previous study neglected to measure things like this and someone with a huge debt from other sources who had a sudden medical bill and filed bankrtuptcy was marked as a 100% medical-caused bankruptcy, not a "living beyond their means and not planning ahead" bankruptcy.
And in reference to another comment, the number 47 million is thrown out as the number of uninsured. But something like 10 million are voluntarily uninsured (they have access to insurance but choose not to get it) and anywhere from 10-20 million are illegal aliens who would (hopefully) not get free government health care. That leaves anywhere from 17-27 million uninsured out of just over 300 million people or less than 10%. Do we really need to overhaul the entire system or can we just figure out some way to give that 10% insurance?
And the fact that medical spending is increasing as a percentage of household income or GDP is not automatically a bad thing. Are people consuming more health care? Or are they getting less for more money? If people are getting more health care, then maybe they want more?
If we really want to reduce the cost of health care, we'll figure out some way to transmit price signals to the consumer. Right now, insurance shields people from price signals, so they overconsume. Government managed health care will probably make that worse. Instead, perhaps we should require tiered co-pays that increase with the cost of the service or charge a percent of the cost or use some other method that encourages people to shop for lower cost health care.
If we really want to reduce the cost of health care, we'll figure out some way to transmit price signals to the consumer.
Right. Fewer people would be sure not to get cancer if they only realized how expensive it was.
If you stiff your doctors because 85% of your income is devoted to house, car, and credit cards, are you having a medical bankruptcy?
That's an average figure for consumption over the last several decades, so you're upholding a common average as some sort of aberration. I don't think that I'd be inclined to do that.
Let's step back for a second. We know that healthcare sucks up a lot of national income. We also know that the spending on healthcare is not evenly distributed. We also know that the cost of healthcare results in some people not consuming it in the first place, when the gatekeepers figure out that they have no money and don't let them access it in the first place.
Meanwhile, we can see that Americans not only spend more on healthcare on a per capita GDP basis, but that we also get less for it. Mediocre longevity rates. Fewer hospital beds than many other countries. Less treatment being provided. If there is a country that is experiencing rationing, it is US (as in the US), not them.
Since you're fiscally responsible, you should consider why the country that spends the most doesn't have much to show for it. If these sorts of results came from a "liberal" plan, you'd be pointing out the abysmal track record as an indication of what ails the system. So why not do it now?
The BK figures are just the tip of the iceberg. They don't include all the people who don't get care at all or have their claims denied.
There are lots of opportunities for reform here, some liberal (cost management), some quasi-libertarian (having people with fewer high-cost medical credentials do more of the work.) I can't look at the trend and the amount of the cost/ GDP ratio of healthcare, and not get nervous about it.
No, it's not. It may be the average figure in Manhattan, but for most of America, housing + car payment + credit card debt do not account for anything like this. Your assertion is not supported, as far as I can determine, by the Fed's DSR studies, the BLS's consumer expenditure survey, or the BEA's NIPA personal expenditure data.
RT - I did not say transmit the costs of health care, I said "price signals"... meaning that if a one procedure/doctor/drug costs 5x as much as another, the consumer should pay more for the more expensive one. If the copay is $20 for the cheaper one, then maybe it should be $40 or $50 for the more expensive one. If someone from the government asks me to come up with a detailed proposal, I'll get with doctors, insurance companies, economists, etc... and generate a detailed plan. For now, though, I have a basic concept.
Would Patricia Barreiro (she of the Edmund Andrews NYT marriage) have been considered a medical bankruptcy by Warren et al.?
Yes. She owed many thousands to what seems to have been her dermatologist.
For now, though, I have a basic concept.
And it's a poor concept, honestly. Pricing doesn't determine the demand for most health care, because health care is generally something that you either need or don't need. It's not as if you're going to get chemotherapy for kicks if the price of it declines or that one's need for it goes away if the cost increases.
We already know that Americans get less for their health care spending, so the price-for-value disconnect is clear. We have plenty of models abroad, some better than others, from which to learn, so there is no lack of information available. For those who aren't ideologically inclined to reject cost management just because, it's a fairly easy problem to diagnose, and probably won't be tough to fix if we accept that the current system doesn't work.
That makes no sense to me. There is a great deal of healthcare that one does not explicitly need, but if you have access to it -- e.g. an MRI, CAT scan, and X-Ray do the same basic thing but provide different types of capabilities and resolution -- it can improve the odds of discovering something the other diagnostic methods overlook. Pricing can determine demand for additional services beyond the basic requirements of treatment, albeit in the US the pricing incentives are severely distorted by the fact that the patient usually isn't paying the costs directly on one hand, and on the other hand, the doctor can smell another rise in his malpractice premium if s/he doesn't prescribe every test and diagnostic under the sun.
No, it's not. It may be the average figure in Manhattan, but for most of America, housing + car payment + credit card debt do not account for anything like this.
I'm sorry, but you are incorrect about this. Have a look at the "Personal Income and Its Disposition" table from the BEA, which is Table 2.1 here: http://www.bea.gov/national/nipaweb/SelectTable.asp
If you take Lines 28 (personal consumption expenditures) and 29 (personal interest payments), and divide that sum by Line 1 (personal income), this is what you get:
1929 - 92.7%
1930 - 93.1%
1931 - 94.0%
1932 - 98.6%
1933 - 98.9%
1934 - 96.8%
1935 - 93.4%
1936 - 91.4%
1937 - 91.1%
1938 - 95.0%
1939 - 93.1%
1940 - 91.8%
1941 - 85.3%
1942 - 72.6%
1943 - 65.9%
1944 - 65.7%
1945 - 70.1%
1946 - 81.2%
1947 - 85.3%
1948 - 84.0%
1949 - 87.0%
1950 - 84.8%
1951 - 81.7%
1952 - 80.6%
1953 - 81.0%
1954 - 82.6%
1955 - 83.1%
1956 - 81.4%
1957 - 81.3%
1958 - 81.6%
1959 - 82.3%
1960 - 82.1%
1961 - 81.3%
1962 - 81.1%
1963 - 81.4%
1964 - 81.7%
1965 - 81.6%
1966 - 81.4%
1967 - 80.0%
1968 - 80.1%
1969 - 79.5%
1970 - 79.1%
1971 - 79.5%
1972 - 79.4%
1973 - 78.5%
1974 - 78.1%
1975 - 79.3%
1976 - 79.7%
1977 - 79.9%
1978 - 79.5%
1979 - 79.0%
1980 - 78.0%
1981 - 76.8%
1982 - 77.0%
1983 - 79.7%
1984 - 78.4%
1985 - 79.7%
1986 - 80.5%
1987 - 80.9%
1988 - 81.1%
1989 - 80.8%
1990 - 81.1%
1991 - 81.3%
1992 - 81.1%
1993 - 82.5%
1994 - 83.1%
1995 - 83.0%
1996 - 82.9%
1997 - 82.6%
1998 - 81.6%
1999 - 82.8%
2000 - 82.4%
2001 - 83.3%
2002 - 85.0%
2003 - 86.1%
2004 - 86.2%
2005 - 86.8%
2006 - 85.9%
2007 - 85.5%
2008 - 85.2%
That works out to be an average of 82.9% between 1929 and 2008.
I don't understand. Personal consumption expenditures are for a lot more than a mortgage, a car payment, and credit card debt. Little things like food, utilities, health care, clothing, furniture, travel, personal expenses etc.
I'm using those three payments as a proxy for the fixed payments most people owe that cannot easily be gotten out of; in otherwords, the kind of dramatic, sudden, inflexible mismatch between income and expenses that triggers a bankruptcy. I'm not sure what you're talking about.
Lt. Gov. Betsy McCaughey had a great op-ed in WSJ today, in which she points out that health-care spending has gone up as a share of household income, but food & energy have gone correspondingly down. Overall, health+food+energy total are the shame share of household income since 1960. (Of course, food and energy spending are equally distributed, not highly skewed right, which is the issue in bankruptcy.)
This is clearly agenda-driven "research" and Megan is right to criticize both it and the journalists who parrot it. Accepting a single-payer advocate's definition of a "medical bankruptcy" is like letting a CEO define "profit" for purposes of his/her bonus.
Here is a critique of the group's prior study (which they now characterize as "less stringent"): http://rightcoast.typepad.com/rightcoast/2007/07/junk-social-sci.html
The new study identifies 62.1% of all bankruptcies as "medical bankrptcies". But only 29% of respondents actually identified "medical bills" as "a reason" for bankruptcy. (Nowhere are we told how many were primarily due to medical bills). 34.7%, a pretty similar group, spent more than $5,000 on medical expense or 10% of income on medical expense. Only 5.7% mortgaged their home to pay medical expense.
The survey takers apparently didn't like having a minority of the sample support their agenda so they pursued other angles to find more "medical bankruptcies".
So they found 40% lost time from work due to illness or to care for somebody. And 42.9% said someone's medical condition had contributed a reason to file bankruptcy.
That's one example of the overstatement of what is a "medical bankruptcy".
This study appears tome to address a very, very small problem. They try to inflate it by saying that there is a "medical bankruptcy" every 15 seconds. Gosh, that sounds like a lot. But let's look at the numbers in context. They predict 866,000 "medical bankruptcies", using their definition, in 2009. They contend each bankruptcy involves 2.7 debtors and dependents on average so that these 866,000 filings would affect 2.34 million people (although they do not tell how many of those filers are married to each other). It's a country of 300 million. So under their analysis we are talking about roughly 0.75% of the nation (rounding).
They also state that the average out of pocket medical expense in their study was about $18,000. Since there has been negligible inflation since the study year, let's use that amount. That means the sum of medical expense in all those "medical bankruptcies" will be $15.6 billion (rounding). In an economy about $14 trillion, that's about 0.1% (rounding).
These are worst-case numbers. If we consider only the "expense-driven" and not the "lost income" medical bankruptcies, all those numbers drop by almost half. And, recall that the survey only asked whether medical expenses were "a reason" as opposed to "the principal reason". So if we only ask how many medical bankruptcies would be prevented by their proposed reforms, we could quite possibly be talking about a problem on the scale of $5 billion or less.
Yet to address a problem of this size, they would propose to overhaul 100% of the entire health care system AND add a income supplement/ home health care mandate to address the "lost income" medical bankuptcies. There is no effort to quantify whether the costs of doing so outweigh the $5 - 15 billion per year that they would purportedly save.
This is the same kind of hysterical over-statement of a problem that the neocons used to get us into Iraq.
Pricing can determine demand for additional services beyond the basic requirements of treatment
No, pricing determines the level of consumption, not the level of demand or need.
If I need chemotherapy but can't pay for it, I just don't get to consume it. That doesn't mean that I don't require it, it just means that I can't afford it. Avoiding the expense does not result in one being cured.
This is one reason that our data is incomplete and only touches on one element of the problem. These numbers don't show the quantity of services that weren't provided for lack of ability to pay. The problem is even worse than these numbers suggest.
Aside from all the other issues that Megan and others have pointed out, there is a separate "apples-to-apples" problem that is apparent in reading the report's text, even if you didn't know another damn thing about bankruptcy.
The report says: "As recently as 1981, only 8% of families filing for bankruptcy did so in the aftermath of a serious medical problem. By contrast, our 2001 study in 5 states found that illness or medical bills contributed to about half of bankruptcies."
The number of people who filed "in the aftermath of a serious medical condition" is simply not the same metric --- not even an analogous metric --- to those for whom "illness or medical bills contributed to" their bankruptcy. (It's like saying: In 1980, only a fraction of those who died of choking choked on blueberry pie; by contrast, in 1990, nearly half of all choke-death victims had consumed blueberry pie in the year before their deaths.) I'd wager that virtually anyone who files for personal bankruptcy has medical bills that "contribute to" their decision to file. Almost everybody has to cope with medical bills (even the insured!), and anybody on the cusp of bankruptcy is, sort of by definition, struggling to keep up with bills. Ergo, it's not surprising that a huge proportion of folks who file personal bankruptcy have medical bills (and probably shoe bills, too) contributing to that bankruptcy.
I'm not sure what you're talking about.
Those figures above show what people do with their incomes. The point here is to show you that the average household already spends a lot of its money on consumption (which is in that number), and retirement savings and taxes (which is above the line and feeds into that number.) Always has, always will.
The figure that you cited as extreme is actually normal by historical standards. It's fairly simple -- throughout the 20th century, people spent a lot of what they made on consumption. As you know that about 70% of our GDP comes from consumption, that can't be surprising.
You already know that medical costs are unevenly distributed. Now, just apply whatever the top quintile of those costs are to the 80-something percentage consumption figures above, and see what happens. You have got to know that this math will put the average household upside down and into serious trouble.
The bottom line: It's tough to budget for an extreme illness for which there is inadequate or no insurance coverage. That's particularly true if the medical event also triggers a job loss, which often results in the insurance being lost, which then makes it impossible to obtain replacement insurance because of pre-existing conditions clauses in policies. Since we're talking about statistical outliers here, you need to look at **their** costs, not just average costs.
We are talking about two different things. I am talking about fixed debt payments, not consumption. Fixed debt payments make consumers more vulnerable to adverse income shock, and they make bankruptcy more likely, because of course debt is the only thing you can get rid of in bankruptcy. What you're saying is "consumers spend a lot of their income" and indeed they do, but this is not a useful insight, or indeed, an insight.
Okay, I kind of understand what you're saying, but you clearly don't understand what I'm saying. I was talking about the major three forms of consumer debt, because those three payment categories account for the main fixed costs in modern American consumer life. When you have high fixed debt payments, you're very vulnerable to an income shock, because you can't shave 10% off your debt payments. Conversely, if you have a lot of debt, you stand to benefit from bankruptcy relief.
Fixed debt payments (or hard-to-break leases) do not account for anything like 85% of consumer expenditures on either a pre- or post- tax income.
I think you're trying to prove that consumers don't save 30% of their income from which they could easily draw large new medical expenses. I don't disagree, but you're not responding to what I said.
In fairness, I should add that I didn't tack "payments" onto the end . . . but I still don't see how you went from "house, car, and credit cards" to "all consumer expenditures + income payments"
Rather than simply say this, some actual data, cites and links would be nice. I have found that when people habitually employ constructs like "Your assertion is not supported, as far as I can determine", there is a pretty good chance that this means that they didn't 'determine' very hard, if it all. Notice from constructions like this, someone could do zero research, and this statement would still be true.
RW, is this the sort of thing you were talking about earlier, when I was asking about how much math MBAs know? Because people who cannot do or follow elementary analyses such as you describe strike me as borderline innumerate.
Scent of Violets, a) you clearly have absolutely no idea what you're talking about, b) I did reference the three main sources of consumer expenditure data in which RW's assertion is not borne out, c) you and RW do not seem to understand what house payment + car payment + credit card payment means, but it is not in any way equivalent to "everything consumers spend", and d) this is your absolute, final warning. You will cease the obnoxious ninth-grader style of argument, or you will take it elsewhere.
One quibbling observation: "house + car + credit cards" is very hard to pin down since so many people use their credit cards as a transaction card to accumulate rewards. (Yes, this is dumb for people carrying month to month balances, unless they can segregate and use a high reward card for day to day transactions, which they then pay off every month, and a relatively low interest card for their ongoing balance).
With credit cards, last month's consumer purchases become this month's credit card payments, or at least contibute to them. I'm not sure how to unwind that.
Fixed debt payments (or hard-to-break leases) do not account for anything like 85% of consumer expenditures on either a pre- or post- tax income.
The interest for servicing that debt is included in that number. This is the amount of income that the BEA would call "disposable."
You seem to believe that if people pay rent instead of mortgages that they won't default on their medical bills. I don't see how you're going to prove that from any of the data.
What I do know is that people have a certain level of consumption, which is quantified through the BEA data. How much of that goes onto a credit card, I don't know, but I do see the amount of interest that they're paying and have accounted for it above.
Lump in a humongous medical bill on top of that aggregate figure, and you're going to have a problem. Keep in mind that those who have problem with medical expenses most likely have substantially higher medical costs than the norm, or at least in comparison to their incomes.
Furthermore, you can see that the introduction of credit cards hasn't radically changed the proportion of personal income that is spent on consumption. There are surely some outliers there, too, but there is no evidence that you can provide that shows that only crazy wacky spenders end up with onerous medical bills that they cannot pay.
You are inferring that consumption can be radically modified to accommodate the medical bills if one has low debt. Yet you try to demonstrate this by applying a mean amount of health care costs, when you must know that those filing BK have costs well above the mean. That dog just don't hunt.
RW, I don't understand this debate. I said, "If you stiff your doctor because 85% of your income is devoted to house, car, and credit cards, are you having a medical bankruptcy?" You asserted that this was the average in America. You've backed this up with data showing that interest payments plus every other consumer expenditure is equal, historically, to about 82.9% of consumer income.
Your response makes no sense as a response to what I said. You have bizarrely proclaimed that "all consumer spending + all interest payments" is equivalent to "house, car, and credit cards". This claim isn't even a little bit defensible.
I understand what you're trying to say: that most people don't save 50% of their income, so they don't have the budget room to absorb catastrophic medical expenses. This is arguably true, although more than one researcher finds that income loss, rather than bills, is what drives medical bankruptcies. But it's not a response to my rather narrow claim that a consumer who is already heavily indebted is more likely to stiff their doctors than a consumer who is not.
You may think this is not an interesting question, that I'm missing the "big picture". I'm happy to discuss the "big picture". But your undoubtedly tossed off remark that "house, car, and credit cards" are normally 85% of household income simply is not true. It may have been true in reference to whatever you were thinking about when you said it. But it is not a true claim regarding what I said.
Megan, clean up your act. You didn't cite anything. You gave no data, no analysis, nothing. Just a throwaway
RW, by contrast, gave a cite, with data, and an analysis which pretty much blew your point right out of the water:
I'm sorry that you think that requests for data and cites, some sort of numerical analysis along with explanations is somehow a personal attack, or obnoxious, but the fact of the matter is, most people think it's not. Most people demand it, in fact. And let's face it, if you want to criticize Ms. Warren for sloppiness or slipshod research, it's a pretty good idea to make sure that no one comes away with the impression that you're committing the same sins you're accusing her of. Looking over these posts, I see several other commenters, none of whom happened to be named SoV who think you're doing exactly that. What's next, an accusation that I'm using mind control rays?
SoV, you can go look it up yourself. The Fed's Household debt service ratio data is here: http://www.federalreserve.gov/releases/housedebt/. The NIPA tables are as cited by RW. The Census consumer survey is here http://www.google.com/url?sa=t&source=web&ct=res&cd=1&url=http%3A%2F%2Fwww.bls.gov%2Fcex%2F&ei=1IcpSte0C5uGNYv76NkJ&usg=AFQjCNHiqy4OzTEzqThTADuBBVuEZh18fQ&sig2=r0rD2TsAmItJD_Uj6vq_pA. None of them show anything like 85% for anything that could reasonably be called house + car + credit cards.
I'm giving you a special, one time only buy on this moronic quibbling, because I don't want to be accused of banning you without answering your question. So now that I have pointed out that you are once again engaging in stupid quibbling over the absence of direct links to sources that support my assertions, not yours, I am telling you: the next time you annoy me or one of the other commenters even mildly, I will happily delete your account. You've been warned approximately 10,000 times. Like BasicFact/Lurker, you seem constitutionally unable to control yourself, and so you are about to share his face.
Sigh. Megan, you don't seem to get it. I'm not 'questioning your assertions'; I'm questioning your methodology. You don't say:"Your assertion is not supported, as far as I can determine, by the Fed's DSR studies, the BLS's consumer expenditure survey, or the BEA's NIPA personal expenditure data.", You say "look here http://www.federalreserve.gov/releases/housedebt/. and here http://www.google.com/url?sa=t&source=web&ct=res&cd=1&url=http at lines d and g. The highest value as a percentage is x, well under 85%." That's not 'quibbling', that's rudimentary scholarship.
Again, I'm sorry that you think this is some sort of personal attack. But that's just the way these things work. Note - again - that other people have said the same thing. If you think that these are personal attacks . . . well, your enemies list is waaaaaaay longer than mine.
Aside from that . . .
Since one of my strikes is because I was complaining about someone annoying me in direct violation of your policy, to which I linked, and the other strike was for defending your right to call yourself a libertarian, well, that's a pretty low bar, isn't it?
SoV, I'm done arguing. You anger everyone you interact with in these comments threads--unlike very fervent liberals like Brooksfoe, Freddie, or RW, who certainly aren't shy about arguing with anyone. You make quibbling demands for data that don't satisfy you when they are delivered. You derail comment threads by forcing people to repeat the same obvious point over and over, because you either deny the obvious, or refuse to acknowledge it. I'm done. The next time this happens, I'm banning you. It's not up for argument. Lurker also couldn't seem to grasp why he was offending everyone he interacted with, and I'm sorry that neither of you seem to understand why you bother others, but I can't let you continue to destroy my threads.
Let me point out that RW, who is just as angry at me, and just as insistent, and in at least as vociferous disagreement, is not at risk of being banned. That's because he is on topic, open to discussion, focusing on arguments rather than juvenile attempts at PhD putdowns to the other commenters, and making interesting points. Perhaps this will offer you a clue as to how you can proceed, if you care to try and stay.
RW, who is just as angry at me
Hey there. I'm not angry. Persistent, perhaps, but not particularly upset. Just so we're clear here...
None of them show anything like 85% for anything that could reasonably be called house + car + credit cards.
I'm just not quite sure why you're focused on those specific things, particularly when the data doesn't indicate a substantial change or pattern that helps to explain anything.
The implication of your argument is that those who file BK for medical reasons were in trouble, anyway. I don't see how you can prove that, and the other data suggests otherwise.
If you look at the BEA data, you'll see that over the last several decades, we have tended to consume fairly consistently levels of our income. When I look back over the last several decades, I see that we tend to consume about 80-85% of our incomes, come hell or high water.
Then if you look at GDP data, you can see that health care costs are a much larger piece of GDP than they used to be.
Now put these two data points together: If (a) consumption ratios are fairly consistent and (b) greater proportions of the consumption GDP are comprised of healthcare spending, that clearly indicates that increased health care spending is coming at the expense of other consumption. Consumers aren't just maintaining their spending and layering healthcare on top of it, they are actually sacrificing other consumption for the sake of healthcare.
The macro implications of this are clear, particularly in light of the bang-for-the-buck problem. This amount of spending compromises the rest of our economy, because we can't feed healthcare without taking consumption away from other areas, yet we apparently have nothing to show for all of this sacrifice. The guy selling a refrigerator, car or dishwasher has to compete with Blue Shield for cash. That cannot be good for the long-term health of the economic system.
We can debate what the best solutions might be, but I can't see how anyone could look at this data and not see a problem that demands a solution.
No, the implication of my point was that some people who are really in trouble for other reasons may show up as medical bankruptcies, in response to your point that some people who are in trouble for medical reasons will show up as non-medical bankruptcies. Which group is bigger? No idea.
House + car + credit cards is shorthand for "fixed debt". When my boyfriend lost his job, we stopped going out to dinner, cut back our grocery bills, turned down the thermostat, etc. If we had needed to, we would have broken our lease and moved. What didn't we cut? The payments on our cars and student loans. Had those been a higher percentage of our income, or if we had had a mortgage that needed both our incomes, things would have been a lot scarier.
No, the implication of my point was that some people who are really in trouble for other reasons may show up as medical bankruptcies
I understand that this is your contention. If accurate, it would be a valid rebuttal to the implications (and I'm more than honest to admit, agenda) of this study.
However, you haven't really done that, as far as I can tell. Previously, you made this statement:
If you stiff your doctors because 85% of your income is devoted to house, car, and credit cards, are you having a medical bankruptcy?
What I was pointing out to you that Americans already devote 85% of their incomes to consumption. You make this seem like a high proportion, when it is actually typical. I was providing context to show that what you believe to be aberrant is actually commonplace.
That leads us to the next step: Take this very-average household's disposable income, and wallop it with medical expenses that are at the high end of the scale, let's say those that are in the top quintile (highest 20%). Do that math, and I will bet you that this is going to be simply devastating, because health care costs can be extremely high for those who require a lot of care. That bell curve is bound to be a nasty one.
The data that I presented from BEA suggests that consumption proportions aren't much different now than they have been for decades, so your implication re: today's spenders appears to be unfounded.
Furthermore, your own data doesn't indicate that very many people are devoting 85% of their incomes to the three specific categories that you deem to be unique. Both the renter and mortgage numbers that you provide are well below that.
I think that you are going to need to accept the notion that this connection between bankruptcy and medical costs is legitimate, and that it isn't just a fantasy. If you want to be libertarian about it (and I certainly wouldn't encourage it, being that I'm not one myself), then I would be making arguments along the lines of deregulation and full privatization. I would imagine that there are some hard-core libertarians that would find a way to blame the bankruptcies on high costs, which they would then allege are the result of excess regulation. (I don't personally believe that, and I'm sure that they can't prove it, but I'll bet Cato et. al. have given it their best shot.)
If you want to poke holes in the study itself, I would be questioning its assumptions. If there is one thing that I've learned from finance, it's that a small change in assumptions can lead to substantially different sets of conclusions, given the same data set. The definition of what exactly constitutes a "medical bankruptcy" would be a better place to start, in my opinion.
RW:
Am I missing something? It seems to me that Megan's discussing the fraction of consumption that can't be cut back quickly short of bankruptcy, and you're discussing the total amount of consumption.
What I think you'd really like is an answer to a question like "What fraction of an average household's income could they cut from consumption, if they were faced with some huge extra expense?" I think Megan is using these fixed debt payments (car, house, credit card) to guess at that, though it's obviously only a guess.
Suppose Alice consumes 95% of her income, but she could cut it down to 50% if she had to. And suppose Bob consumes 80% of his income, but he's already cut out everything but the bare necessities like paying off his mortgage, car, student loans, credit card minimum payments, plus minimal utilities and food and such. If both of them get hit by some obscene medical bill, Bob is a lot more likely to end up in bankruptcy than Alice, because he simply can't come up with more than 20% of his income to pay that bill off. (I'm ignoring any difference in savings between them; let's assume their savings are equal the day they both show up in the ER with chest pains.)
Am I missing something?
Well, for one, you're apparently missing that Ms McArdle has provided absolutely no data that supports her contention. She pulled this 85% thing out of thin air, and can't support it.
For another, she is failing to engage in fairly basic exercise, as I have: take an average household, slam with a well-above-average amount of medical claims, and hypothesize what happens. Basic arithmetic should tell you that with average households devoting so much of their incomes to living costs that there isn't much of a cushion in the event that a huge event arrives in their lives, particularly if that event is also accompanied by decreased income.
What I think you'd really like is an answer to a question like "What fraction of an average household's income could they cut from consumption, if they were faced with some huge extra expense?"
No, that is Ms. McArdle's priority, not mine. The fact that Americans have consistently consumed within this fairly narrow band over several decades suggests that there isn't going to be enough spare room to cut if the medical bills are on the high end of the bell curve.
Medical costs keep going up. This is undeniable if you look at GDP data. Apply some math to that and figure it out: average household + extraordinary event (perhaps coupled with lost income) = problems for many people. Surely this can't be shocking for anyone who is bothered to think this through.
This is not the only time Warren has fudged or invented the facts ... please see this long, careful discussion of her assault on the TALF lending program. It's one thing to have an agenda, it's another to disguise it with untruths.
http://www.housingwire.com/2009/06/02/viewpoint-the-cop-ralfs-on-talf/
It is so weird that so many commenters are totally unable to read what they are responding to.
Could this explain American's inability to understand a mortgage contract?
(I speak as someone who is currently trying to fix a mortgage contract that I didn't read carefully enough, AND someone who turned up to ER 2 months ago with chest pains and unable to breathe. So by "chickenhawk argument" nobody can disagree with me :)