Er, no. The world is full of studies that do this. I get mad at only a minority of their authors. I am mad, first of all, because Elizabeth Warren is not a third-year statistically illiterate policy analyst at a health care advocacy group. She's a professor at Harvard, and the head of the Congressional TARP oversight panel. This conveys a certain responsibility to present data in the most illuminating way, not in the way that will induce journalists to say things that aren't true.
And they have done just that. Read a sampling of the stories about this study on Google News. It's clear that none of the authors of the stories I've read understand that we're talking about a smaller absolute number of medical bankruptcies, representing a larger proportion of a much smaller overall number: that this increase in the proportion could at least as easily have been driven by less need for non-medical bankruptcy, than by bigger, scarier medical bills. Indeed, many of the stories indicate that medical bankruptcies have risen since 2001, which is not true even according to Warren's figures.
I submit that the study is designed to get that result from journalists. Readers have responded that my criticism is out of line, because after all, they only talk about the proportion, so who am I to say they're misleading the readers?
Yes, but why do they only talk about the proportion? In general, economics papers talk about absolute numbers whenever they can, and use proportions only when things like changes in income and inflation make comparisons between years too difficult. I submit that we want to know, not whether medical bankruptcies are a bigger or smaller proportion of overall bankruptcies, but whether more people are being pushed into bankruptcy by their medical bills. To take the extreme absurd case, if only one person had declared bankruptcy in 2007, but that one person had had huge medical bills, would this be a sign that we need national health care?
We can measure the absolute number of medical bankruptcies, and the changes in income, GDP, and population between 2005 and 2007 were too small to much affect these. Therefore, the appropriate measure was the absolute number. The proportion would have been an interesting inclusion. And it would have been the basis for a different, fascinating study: the relative "stickiness" of medical bankruptcies. But it was not the obvious choice if you are going to use one or the other. That is, unless you are determined to give the impression that rising medical bills are pushing ever-more people into bankruptcy.
Warren's defenders in my comments seem to think that this is simply libertarian bluster--after all, what we're concerned about is whether medical bills are driving the post 2005 increase. But, as Warren surely knows, it is very unlikely that medical bills are driving either the post-2005 increase in bankruptcies, or a post 2005 increase in medical bankruptcies.
Let's review the history. In 2005, Congress passed a law changing the bankruptcy rules. There were a number of different changes to the code, but for our purposes, the relevant changes* are these:
- It became more difficult to do rapid serial filings
- Debtors were required to enter debt counseling before they filed
- Attorneys had to sign off on the debtor's claims
- Debtors had to provide pay stubs and tax returns
- Debtors whose income, after allowable expenses, was higher than the median for their area, had to file Chapter 13 instead of Chapter 7. This means they'd be forced into a five-year repayment plan.
But the hype about the bankruptcy barriers was formidable. This seems to be why so many people rushed to file in 2005--basically, everyone who thought they might end up in bankruptcy hurried to complete their filing before the law took effect in October 2005. And afterwards, filings stayed low, much to the puzzlement of bankruptcy experts. Everyone had expected some fall simply because 2006 and 2007 bankruptcies had been shifted forward into 2005, and a slight decrease due to the small percentage of filers who were really abusive or fraudulent. But the sustained decrease puzzled everyone. It simply hadn't gotten that much harder to file bankruptcy.
The dominant theory I heard is simply that people had become irrationally afraid of bankruptcy. The consumer groups who had hyped this "draconian" change to the bankruptcy law had done their PR job too well, and now people who thought that it was impossible to get a discharge weren't even bothering to contact an attorney.
This is what the filing pattern looks like through 2008:
The post 2005 increase in bankruptcies isn't being driven by medical bankruptcies. It's simply rebounding from what every single analyst at the time, including Elizabeth Warren, agreed was an unsustainable drop.
Nor can we say, as some of my readers have argued, that the post-2005 increase in medical bankruptcies is likely being driven by medical bills. Here's why: there is no post-2005 increase in medical bankruptcies. Or at least, not one we know of. All we know about is the post 2001 fall in medical bankruptcies. You may think that there was a rise in bankruptcies after 2005, but the number of medical bankruptcies in 2007 (ca. 550,000) is smaller than the total number of bankruptcies in 2006. For all we know, both the proportion and number of medical bankruptcies fell between 2005 and 2007.
Now, I find Warren, et. al's results fairly implausible. Bankruptcy, as they themselves note, is an incredibly delicate topic, and the refusal rate on surveys is high. I would not be surprised to find that they'd gotten a sample heavily weighted towards people who had problems with medical bills, because people with more personal and possibly less sympathetic problems, like divorce and addiction, would presumably be less willing to chat about those.
But even assuming that their sample was valid, given what bankruptcy experts (including Warren) know, it seems likely that they uncovered an interesting statistical artifact. Most bankruptcy filings are at least partly strategic--Warren herself urges troubles consumers to run up credit card bills rather than missing a mortgage payment. (This is very good advice). The people with the least room for strategic behavior are presumably people who can't work at all, and/or must run up large bills: i.e., very sick people. Those people did not shift their bankruptcies forward to 2005, because they had no warning that they were going to get sick. Nor could they alter their behavior, as people who were running up less urgent debts may have.
Now, Warren et. al. may disagree that this is the most likely explanation of the data, though I will happily debate any of them who care to defend their interpretation. But I do not think you can get around the fact that they had to mention it. The post-2005 fall in bankruptcies, then the steady subsequent rise back towards the pre-2005 mean, is the central fact about US bankruptcy in the last ten years. It's like doing a study on bank capital without reference to the financial crisis.
Yet they not only fail to mention it, but include a lot of window dressing about the proportion of the uninsured, healthcare bills, and their 2001 study, which are designed to leave the reader with the followng impression: medical bills are a growing problem in our society, driving people into bankruptcy in ever higher numbers. Sure, they don't actually say this. But it's not a scientist's job to mislead only by omission. Had they simply included this fairly obvious statistic, it would have substantially altered the conclusion that readers drew. That makes it a material omission, and I think that Warren, of all people, ought to hold herself to a higher standard.
* Things like KERP treatement in corporate Chapter 13, modifications to the homestead exemption provisions to make it harder to evade legal judgements, and changes in the relative seniority of reaffirmed auto debt are actually quite important, but it's not likely they've noticeably altered the national propensity to file for consumer bankruptcy protection.
The 2005 BK changes had a massive impact on costs for individuals. The direct costs of counseling are small. The bigger problem is that attorneys are scared to be personally liable for a potentially lying client. This caused a lot of attorneys who did BK as a minor part of their practice to stop entirely. Attorneys that still do individual BK bill more so they can investigate client honesty further, and to compensate for the personal liability. Though maybe now that all other areas of law are sucking for employment, more attorneys will step into individual BKs for lack of other options.
The Warren study is more valuable than Megan is acknowledging because it shows how unavoidable medical-related BK can be. The proportion is more important than the absolute number of filings because the more onerous BK rules in 2005 is blind to the reasons for filing. Talking more about absolute number of filings would have obscured that.
Unfortunately, that wasn't the primary goal of the study, so the fact that this is visible within it by incident, does not improve the quality. It's also worth observing that to the extent BK attorneys were spooked by the attorney accountability requirement, they would likely be the least spooked by medical bankruptcies, since those leave plenty behind a pretty broad paper trail which the healthcare providers will necessarily save for quite some time. In other words, that may be another possible distortionary effect on the proportions found in the post-2005 results.
The medical paper trail only tells you part of the story. There could be gambling, hidden assets, etc. Lawyers are taught to be scared of any sort of personal accountability for their clients. It's one thing to be personally responsible for knowingly false statements (easily avoided). It's a whole other thing to be faced with a battle over what you should have known (unknowable).
Something that attorneys deserved, good and hard, for their frequent support of suing CEOs if their underlings lied, accountants if their clients lied, etc. under Sarbanes-Oxley and other laws.
Yeah John, CEO's have it real rough with accountability under Sarbox. And all attorneys should be personally responsible for policing entirely separate practice areas. BK attorneys serving individuals should have their practices gutted because of class action and shareholder lawsuit abuse by a handful of plaintiffs' lawyers. So many people love to bash attorneys and support tort reform marketed by corporations, but lawyer up as soon as they get screwed over. Then they're shocked to find the court room door closed or the process favoring the other side.
We have a clear discontinuity in the trend caused by the bankruptcy law that reduced the total number of bankruptcies. The only way to compare pre 2005 to post 2005 is to use proportions. This should be completely obvious to anyone looking at the graph you posted.
Now, I can see the argument that we need more time to see if the trend is going to continue or whether it's just some sort of equilibrium thing... but using the absolute numbers would be complete nonsense.
I quite agree with you on your second point, but using the proportions is also complete nonsense. The absolute numbers are not less nonsensical. The study's authors assert that the rules fall equally on medical and nonmedical bankrupts, but of course, that doesn't mean they're equally affected. Indeed, we know they aren't; unlike divorce (historically the single most prevalent factor), medical bankruptcy almost always involves substantial loss of income, and the bills that trigger it can't be timed.
If I had written up the absolute fall, would I have left out the bankruptcy reform, and the fact that other kinds of bankruptcy had fallen even more dramatically? No, because it's obviously relevant. Similarly, you don't write up the higher proportion without mentioning the absolute fall, because that, too, is obviously relevant to our perception of medical insecurity in this country.
The study's authors assert that the rules fall equally on medical and nonmedical bankrupts, but of course, that doesn't mean they're equally affected. Indeed, we know they aren't; unlike divorce (historically the single most prevalent factor), medical bankruptcy almost always involves substantial loss of income, and the bills that trigger it can't be timed.
This is possible, and perhaps you are presenting a better explanation for their findings... however, that doesn't make them irresponsible or corrupt or whatever for having reached different conclusions.
Instead of ranting about what terrible economists they all are, perhaps you could have made a well sourced argument as to why the more likely explanation for the increased proportion was the causes you mention? Just a thought.
There are no sources. We don't know. I just got done writing a whole post on how we don't know why they fell. None of the experts I've talked to know why they fell. It's the central mystery of bankruptcy expertise, and Warren et al. just declare that they've solved it.
I'm not saying that they're irresponsible or corrupt for having a different interpretation. I'm saying they're irresponsible for having omitted a key fact that casts serious doubt on their interpretation. If you include that fact, it becomes clear that you can't just say that rising medical bills are driving a lot of bankruptcies. You have to prove your central assertion that BAPCPA fell equally on medical and non-medical bankruptcies--not merely that the laws were facially neutral (they weren't, actually, as the treatment of a bunch of other types of debt somewhat, but probably close enough)--but that they had no disparate impact. Yet what we know about medical bankruptcies is that they're actually quite different from other kinds of debtors, because they tend to be associated with steeper, longer term income shocks than, say, a divorce.
The problem is that you didn't just disagree with Warren's findings. You attacked her for dishonesty and deception, then said some snide things about the TARP program she's helping to oversee. Then you had this long critique about how they should've mentioned the 2005 BK reform, as if they didn't.
The point is that they made reasonable use of proportions and percentages given that BK has operated in two different worlds (the pre 2005 and post 2005 worlds), and made some conclusions based on surveys they did. You can be critical of that, without charging them with dishonesty and deception.
If you're trying to figure out what kinds of factors are driving BK filings and the growth in filings, then pointing out that BK filings have dropped because BK today is different than BK 5 years ago is irrelevant. That's the past.
Of course Dr. Warren has pitched her data in a way to maximize the likelihood of public exposure and drive a public discussion in the direction she desires. It's called spin and every researcher in the biomedical field that I know does it. Success in research is dependent upon funding and funding is dependent upon publications that everyone else in your field deems important. Therefore everyone attempts to present their data as the most critical, informative and necessary research currently being done, and studies are very unlikely to go against prevailing current public opinion--it's easier to publish research everyone already believes (or wants to believe).
One does hope that the peer review process weeds out poorly designed or poorly controlled studies, but it doesn't.
Also, one does hope that the innate integrity of researchers prevents critical omissions of data, but when integrity collides with self-interest, often integrity loses. In areas that are not terribly politically charged, a body of researcher will gradually self-correct (e.g. if I publish data that is exciting and paradigm-shifting in a high profile journal to further my career, other researchers will get excited and will start trying similar experiments in their systems. If I made up or stretched my data or left out critical details, no one will be able to repeat it, or will only be able to repeat under stringent conditions. Researchers will conclude that although it was interesting data, it was probably not representative of a greater underlying principle, and word will get around that I am a sloppy researcher. The publication will in all likelihood stand, but it would be harder in the future to get other researchers to take my work seriously. Add up enough of these episodes and one is politely asked to find another job.)
Unfortunately, in areas that are politically charged, such as discussions surrounding health care policy, large funding changes can be implemented before self-correction occurs.
But to think that Dr. Warren simply objectively presented her data is woefully naive. Of course she spun her data to present a certain outcome. EVERY researcher does this. The question is whether or not the data she presents (or fails to present) actually support her chosen story line. And if what Megan says is true (and I have not reason to think otherwise), the data do not.
I don't think she's actually a "dr." If I recall, she's a lawyer (most law professors don't have a PhD, since a JD is a terminal degree)
JD stands for "Juris Doctor" and you wear a doctoral hood at graduation. Not that any lawyer I've ever met would be that pretentious, but I've never met Warren.
"Not that any lawyer I've ever met would be that pretentious"
Not much scope in the lawyers you've met, then. Plenty are pretentious enough, few who are pretentious enough AND foolish enough.
Also, if one is familiar with German legal practice (not that Prof. Warren has any german experience, to my knowledge), German attorneys mainly (a) have JDs and (b) use the title Dr., at least in CVs.
Germans and their titles are hilarious. There's nothing like meeting someone and having to call him "Mr. Dr. Prof. So-and-So," and then turning to meet his SAHM wife and having to call her "Mrs. Dr. Prof. So-and-So."
I always get a kick out of the folks who refer to themsleves as "Attorney Smith", and always have their assistants do the same. There's no lack of pretention in Lawyerdom, but there is usually also an awareness that letting that spill to non-lawyers will get one laughed at. I find that any title or honorific is only useful to clarify if a writing may be privileged/from counsel or to ensure that everyone on a conference call knows that counsel is participating.
Yeah, juris doctor notwithstanding, I've never met a law professor go by "doctor", unless he or she also had a PhD in something (or was a medical doctor, which, of course, is the oddity that got that whole JD stuff started).
"Juris doctor" notwithstanding, I've never met a law professor go by "doctor", unless he or she also had a PhD in something (or was a medical doctor, which, of course, is the oddity that got the whole JD stuff going). And even if the ABA lets you call yourself "Doctor", you're just asking for an atomic wedgie from your peers if you try it.
I agree with you that it would be valuable if it made that point. As I say, I think that the relative stickiness of medical bankruptcies is interesting, and important. But it doesn't make that case--indeed, it has to obscure that case, because in order to make it, you have to first acknowledge that the absolute number of bankruptcies has fallen. This undercuts their larger point about increasingly insecure American families.
This conveys a certain responsibility to present data in the most illuminating way, not in the way that will induce journalists to say things that aren't true.
WTF?!?!? There are a lot of stupid journalists. Elizabeth Warren can't be held responsible for a journalist not doing their homework(or being deluded by Gov't sources). Journalists aren't supposed to be stenographers.
Dude, the authors are giving interviews on how this shows the urgency of the need for reform, as our nation slides into the abyss. This isn't unintentional.
http://latimesblogs.latimes.com/booster_shots/2009/06/medical-bills-led-to-twothirds-of-bankruptcies-in-2007-study-finds.html
Two of the four authors of the study, Harvard Medical School Professor Dr. David Himmelstein and Cambridge, Mass., physician Steffie Woolhandler, are co-founders of the group Physicians for a National Health Program. Citing the study's findings, Himmelstein called private insurance "a defective product, akin to an umbrella that melts in the rain." Woolhandler said the findings demonstrated that in the current debate about healthcare reform, proposals to "expand phony insurance -- stripped-down plans riddled with co-payments, deductibles and exclusions -- won't stem the rising tide of medical bankruptcy."
Sure she can be held responsible. If she is tailoring her work to maximize the chances that reporters will publish misleading stories that further her political aims, she is not just responsible, she is worthy of condemnation. I believe that is Ms. Mcardle's point.
While journalists should do their homework, in reality most either don't or don't have the competence to judge. And NONE of that absolves study authors from a responsibility to not mislead. To take your example, would you possible argue that Bush Administration officials had no responsibilities to avoid misleading journalists about anything, since they couldn't be held responsible for journalists not doing their homework? It's ridiculous.
Perhaps the decline was in part due to the credit counseling requirement? If you have ever listened to one of the national financial call-in shows (for example, Dave Ramsay) you will be astounded at how many people have considered filing bankruptcy for $3000 in credit card debt on a $36k income. Or that have actually done that. A credit counseling service can straighten out someone in that situation pretty easily.
Now Ramsay is not the world's greatest financial guru but his message is pretty simple: have a budget, don't go into debt (except for the house). I'd submit that for those below median income, who are the majority of BK filers, it's damn good advice. In fact, if you decoupled his religious message from his financial message, it ought to be required reading for HS graduation. My daughter's senior economics class (not at the public HS I have mentioned elsewhere here) spent a month on personal finance, including making her research and draw up a budget for what she would need to live on her own - rent, food, insurance, etc.
Any bankruptcy attorney who let a client file for $3,000 in credit card debt should be disbarred. I don't deny that it happens, but the average filing involves tens of thousands of dollars in unsecured debts.
Listen to the finance shows and you'll hear lots of stories of people that went bankrupt for a few thousand dollars. And their attorney probably ought to be sent to the labor camps. The average may be tens of thousands, but what's the distribution like? Is it normal, linear, bimodal? The average of my income, your income, and Bill Gates' is uninformative after all.
In any case, the credit counseling might be a factor in the decline and would be a topic to investigate. If it was helping, I would expect that medical bills would become a major cause of bankruptcy, because medical providers have very little flexibility in collections practices due to federal Medicare regulations. Essentially, every medical practicioner must have carved in stone, inflexible rules on collections. You can't make allowances. If you decide to send any debt over $100 to collections, all must go to collections. It doesn't matter if the debtor lost his job or - real example - if he got a check from the insurance company and spent it on a new dining room set.
I've noticed that too, on the personal finance shows. It amazes me that people would spend more on a BK attorney/court fees than the actual debt itself.
With medical debts, I wonder what else is lacking in the system. I am insured, but had to wrangle and tangle with the insurance company because they had our contract loaded wrong. I learned a lot from this experience. Things worked out for me, but I am assertive and highly educated and have three people in my life that know about this stuff because they teach and train people in it. I just wonder about the unassertive, the uneducated, the mystified, and the extremely sick. I battled through it while taking chemotherapy! The insurance company was so incompetent, said things would be resubmitted and it would be paid this time, and it would be rejected again. The bills were racking up to hundreds of thousands of dollars and I asked the insurance company just to tell me if they were ever going to pay the bills, because if they weren't, I can't afford this. What good is surviving if you're destitute? I'll just quit treatment and let nature take its course. My life is in your hands, what is it going to be?
The same insurance company sells Medigap policies to senior citizens, and some other old patients in the cancer center were having problems getting bills paid. I tried coaching them how to do it, but as old and meek and chemoworn as they were, I didn't think they'd fight or win these battles unless a younger healthy friend or relative did it for them.
If your HMO totally screws you over, you have 12 months from the date of service to file an appeal with the company. What they don't tell you is that the only things admissable in a court case (if it gets to that) are what you include in this appeal. So really, you need to hire an attorney to get the appeal done right. NOBODY KNOWS THIS. Jane Bryant Quinn wrote some columns about this.
When I was arguing with the HMO CSR's about resubmissions, they were trying to talk me into just going ahead and filing an appeal, and I explained the above to them, and said they should be doing their job according to the contract and not forcing me to spend extra money on attorneys to make them do their job as contracted, agreed, and paid. They HAD NO IDEA that you really should use an attorney to do the appeal.
So me with Humana is like a dog with a bone. But not so for everyone.
I am wondering if these medical BK's are showing a hole in the system. We need patient advocates to help people get what is rightfully theirs from their insurance companies. Don't assume the medical billing department is highly motivated or able to help people. They do the clerical work and don't give a crap if it works or not. There needs to be patient ombudsmen that are snarling curs and fierce advocates for patients with the insurance companies. The hospital social workers are a bit out of their league here.
People with expensive health problems qualify for all sorts of assistance programs that are a well kept secret. I was insured and high income but had hospital social workers falling over themselves trying to sign me up for free programs that I didn't need. I wonder if that's consistently done everywhere? How many medical BK's could have been averted if those patients were connected with the right charitable and medical organizations that comp a lot of care?
Don't think things will be better with single payer gummint health care. It will be worse and more of the same as what I dealt with. You will have to fight to get the care you need. Make sure someone in your family becomes a doctor or other highly trained medical specialist, because you will need to make phone calls to your connections and work influence to jump up the queues, especially if you're old. That's the way it works in the UK and Canada.
At least I had NO trouble getting the care I needed.
The debt mushrooms from $3k to $4-5k as soon as they talk to the lawyer about filing. It happens more than you think.
Also, "average" is horribly misleading, as it skews up radically for those individual debtors who are really filing small-business cases for their sole proprieterships. The mean is more like TWO tens of thousands, which more respresentative of the debts of truly individual petitioners.
Finally, why do so many petitioners have medical debt upon filing? Because it's no-credit-check financing. If you're headed toward bankruptcy, what the first bill you don't pay? Anything you can avoid paying w/o being denied more service--medical bills fit that very neatly. One kid's broken arm is over $1k w/o insurance; should $1k out of $25k in unsecured debt be seen as "causing" BK.
The "medical debts leading to BK" should be only if the medical debts--both directly owed or paid by outstanding revolving credit--exceed 50% of total unsecured debt. Given Prof. Warren's obvious policy preferences for dealing with this "problem", I also dont think that it is reasonable to lump in "medical related loss of income" with "medical debt" as similar bases for bankruptcy. Is she actually suggesting that we establish a national "short-term disability insurance" program? It's a completely different issue from medical insurance.
Actually, I believe the median, not the mean, is in the 30-40K range, but I'd have to actually look it up.
You have a recent, non-Warren, survey to refer to?
Warren's 2007 data shows $33,882 with N=2371. The sec'd debt median was $35,000. The 2001 amount (in 07 $$) was $23,594, based on N=1233, w/ Sec'd median=$28,970. So, your recollection is better than mine, but I seriously question their results.
Notwithstanding statistical equivalence of the samples (adequately demonstrated to my barely-trained eye), I am skeptical of a doubling of N out of a smaller cohort of filers. Indeed, the explanation for their presumed equivalence is:
"Our prior studies were not random national samples but random samples drawn from five judicial districts. We have no reason to believe this affects the comparisons we make to these earlier cohorts of bankruptcy filers."
Yeah, right. Because one doesn't care to think about it, does not equal no basis for doubt.
Another, unrelated, absurdity in the Study article (fn 63)
"The authors believe that the higher proportion of legal service clients in Philadelphia drove down the average homeownership rates in that district unrepresentatively"
Uh, no, the lower HOMEOWNERSHIP RATE of Philly residents, across (almost) all income levels, drove down the homeownership rate of petitioners in Philly. This is soo simple, I have a hard time taking their conclusions seriously.
This is not difficult to understand if one realizes the obvious, but unmentioned, reality that Elizabeth Warren is a leftist. A leftist is taught, as a first principle, that the ends always justify the means. Her intention is to achieve the end result of a health care takeover by the government. A little academic manipulation and distortion is easily justified as a necessary (and cost free) method to achieve that end. How feftists operate is not complex. They rely upon the media to drown out the opposition, the reluctance of people of good will to speak directly in opposition to them and the short attention span of the electorate.
This is the main difference between the classic "old school" northeast liberal of two generations ago and the committed leftists of today. An "old school" liberal understood that the rules do matter because the other side may someday be in charge and the lack of rules could be used against them. The modern leftist doesn't fear losing because the conservative side does nothing to repeal the leftist agenda even if it takes power. If your choice is win win, then it is irrational to care about procedural and societal rules when they are inconvenient. So, put out all the dishonest academic research you want. You will still be a Harvard professor. Join a racist group like La Raza, you can still be a Supreme Court justice. Do al the drugs you want and disrespect women in a blatant and obvious way, you can still be President. The larger question is why does anyone follow the rules that allow for civil (meaning non-politica) life? I commend you, Megan for your honor and your dedication to classical liberal ideas. You will, I fear, never be a Harvard professor. That is too bad.
Basil, symptoms of delusional paranoia such as yours are being treated with amazing success these days using modern pharmaceuticals. Or are you perhaps trying to tell us that you’re uninsured and/or unemployed and can’t afford the diagnosis/meds? Hopefully, there’s a community outreach group in your area that can help you out with that, although funding has been problematic for such “leftist” causes for some time. Good luck with that.
Jimminy, typical lefty ad hominem attack in lieu of a thoughtful response. Way to live the stereotype. Do you dispute that classic left wing radical theories espouse an ends justify the means strategy? Do you dispute that the bankruptcy study referred to herein clearly ignores academic rigor and reaches the end of espousing just what the current administration wants to do, which is add the medical sector to teh federal arena along with teh auto sector and the banking sector? As the church lady would say - "how convenient!" I am sane enough to be able to read and understand history and respond rationally to what is clearly being done right in front of me. What is the mental state of someone who refuses to see what is actually happening in front of her/his face? Finally, I do not support taxpayer funding of "community outreach groups". Why should such things ever be given money taken from hard working persons through the police powere of the state?
I find the reference to "libertarian ideology" in this post a bit puzzling. Surely nobody now thinks a "free market" in medicine exists. The current system of "self-governing professions" (the last of the medieval craft guilds), with exclusive control, backed by legal sanctions, of certain type of work may have some advantages. It may even make more sense than any other available system. But surely nobody can mistake this system for any kind of free market. And if medical economics operate in the context of an absolute monopoly enforced by law, how can a libertarian find a negative conclusion about the current system especially uncongenial?
Where there is a free market in medicine, costs and prices have been decreasing. Breast implants, cosmetic surgery, Botox injections, aesthetician procedures, LASIK surgery.
Megan, how would you measure the economic impact of medical costs; the kind that do drive families into bankruptcy, foreclosure, etc?
I took the report as an attempt to analyze the trend. I'm sad about the media cascade, but not overly surprised. And since the overall goal of the Obama administration is to avoid the economic catastrophe they see if health care issues aren't dealt with, I somewhat understand the tone of the report.
But the underlying problem -- financial ruin due to health issues, remains. How would you understand its impact?
@Calvin -- sure, there are stupid journalists, but that's not Megan's point. The question is really whether EW is trying to be an academic, or an axe grinder. The way EW presented this data, I feel like I'm on the shop floor of an axe factory.
The fact that journalists are (more) confused (than usual) is suggestive that it was misleading, and is a negative consequence, but is not slam dunk proof. The proof comes from Megan's analysis of what EW actually wrote.
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Yes, but why do they only talk about the proportion?
Surely, you aren't serious with this question. It's sort of obvious when somebody wishes to measure the relative impact of Item X, we need to measure that in percentage terms. An absolute measure without context becomes meaningless; the relative measure helps to describe what it means.
If the bankruptcy "reform" achieved the benefits that the banking lobbyists who authored it intended, then the remaining BK filings should be more "worthy" than the ones we used to have. So if this reformed system, designed to be banking-friendly, results in a high pro rata share of filings being caused by medical expenses, it suggests that medical bills do create a tipping point for a lot of people facing legitimate financial disaster, given that the more questionable cases no longer pass muster.
I suppose that we could fix this by just amending the constitution and getting rid of bankruptcy altogether. No bankruptcies means no medical bankruptcies; no medical bankruptcies, problem solved. If people can't file, they won't get sick, and everything will be just peachy.
A marvelous post. Well stated.
[One quick nit: You say "Things like KERP treatment in corporate chapter 13," when you mean to say "corporate chapter 11." The former does not exist.]
My favorite factoid is that Warren and her co-authors classify people who declared bankruptcy because of alcoholism or gambling addiction as "medical bankruptcies." That may be an interesting finding, but it doesn't necessarily show the need for a single-payer health care system.
Not to mention $1001 or more in medical expenses.
So if you spend $50,000 on hookers and $1001 on syphilis treatment, then go bankrupt, you just had a medical bankruptcy.
lol
(JackNicholson) YOU'RE GOD-DAMNED RIGHT I DID!!!!! (/JackNicholson)
RW,
One way we might be able to get movement towards universal healthcare would be to mandate community rating and, as a start, force everyone who makes more than 50k a year to buy health insurance. As you know 1/3 of the 40 million without healh insurance make more than 50k a year and 1/6 make more than 75k. In addition 1/3 are eligable for heath insurance but chose not to get it.
I think liberals lose a lot of buy in by arguing that we should "give" health insurance to those who don't have it. The first step should be to force all those who can afford it, but chose to spend their money on other things, to buy it. Then we can start thinking about offering it to those who can't affrd it.
"The first step should be to *force* (!!!!!!!) all those who can afford it, but chose to spend their money on other things, to buy it."
Wow. Just, wow.
I guess that pretty much sums the whole thing up, doesn't it? Force.
Force is what a single payer gummint system would be.
Massacusetts does it.
And why not? Health insurance doesn't keep you healthy. The lack of it doesn't deny you health care.
Health insurance protects against financial catastrophe. If you shirk your risks and try to fob that off on everyone else, when you can afford to bear the risk yourself but choose not to, why should the state (all other taxpayers) just roll over and say OK no problem we'll pay that for you!
The state requires people to buy at least a minimum level of auto insurance if they own and/or operate a vehicle, why not require at least a minimum level of health insurance if you own and/or operate a body?
It doesn't have to be topflight insurance. Just catastrophic coverage. My sis and her family (farmers) had that kind of insurance. They paid for routine care including three childbirths, the policy only kicked in for major illness or injury. It's protection against FINANCIAL DISASTER and that's what we're talking about here.
Young people think they're healthy and immortal and don't buy health insurance because they'd rather have beer money. However, they also drink and drive, engage in adventure sports, and make other risky lifestyle choices that incur accidents. They need to be insured (at least catastrophic).
Illegal immigrants work for cash under the table and pay no taxes and get free health care at American hospitals and refuse to sign up for Medicaid when the hospital social workers try to get them to. They give fake names and get free care and disappear. The illegal immigrants need to be forced to buy the health insurance they're shirking on--no insurance or even taxes to support their free care.
A study of tax court filings shows a steady increase 2001-2008 which might show a more ongoing economic storm.
We spend more on military than all the rest of the nations of the world combined, and military spending diverts money from civilian needs.
Military spending is not otherwise available for domestic needs. The GWOT was financed separately with spending bills and cranking up the printing presses for this special project. That money didn't exist for other purposes.
One way we might be able to get movement towards universal healthcare would be to mandate community rating and, as a start, force everyone who makes more than 50k a year to buy health insurance.
That doesn't address the structural cost problem, which is fundamental to the problem. Americans spend more and get less. You can't blame some people for rolling the dice when the costs of private insurance are so high, particularly when everyone knows that a costly condition may encourage the insurer to withhold payment, anyway.
For the moment, I'll spare you my specific ideas, but expecting the free market to magically fix health care is unreasonable, unless you are content with the idea of a lot of people dying because of it.
The economics of health care don't really work with a free market system. It's not as if I decide to "consume" strokes or brain tumors if they become more affordable, or consume fewer of them if they become less so. Normal market dynamics may apply to breast enlargements or botox, but they don't apply to pancreatic cancer or Hodgkin's disease.
Nor does a free market assure access to care to everyone. As is the case with BMW's or mansions, having a free market doesn't guarantee that everyone gets to have them, but only that there will be a base of suppliers who will willingly provide them to those few who have the money to pay for them. We don't have a social interest in making sure that everybody gets to drive an M5, but it does upset a few of us to think that some people may not get to breathe because they're short of cash.
No one gets denied health care. Health insurance doesn't keep you healthy, it protects against financial disaster.
If Americans really are spending "too much" on healthcare, then tax any amount spent above a certain level at 100%. That takes care of the problem.
Or, we can cap and trade.
As for Warren, she fits perfectly as Congress's TARP overseer considering that they don't actually do any overseeing at all as far as I can tell.
Both proportion and total number are useful. While this study is interesting it doesn't address whether medical costs are causing more bankruptcies OR if there's a relative reduction in non-medical-related bankruptcies. It's a flaw in the paper. They should have addressed it. But that falls short of fraud or misinformation.
Given that an external factor has pushed the total number down it's very difficult to ascertain the root causes of changes in proportion. Time will tell if the proportion increase stays the same.
How people responds to the study says more about the responder than the facts of the study. You don't think medical costs are increasing enough to cause more bankruptcies and don't like the idea of government insurance. The answer isn't definitive yet but this study isn't as bad as you make it out to be.
Klatz,
Sorry, but I just can't agree that it isn't fraud. It is only an honest mistake if you think Warren and her collaborators are too stupid not understand the relevance of the absolute numbers. One must choose one or the other. Having witnessed Warren in the past, and other politically motivated researchers like her, I choose fraud as the explanation.
For all I know medical costs are increasing enough to cause more bankruptcies. But this study doesn't show it. Bankruptcy just hasn't gotten so much harder to declare, that I would expect to see such a substantial fall in people with truly unsupportable medical debts filing.
It's not as if I decide to "consume" strokes or brain tumors if they become more affordable, or consume fewer of them if they become less so
But, the cost doesn't need to be so high for the treatment of strokes or brain tumors. People should have the option of buying BMW level health care or Kia health care.
The Kia will be cheaper, slower, more dangerous and less responsive than BMW care. But, the new technologies developed as part of BMW care will eventually filter down to the Kia level.
RW,
Sorry, but you are wrong. You are correct in stating that “in order to measure the impact of something, you need to look at it in percentage terms”. But the reason this report is so misleading is that it measures the percentage of medical-related bankruptcy filings against the wrong data set.
If you want a true measure of the impact of medical related bankruptcies on society, then you need to measure the percent of filings against society as a whole. And over the time frame of this study, society (population) was relatively stable—so looking at the absolute number of bankruptcies is the most telling statistic about the impact on society.
Measuring the percent of medical bankruptcies against total bankruptcies is interesting but not particularly relevant to the debate—especially when the backdrop of bankruptcy filing changed so dramatically due to bankruptcy law change. In fact, if you assume medical-related bankruptcies are harder to predict, and also harder to avoid, than other types of bankruptcies, then the significant fall in number over the period is somewhat surprising. And the relative rise in medical-related bankruptcies (as compared to total bankruptcies) was easily predictable.
If the number of medical-related bankruptcies were rising, then it would be a lot easier to make the statement that the medical system is placing an increasing burden on American families. But they fell. This is not to say the healthcare system is not placing a burden on families. But the data as presented in this report do not, in any way, support that conclusion.
I do not know how the Warren report gathered data. I am a chapter 7 bankruptcy trustee who sees about 60 new cases each month . we examine each petition to determine the reasons for filing. we do this for a number of reasons. for example a person with a lot of medical bills may have a personal injury claim that we may pursue, settle and give that money to creditors. In our experience the 50% amount is very close. I often ask what did you use the credit cards for? the answer,"we paid medical and hospital bills." another factor that is often overlooked is the cost of health insurance as an expense that depletes household income. As the cost of health insurance increases, more of the cost is shifted from employers to wage earners. this increasing costs reduces the amount of income available to the family. for people forced to purchase private insurance, this 3-600 or what ever a month may occasion default on a car, a home , a credit card.
I thought this was quite interesting and underscored the perils of a Warren-type study. How do you collect data/score results to properly reflect the above nuances? What's more useful, the massaged scored "data" or 50% intuitive gut check from a practitioner?
On scoring, you really can't, and I don't think Warren's methods cleverly cut the mustard either (dollar amount on claims cutoff? a labor economist would find that embarrassingly crude hand-waving). Can you reach valid conclusions with fluffy data sets, as Warren is trying to?
Maybe she's not a bad academic for investigating the topic, but she's a bad academic for passing off bad conclusions as allegedly quantitative truth. Warren's study is either intellectually bankrupt or worse, dishonest. Either way we should we upset with Warren using her academic standing to peddle her agenda, and goodness knows what such a person is doing overseeing TARP (nothing, hopefully).
Aside: we should applaud Megan who, unlike any print journalist or other non-specialist, for digging into the intellectual underpinnings of research, instead of blindly accepting the title argument as fact and mindlessly flipping it into a headline
http://www.phdcomics.com/comics/archive.php?comicid=1174
Russ is right about the role of credit cards, in my limited experience with people going bankrupt. Those with high medical bills have used credit cards to both pay the bills and maintain a good portion of their lifestyle. From which I make three observations: First, it's at least as much the credit card charges that put them under. Second, it's the credit card issuer(s), not just the household, that bears the ultimate loss in a "medical bankruptcy" - the household gets discharged, after all. Presumably the cc issuers price it into the rates they charge us all, so credit cards function as a kind of insurance, if not optimal (but then neither is Medicare optimal as a kind of insurance). Third, the claim this study makes of "medical impoverishment" is overstated in my view because the bankrupts I've known closely have all managed to maintain at least most if not all of their lifestyle despite mounting medical bills, through use of credit.
If you want a true measure of the impact of medical related bankruptcies on society, then you need to measure the percent of filings against society as a whole. And over the time frame of this study, society (population) was relatively stable—so looking at the absolute number of bankruptcies is the most telling statistic about the impact on society.
That's really false on a lot of levels, but for one, it ignores a substantial change in the bankruptcy law that occurred in 2005, which raised the bar for what cases could be filed, which would in and of itself change the nature of the filings being made.
Bankruptcy is only one measure of economic failure. It is an easy one to measure, because the court data is public record, but it is not an exhaustive or exclusive data series to measure those who face economic problems.
Again, there is no denying that health care costs as a percentage of GDP are rising. At this point, we spend more on healthcare than we do on durable goods.
Meanwhile, we spend more than do other countries, yet have no statistical benefit to show for it. For all of what we spend, you would think that we would outperform everyone, but apparently not.
The system just doesn't work that well. If it was anything else and not a political football, everyone would be quick to admit that the system delivers poor bang for the buck. We can debate the alternatives, but to deny the underlying problem is simply foolish and requires ignoring a hell of a lot of easily obtained data. Ostrich economics at its worst.
The evidence of overmedication seems perfectly sound, but it's completely unreasonable to pretend that we're going to solve it politically. If it were so easy for a national single-payer health care problem to prevent the excess care in some areas of the US for equal outcomes that the data suggest, then Medicare wouldn't have exactly the same pattern in those areas.
I strongly suspect that politics will mean that, even if those studies and data are used to justify the potential cost savings, that in actuality national health care will look like Medicare and will still way overspend in certain areas. Those potential big savings will not happen.
I don't buy the argument that national health care is necessary to get the necessary cuts and rationing in Medicare and nationwide that Obama and Orzag claim. Setting aside that for every Democratic vote gained thereby you lose a Republican, if we can't get it for Medicare standalone, then even if the cuts come in as part of a compromise, politics will remove those cuts on down the road.
Virginia Postrel's point is reasonable. If these 30% cost savings are possible, and your data shows that the same 30% cost savings are available in Medicare (which they do, as the various New Yorker and other articles show), then I won't believe that the reforms and efficiencies are politically possible unless you can achieve them in Medicare. Show that Medicare can be made to work better than the private system on that basis, or don't use theoretical improvements on that metric as a justification.
RW,
the system delivers poor bang for the buck
The starting salary for a nurse in the US (at PPP) is $39,276 in Germany it's $26,286. Germany gets "more bang for the buck" becaue they pay their nurses 1/3 less.
http://www.icn.ch/sew_wff_data_sum06.pdf
Are they doing the same job? The study seems to suggest an attempt at equivalency was made, but....
Moreover, who funds the training and how long does it take? In America, people pay for their own education and it usually takes longer than is necessary, so salaries are put off and costs are incurred to learn. That means higher salaries are needed upon graduation to lure people into the field. If the training occurs on the job while you earn in Germany, lower salaries, particularly lower starting salaries, would make perfect sense.
Finally, cultural preferences regarding titles and tort liability for bad nurse performance would impact things. Nurses who fear getting sued--as they might in America--properly include that risk in their compensation expectation. Germany's nurses likely face no such risk.
Not arguing much here, just suggesting that data point is not worth much without more inquiry into things a bit. Cross cultural comparisons are tricky things.
Remember that, according to Elizabeth Warren, Patricia Barreiro is a victim of a medical bankrupcy!
And actually her 1998 was "medical" as well according to Warren's definition.
Germany gets "more bang for the buck" because they pay their nurses 1/3 less.
If the German population doesn't suffer as a result, why would this be a problem?
People should have the option of buying BMW level health care or Kia health care.
That sounds great. Mr. BMW gets chemo, Ms. Kia gets a Ouija board. I'm going long on pharma **and** board games.
If the German population doesn't suffer as a result, why would this be a problem?
It's not politically feasable, that would be the problem.
That sounds great. Mr. BMW gets chemo, Ms. Kia gets a Ouija board.
No, we have minimu standards like we do for cars. If we have two chemo drugs, a new one that costs 10k a dose and doesn't cause as many side effects BMW guy gets it. The $1500 generic that is effective but more unpleasant goes to Mr. Kia.
RW,
Look, I know it's been hashed out here a zillion times, but I still don't understand what's so terrible about the idea of medical insurance that is really insurance -- that is, a hedge against a sudden, catastrophic expense. I don't understand why it is necessary for people to be "insured" against small, routine expenses. We need food to live; but we are none of us on "food insurance," apart from the rough equivalent of the emergency room that must treat anyone in distress regardless of ability to pay. Why must every medical expense, no matter how small or regular, be filtered through some sort of system?
In other words, I think Ms. BMW and Mr. Kia (if you must gender your hypotheticals, need you be so tediously stereotypical?) ought both to get chemo. But it will not break my heart if Mr. Kia decides on a plan whereby if he wants a new pair of glasses he pays for it himself, whereas Ms. BMW pays whatever her smallish co-pay for new glasses is. Or Mr. Kia buys his own condoms, whereas Ms. BMW can have however many she wants for free. And if, when either is seriously and expensively ill, Ms. BMW, who has been paying more all along for her, um, BMW of a health plan has to pay a smaller deductible than Mr. Kia, but neither is bankrupted by the illness.
Suppose you want to evaluate the impact of medical expenses on the total number of bankruptcies in the US. Your data consists of a time series between the years 2001 and 2007 for absolute number of bankruptcies, and just the 2001 and 2007 years for the self-reported causes of those bankrupcies.
But you know that there was an event in 2004 (BAPCPA) that has greatly reduced all the bankruptcy filings. This is equivalent to a shift in your data, reducing bankruptcy absolute numbers when you know that nothing substantive changed from 2004 to 2005. The new low absolute numbers are a result of more stringent requirements for filing bankruptcy, not an improvement in economic conditions. So, understandably, you want to control for this. What do you do to make pre and post 2005 data comparable?
Well, you normalize your data and compare the proportions of medical-related bankruptcies between 2001 and 2007. That's what the study did. And they had this to say about the new bankruptcy laws:
BAPCPA’s effects appear nonselective. Current filers differ from past ones mainly in having struggled longer with their debts. New restrictions fall equally on medical and nonmedical bankruptcies, with no preferences for medical debts or sick debtors. It is implausible to ascribe the growing predominance of medical causes of bankruptcy to BAPCPA. Conversely, there is ample evidence that the financial burden of illness is increasing. The number of under-insured increased from 15.6 million in 2003 to 25.2 million in 2007.3 Of low- and middle-income households with credit card balances, 29% use credit card borrowing to pay off medical expenses over time.8 Collection agencies contacted 37.2 million Americans about medical bills in 2003.9 Between 2005 and 2007, the proportion of nonelderly adults reporting medical debts or problems paying medical bills rose from 34% to 41%.
This is Megan's only legitimate argument - maybe bankruptcies post 2004 were altered in composition for a while due to anticipation effects. But one must wonder how much can non-medical losses be anticipated in average, i.e., how long does this effect last. Questionnaire data was from 2007, 2 to 3 years after BAPCPA. Was there a sizable number of bankruptcies anticipated 3 years down the line? In the divorce case, a number of people that saw their marriage falling apart 3 years down the line? Doubtful, to say the least.
What is relevant, of course, is that there was an increase in 22% since 2001 with the same "biased" method used for 2001 and 2007. So the increase is real even if the questionnaires tend to inflate medical reasons for bankruptcy.
Also, this is a minor point, but one should be careful in stating unfounded opinions about biases in questionnaires. The "I would not be surprised..." argument is an incredibly comfortable argument to use, that undermines credibility without having to present any evidence. And it doesn't commit you to anything either. If it turns out in the future that these questionnaires were not biased, one can dismiss it with an "whaddya know"?
Of course, this analogy fails to recognize that the new BAPCPA regulations didn't change any underlying reality in financial difficulties of families and businesses. Numbers were down, but nothing magical happened from 2004 to 2005. The relevant "extreme absurd case", would be something like this: if new regulation were so restrictive that it would make it possible for only one person to declare bankruptcy due to medical bills, would that mean the necessity for national health care would have diminished?
What continues to amaze me, though, is this sentence from the previous post:
We really should be very certain about what we're saying before publicly questioning somebody's integrity. This is incredibly irresponsible, and the sort of thing that makes a blog lose credibility.
"New restrictions fall equally on medical and nonmedical bankruptcies, with no preferences for medical debts or sick debtors. It is implausible to ascribe the growing predominance of medical causes of bankruptcy to BAPCPA."
As someone noted earlier in the thread, the restrictions may fall equally, but their effects do not necessarily, especially the part where the attorney must sign off on their client's claims.
Also, since nobody seems to understand why the total number of BK filings dropped so precipitously, it's pretty hard to even extract meaningful conclusions from the proportions of bankruptcies. If medical BK is as serious and inextricable a situation as the evidence would suggest, why did those also fall significantly post-'05? Moreover the fact that they are a higher proportion now may only reflect that fact, and/or it may reflect the fact that the documentation to prove them is more secure than many other types, without being indicative of an increasing trend.
Since the study failed to examine these things comprehensively, and the study authors are actively presenting their findings to the press as evidence of a need for a drastic political and social chance, it's not hard to call the study misleading and irresponsible. It was evidently structured to sucker rubes, and the rubes are lining up.
Is there a reason why an attorney would sign off more promptly on a medical-related bankruptcy (MRB)? More importantly, is there evidence, or is just speculation? Apart from the mentioned anticipation effect, I see no reason for effects of restrictions being biased towards increasing the proportion of MRBs. If you know one, please provide evidence, not speculation.
But we do know that the change on bankruptcy requirements (along with anticipations) was the cause for the fall of bankruptcies. If you apply more stringent criteria for bankruptcy, you're going to get less of them. The reduction is, of course, irrelevant for the problem at hand.
It's simple, really: every time you requirements for bankruptcy (or anything else) more difficult to meet, filings fall. They fell less in MRB, which means something. It seems to suggests that MRB would have continue to increase their absolute value as well as their proportion had the law not been changed.
I see no reason for this, unless you had a large share of fraudulent bankruptcies before. Is there any evidence of this?
If studies had to meet your criteria of acceptability, nothing would ever get published. In absence of strong reasons to think that the new bankruptcy law changed, not only the absolute number, but the composition of bankruptcies up to 2007, of course the authors didn't have to "examine these things comprehensively". The burden of evidence falls on others to show that the 2005 bankruptcy laws were responsible for a bias in the proportion of MRBs.
"My criteria"? No, in fact I do believe there is room for reasonable uncertainty. The key, however, is transparency and disclosure. Since Warren is a public official and produced this study with a group that has a known and significant public policy agenda, it should occur to her that the requirements for transparency and disclosure increase, not decrease, and both Megan and several posters in this thread have deconstructed where the study went wrong on those points. Your objections do not address all of those points AFAICT, so I assume their overall critique still stands.
A couple of reasons to think that medical bankruptcies might have been reduced less than others:
1) They're harder to time: someone who got sick in 2006 couldn't move their bankruptcy up. Someone who had a snowballing debt problem for five years prior, could.
2) Medical bankruptcies are more often accompanied by income loss than other major triggers like divorce. That means fewer medical filers would flunk the means test and be forced into an unattractive Chapter 13 plan.
3) The income loss of a medical bankruptcy would have made it harder to refinance the house to pay off unsecured debt.
4) Sick people may be less able to deal with bill collectors in other ways--they may not have the energy to, say, negotiate a payment plan.
5) Attorneys may be more willing to sign off on their bills.
6) Unlike, say, someone who bought too fancy a car, someone with a disease can't modify their behavior. The presumption that bankruptcy had gotten harder may have caused some debtors to be more careful about taking on debt. But people who really are simply pushed into bankruptcy by an illness can't plan around it.
7) We know that some bankruptcies--the actual number is hotly debated--were fraudulent or abusive. Some people used serial Chapter 13 filings to stave off eviction or foreclosure. Some people used them to stiff business partners they were angry at. Some people used them to evade legal judgements. (Witness Dick Fuld trying to transfer his half of a home in Florida, which has an unlimited homestead exemption, to his wife.) Some people hid assets from creditors, claiming absurdly low income, etc. The law, for all its other flaws, really did cut down on those abuses. That would mean that non-abusive filings would go up as a percentage of total filings. To be clear, I don't think this accounts for a very large percentage of pre-2005 filings, so I don't know whether the effect would even be large enough to measure. But it's undoubtedly there.
This is all speculative; we really don't know. But it's not crazy on its face.
As a social scientist, I agree with Megan on this: this paper is not sufficiently transparent about its data and methodology, and may contribute to some misleading inferences due to a lack of contextualization and selective use of statistics. This is not to say I know the conclusions of the articles are wrong, but rather to say I can’t be sure from what is presented in this published paper. Megan in fact barely touches on the problems in transparency, which would have led to this paper to be sent back for revisions by any leading social science journal with which I’m familiar. It is a surprising fact to some (including myself a few years back) that medical and health journals seem to have lower standards for statistical evidence than journals in sociology, economics, political science, and psychology.
Time won’t permit me to run through all of the issues now, but a few highlights:
First, let’s address the percentage versus absolute numbers debate. Both pieces of information can be useful for answering distinct questions. Sometimes we’re mostly interested in compositional numbers (proportions), like when we discuss the changing ethnic or racial make-up of the U.S. In the latter case, it would be more useful to know not the absolute population increase among Latinos, but instead whether Latinos have increased as a proportion of the U.S. population. In other cases, we’re may be interested in the actual numbers, for example, how many people have contracted a new deadly disease. Often both numbers are valuable.
That’s likely the case with medical bankruptcy. While we might want to know whether medical costs are a leading cause of bankruptcy, we also surely wish to know whether medical costs are causing an increase in the number of bankruptcies. (To take a simple example for illustration, many people wouldn’t care as much about gun violence, even if guns were involved in 90% of violent deaths IF there were also only 10 violent deaths in the country per year. The size of the overall “problem” and whether it is decreasing or increasing are relevant considerations, especially for an important public policy debate. The paper should indeed have been more forthcoming about this. Had it been so, the authors would come across as more fair minded without necessarily minimizing the problem (there’s still plenty of bankruptcies). By giving us more context, the paper’s argument becomes somewhat less dire but hardly unimportant.
On top of that, we’d want better time trend data before inferring that the role of medical costs in bankruptcies changed between 2001 and 2007. All we know from their multivariate logistic analysis (accepting it on face value) is that the share of medical bankruptcies (by their definition) was higher in 2007 than 2001. Okay, but was that due to some change in the nature of medical costs, medical insurance, or anything else do to with health? Or was it due to how the intervening change in national bankruptcy laws differentially affected the composition of bankruptcies? (They address this only superficially at the end of the paper.) Or perhaps due to other changes in the financial environment – a plummeting housing market, a change in the lending environment, and so on? We can’t tell from these data, because the binary variable for year of study would capture anything and everything that was different between the years (and not otherwise controlled for). One might be able to use court data to construct a dataset of annual bankruptcy filings and then add variables to control for other factors, and in that case a better outcome variable is probably number of bankruptcies per thousand people (or similar). This would allow researchers to monitor whether medical costs were causing actual increases in bankruptcy (not just becoming an increasing share of bankruptcies), yet still control for population growth and other causes.
Second, there are a number of other problems with the paper. These don’t clearly invalidate the conclusions of the paper, but they do make me skeptical that we can have confidence in those conclusions from the data as presented.
Example 1: Tables and analyses don’t report the number of respondents in the particular analyses, which is an issue because evidently the baseline or reference group shifts from analysis to analysis without explanation for why. See the note to Table 2, where the key percentages on medical bankruptcy are reported; the note indicates that these percentages are based not on the full sample but only the home-owning half of the sample. Does this make a difference? I don’t know. Why was it done? I don’t know, it’s not explained.
Example 2: Unless I’m missing an explanation somewhere, it appears like the 2001 to 2007 comparison is based on different populations. The former was a 5-state study, the latter seems to be a national study. If that’s true, then we really don’t know in fact anything about the national trend from these data (but the authors could try to shed light on it by using their 2007 data to tell us the trend for the 5 states from 2001, which may or may not mirror the national trend).
Example 3: They provide a fair amount of information about their sampling and survey procedures, but not enough. One case in point is that they provide a verbal assurance that respondents to their initial mail survey “resemble” non-respondents on many basic characteristics. Given that they have the data to reach this judgment, most studies would provide more precise numbers to demonstrate that the two groups are statistically indistinguishable. We also don’t learn much about what respondents were told about the study, so that we can assess whether “demand” effects may have inflated reports of medical problems. The researchers may have been very careful about this, but they need to report what they did.
Example 4: Most seriously, the authors invite improper inferences by conducting a national survey of bankruptcy filers, rather than a national survey of all households. By doing what they did, the researchers can study how often medical costs are an issue among bankruptcy filers. But many of us, including in all likelihood the researchers and the journalists and politicians who will be talking about this study, are more interested in whether and how much medical costs are causing Americans to file for bankruptcy. If that’s so, then the researchers would appear to have committed a cardinal sin in principles of scientific research design: selecting on the dependent variable. They are examining only people for whom the problem has occurred. If we want to know whether a factor is causing that problem, then we need to collect data on instances where the problem did AND did not occur (i.e., those who did and did not file for bankruptcy). Then one can conduct a multivariate analysis to determine the impact of the variable in question (medical costs), controlling for other factors, on the outcome of interest (the likelihood of filing for bankruptcy). When you select on the dependent variable as these researchers did, you can’t tell something as basic as whether more Americans with high medical costs actually avoided bankruptcy than Americans without high medical costs.
Perhaps had researchers fixed these and other problems, we’d discover the problem is even worse than they currently report. Or perhaps we’d discover things are actually getting better, or there is no change. We just can’t tell from their data as conducted and presented, and that’s a shame because that means it really can’t inform an important on-going discussion about national conditions and public policy.
(By the way, this is what a real peer review looks like, and it is how these sorts of problems can be fixed (and often are) before a study is released to the public.)
That was a very helpful comment, thanks. I especially gained from the comment on selecting for the dependent variable.
It's not as if I decide to "consume" strokes or brain tumors if they become more affordable, or consume fewer of them if they become less so.
True, but people don't decide to "consume" car accidents either. If you get hit by a drunk driver in you Audi A8 or Mercedes S550 you are far more likely to survive than if you're in a Kia Rondo. I think the same should apply to heathcare.
If you get the Kia insurance you are given on the bare minimum level of care - only generic drugs for example. Just like you only get the minimum level of safety protection in the Rondo. If you want the latest and greatest drugs and treatments you need to pay - just like you pay up for an S550 to get the latest and greatest safety protection.
44,000 people a year die in auto accidents. How many would be alive if they had been riding in an S550? If we condem 10's of thousands to die each year on the road because they can't afford a safe car, why should healthcare be any different? It's not like anyone "choses" to get killed in a car accident.
And it's not as if there is much evidence to say that the mercedes version of healthcare promotoes longer life outcomes on average.
The basics suit about 98% of people just fine. Basic drugs, basic procedures done 100x a day by core institutions, etc.
As long as we're making tortured automotive analogies, it should be noted that the buyer of a BMW is inherently getting less bang for the buck than the buyer of a Kia. After all, both accomplish the primary mission--get occupants to destination--equally well. The BMW just makes it somewhat more comfortable and much more impressive to certain observers.
We get less bang for our medical buck for similar reasons; the last health-care dollar buys less health (although perhaps not less health care) than the first, just as spending $40k on a car gets you from home to the office less than twice as fast as spending $20k.
I am a strong libertarian/conservative when it comes to government run programs. I say that first, because of what I'm about to say.
Our national health care system is in terrible shape right now, and is unsustainable.
But for some reason, it seems that the only answer being debated is going to a national health care system.
Relatively FEW countries have successfuly managed to do this, though many countries have nationalized health care (or, more accurately, nationalized health insurance).
Our nation's models, Medicare and Massachusetts, are both terrible examples of what our government would do.
I think there is still a strong potential for privately run health insurance to be a wise choice, but here are some questions I pose:
1. Why are there tons and tons of different health insurance programs throughout the states? Each one requires a unique marketing department, administrative departments, and localized networks instead of national "providers". This is massively wasteful. I believe if we have actual national private health care, you'd see alot of waste reduction.
2. Why do most people get their health care through their work, and not have an option to opt out AND RECEIVE EQUAL COMPENSATION? I know there are arguments for this, because the blended rate of the young people helps counteract the cost of insuring the older/unhealthier. Nonetheless, I think it would be far better and more competitive to allow nationalized health care plans to form and allow employees to join a company-group plan or receive equal compensation and pick their own.
3. Why not provide a national base level of health insurance for true emergency care, and let medicare for the older populations pick-up the annualized physicals/preventative healthcare that only truly becomes useful during the later years. You can let men pay for blood tests/stress tests in their 40s when they are overweight and smoke, and women pay for mammagrams and pap smears. Allowing such services to become competitively bid and self-paid would help drive the cost down, and would help eliminate all the wasteful treatments people get because it's part of their plan.
3a. My wife, God bless her, is young, vibrant, and healthy. I estimate that she attends a family physician 2-3x per year, urologist 1-2x per year, dermatologist 1-2x per year, and gynecologist 3x a year. At what point did these seperate visits become necessary for a young person to stay healthy? She is excessive, absolutely, but it's become far more normal for hypochondriacs to abuse the system because they only have to pay a co-pay and that usually only adds up to $200-300 per year.
I believe if we had truly nationalized private insurance offerings, employee or self-chosen, and eliminated alot of the wasteful administration of the current system and wasteful visits allowed, we'd see the cost of healthcare massively decline and stay in touch with inflation.
Instead, we are talking about a centralized government run program which does not have a succcesful track record (even in other countries, the successes are fewer than the failures), which causes conflicts of interest, and reduces citizen freedom (by reducing choice and increasing direct taxation).
Our current system is unsustainable, without a doubt, but why are we arguing over only ONE alternative. It's ridiculous.
Joe
Why do most people get their health care through their work, and not have an option to opt out AND RECEIVE EQUAL COMPENSATION?
Because efforts to change the tax exemption underlying this treatment are inevitably met with screaming: "Politician X wants to RAISE YOUR TAXES!!!!" Obama said it about McCain, and now that Obama has flipped on the issue, the WSJ is saying it about Obama.
I haven't heard Obama wants to ensure that employers provide equal compensation to their employees if they opt out of the provided healthcare. And I have read about Obama trying to remove the tax exemption on that healthcare.
I'm talking about, for instance, my employer paying $12k a year for my health insurance. If I opt out, they pay me nothing. I'd like $12k in compensation for opting out and I'd like any amount of that 12k that I apply to healthcare to be tax exempt.
Do you really think that your employer, operating in (likely) the most competitive labor market in the world, would not give you that money in cash-wages? Of course he would: You'd get the raise the same day the tax-code changed. On the other hand, if your boss thought you'd keep working for him for $12k less he'd drop your health benefits today.
What I worry about is if Obama goes one step further: the retail value of the health care you receive but don't pay for, beyond the value of your premiums and copays and deductibles, becomes taxable imputed income.
In the last couple of years I have received $3/4 million worth of health care (retail value) for $26 per month premiums plus specialist office visit copays and drug copays. Basically I'd be stuck with income tax on $3/4 million that I never personally received. The same as Obama wants to do on premiums but bigger scale.
I wouldn't put it past him because his economic plans are tanking and revenues are tanking and a greedy overreaching government needs its revenue.
So what would that tax be? $750,000 at 35% = $262,500.
Which is about half of what my insurance actually paid out. (The rest was discounted as per contract.)
I honestly wouldn't put it past him. And if I didn't have the money, the federal government would be a lienholder on my life, first in line at probate.
All to fund his grandiose schemes.
it should be noted that the buyer of a BMW is inherently getting less bang for the buck than the buyer of a Kia.
You, sir, have obviously not had the pleasure of driving the former or suffered the torment produced by the latter. But I'll leave that for another thread.
I think Ms. BMW and Mr. Kia (if you must gender your hypotheticals, need you be so tediously stereotypical?)
If this is going to morph into a thread about automotive demographics, than I think that you will find that BMW drivers do tend to skew heavily male relative to other vehicle brands, while cars at the Kia price point and configuration really do tend to be sold in greater numbers to women than to men. So in generic terms, the metaphor was actually fairly accurate.
Now I suppose that I could have labeled the above as Mr. BMW and Mr. Kia, but that would have been sexist to exclude one gender entirely. On the other hand, had I labeled them both as Ms. BMW and Ms. Kia, then I undoubtedly would be castigated as some sort of revisionist deconstructionist femi-nazi who worships at the feet of Andrea Dworkin.
Just be thankful that I didn't refer to Miss Kia, as that would prompt the ACLU to repossess my membership card. But in the future, we can refer to NGS (Non-Gender Specific) BMW and NGS Kia, and leave it at that.
I still don't understand what's so terrible about the idea of medical insurance that is really insurance -- that is, a hedge against a sudden, catastrophic expense.
That's a bit of a straw man, er, person argument. Economic blowouts are not caused by hangnails and head colds, but by the serious stuff. The problem in this scenario is that NGS Kia can't get the chemo when the policy gets canceled, the claim gets denied, or there was no insurance in the first place. Get yourself a big, nasty pre-existing condition, and you won't have any insurance coverage to worry about.
Maybe you haven't had the pleasure of driving a Kia recently. IME the latest models are tightly assembled, adequately powerful, as comfortable as any lower-cost vehicle can be, and fairly quiet inside, even if the auxilliary features are limited in number and the interior materials are necessarily of a very basic grade. Hyundai is rapidly pushing its way toward becoming the Korean Toyota.
RW and Rob,
To continue my tortured automotive analogies.
Electronic Stability Control introduced in 1987 has proven itself to be as important a safety feature as seat belts. Indeed, it has proven itself able to reduce fatal crashes by 63% in SUV's and 30% in cars.
Inititaly, Stability Control was only available on the most expensive cars (BMW, Volvo, Lexus, Cadillac, etc). By 2012 it will be mandatory on all new cars.
Is it a shame that 260,000 people will have died in otherwise preventable car crashes because stability control wasn't mandated as soon as it was commerically viable? Yes, but that's life.
The way healthcare works, as soon as a new drug or procedure is available, it is mandated for everyone. That's not a viable system.
Jmo - No offense, but that's complete nonsense (regarding the number of people who died).
I understand the studies behind it, but understand that there are a huge number of confounding factors and that stability control CANNOT overcome physics. In fact, it's not much use in accidents period....it only really helps in avoiding accidents altogether, as it prevents minor slides from becoming big slides by people having a bad reaction.
FYI, stability control could have saved me from an accident I had in a 1995 volvo. I started to slide coming around a turn and I hit the brake. Which was exactly the wrong thing to do. I pendulumed and slammed into a fallen log hard enough to bend the frame of the car.
Of course, it was a volvo. So I drove it home.
people don't decide to "consume" car accidents either.
Actually, they do. Drive like a moron, and your accident rate will increase substantially above the norm.
Some medical conditions are self-inflicted, but a lot of them are ultimately a byproduct of age and genetics. There is little that the health insurance system can do to use pricing as a behavior modification mechanism in such a way that their costs will decline. If you chose the wrong parents, you'll have more problems than those who did a better job of it.
There is little that the health insurance system can do to use pricing as a behavior modification mechanism in such a way that their costs will decline.
Which is precisely why the Big Government version will have signs posted by the various procedures that state You Must Be Younger Than This Line to Ride, and everyone else who isn't unusually healthy into their old age is expected to die off quickly and gracefully. That's the only way to control costs other than a market pricing mechanism, which also doesn't really exist under current insurance structures.
And I would support higher premiums for the single payer gummint health care for people who choose higher health cost behaviors: overweight, obesity, extreme obesity (three different categories on the NIH BMI tables), smoking, illicit drug use, excessive drinking. The gummint will be powerfully motivated to force people to be healthier in spite of themselves and steep premiums will be the way to do it. Obama said we'd all feel the pain and have to sacrifice.
You, sir, have obviously not had the pleasure of driving the former or suffered the torment produced by the latter. But I'll leave that for another thread.
Well, if you're going to use life expectancy (say) as a proxy for quality of health care outcomes, then the proper automotive analogy is "goes from point A to point B." If you want to bring in leather seats and 12-speaker stereos, then we need to dig into health care and look at waiting times, wood paneling in patient lounges, and the ability to make a &*%$ appointment to get a sore tooth inspected instead of spending the whole morning in a waiting room next to the guy who's there to see about a having his missing lower jaw reinstalled, and then having to come back the next day because he got a number before yours and the surgery takes a little while (which we struggled with in Germany).
Get yourself a big, nasty pre-existing condition, and you won't have any insurance coverage to worry about
I have noticed that it is also difficult to buy auto insurance to pay for bodywork after you crash, and life insurance after you die. People with pre-existing conditions seeking "coverage" don't want insurance, they want somebody else to step up and pay for their medical costs so they don't have to. Now, that maybe something we want to do as a society, but we should not confuse it with "insurance." It's welfare, plain and simple.
The confusion between "insurance" and "give me health care for free" is at the root of our whole crisis.
"I have noticed that it is also difficult to buy auto insurance to pay for bodywork after you crash, and life insurance after you die. People with pre-existing conditions seeking "coverage" don't want insurance, they want somebody else to step up and pay for their medical costs so they don't have to. Now, that maybe something we want to do as a society, but we should not confuse it with "insurance." It's welfare, plain and simple.
The confusion between "insurance" and "give me health care for free" is at the root of our whole crisis."
Excellent, excellent point. Well said, with a large dash of vinegar too.
Totally agree.
People with pre-existing conditions seeking "coverage" don't want insurance, they want somebody else to step up and pay for their medical costs so they don't have to.
Possibly true if you're talking about someone who has never purchased health insurance, finds himself seriously ill, and now wants coverage. Not at all true if you're talking about someone who has purchased health insurance for her entire adult life, finds herself seriously ill, and cannot - for example - move to another state because she will be unable to purchase health care there without a waiting period for pre-existing coverage.
I'm not offering this as an argument for national health care, simply as a reminder that not everyone with a pre-existing condition who is "seeking 'coverage'" is trying to scam the system.
Don't load the language by saying people were alleging he implied prexisting conditions were a "scam". The point stands as a point well made: people with pre-existing conditions who seek treatment payments and/or mandated coverage despite the condition are really seeking to get healthy people to pay the bill. Whether you pool the "risk" (outcome in this case) at the government level or private market level via mandated coverage, that is the outcome.
You must allow that fact as a fact, and address it, without implying that the person making it is casting aspersions on the sick as "scammers".
As Rob Lyman said, we may want to pool health outcomes at a societal level and pay for all, or not. But let's at least acknowledge what mandatory pooling does: it transfers wealth from the relatively health to the relatively unhealthy.
My apologies - you are quite right that scam is a loaded word. In my defense, however, Rob Lyman's analogies seemed to point to someone who attempts to buy health insurance only after he becomes ill. If that person attempts to get the government to force others to pay for his care because he was unwilling to provide for it responsibly before he became ill, I would consider that a scam.
As for this:
people with pre-existing conditions who seek treatment payments and/or mandated coverage despite the condition are really seeking to get healthy people to pay the bill.
isn't that true of all insurance? If I have a car accident and total my car, my premiums will not pay the entire cost of replacing it - some of it will be paid for by other people with car insurance who have not had accidents. I thought that was the whole point of insurance.
Furthermore, this ignores the longitudinal aspect. If someone has faithfully paid health insurance premiums for 30 years and is now ill and needs care, surely all those years of premiums are paying at least part of the bill.
There's a new law called HIPAA that nullifies the impact of preexisting conditions. Just don't go ininsured for 64 days and you're golden.
Failing that, get a federal government job and stay at it for 5 years at least, and you've got guaranteed health insurance for life.
Kinda makes me want to "go postal."
As far as I know, HIPAA only helps if you quit a job and need individual insurance or if you go from job to job. The situation I'm thinking about is someone who is currently buying individual insurance and wants to move to another state. I'm pretty sure HIPAA won't help.
I have to say, though, that if I'd known at 21 what I know now, the Federal government job route would have looked pretty good.
I'm talking about, for instance, my employer paying $12k a year for my health insurance. If I opt out, they pay me nothing. I'd like $12k in compensation for opting out and I'd like any amount of that 12k that I apply to healthcare to be tax exempt.
The question of compensation is for you and your employer to negotiate; no reason for Obama to get involved unless you work at Government Motors. The change in the law you suggest might be nice, but it preserves the tax incentive to spend as much on health insurance as possible.
Rob - I don't understand or maybe you don't understand my point. I'm not into the government intruding on employers, but I am into the government ensuring citizens have choices.
If a federal law was passed that allows an employee to opt out of a healthcare offering and receive the amount spent on the group plan via direct compensation, and if privately purchased health insurance by individuals became 100% tax deductible, that's what I'm intending...
I thought that choice would incentivize individuals to spend as little as possible on health insurance and to comparatively shop plans most suitable for them.
And when the younger, male workforce cohort of your workforce opts out and pushes everyone else's premiums up by 20%, are they entitled to the 20% increase? Or do we do it by the last year they were in the plan? What if a couple of 'expensive' employees leave and the premiums drop by 10%, do we get to cut the opted-out employee pay as well?
Good questions, I don't know. Maybe they get a maximum compensation of what the cost was when they left, and if the premiums decline for the company then that compensation goes down as well by an equivalent amount.
I.e. the employee never gets more than the year they opted out, and may get less.
Maybe it's updated every X # of years to update market conditions.
That's where the economists and actuaries and analysts make their dough, not me :)
Joe
If a federal law was passed that allows an employee to opt out of a healthcare offering and receive the amount spent on the group plan via direct compensation, and if privately purchased health insurance by individuals became 100% tax deductible, that's what I'm intending...
The second half is reasonable, but it makes health insurance tax-preferred, which is usually understood to encourage more spending on it (it also complicates the tax code still further). The first half is the government intruding on employers and would have lots of unintended consequences.
Hi Rob,
I guess, to me, the difference is this:
Federally run health insurance = paying taxes to government to run healthcare
Personally bought health insurance = Not paying taxes on money that would've gone to the government to pay for healthcare.
So to me, in the pure abstract, it's a wash.
I wonder: If health insurance costs the average person $12000 a year, and Obama says we can reduce the cost of healthcare by 30% by going government-run, does that mean that Obama will raise our taxes by $8400 per person while simultaneously ensuring that the $12000 will find it's way into our pockets (by the way, if that $12000 is suddenly given to us as compensation, would it not then be taxed down to about $8400?)
It's an honest question, would they ensure our income would go up commensurately to cover the tax increase necessary to run such a program? Would that switchover be smooth?
Leaving aside the tax deductibility, can't employers now offer their employees a choice of health insurance coverage or a higher salary? That is, we may need the tax deductibility to make taking the higher salary a good deal but would we need a law to allow employers to offer the choice?
I wasn't surprised the study has gotten so much media attention. After all, it is a foregone conclusion in a majority of print and broadcast journalism that single payer health insurance is not only inevitable, but necessary and good. Anyone arguing the contrary is swiftly marginalized as a minion of the evil insurance industry.
Dr. Steffi Woolhandler, one of the study authors, didn't participate out of scientific curiosity. Calling it agenda-driven is overly polite. But now that it is out there, it will be quoted by whatever politician wants 15 seconds of TV coverage. It reminds me of another big lie that has a life of its own: the allegation that medical errors kill 100,000 Americans yearly. That number was derived from a legitimate study, but in such a way as to distort the original purpose of the study. It gives the reader the idea that 100,000 patients walk into hospitals, healthy but for minor ailment, and then leave in a body bag. The study used very broadly defined classification of medical errors: for example, if the diagnosis of a cancer was delayed, irrespective of the reason, it counted as an error, even if that occurred years before the final hospitalization. Or if a gravely ill patient died after heroic interventions which maight have hastened death, as in an intravenous catheter placed improperly, that counted as an error. I could go on, but the point is that the list of possible errors was widely inclusive. The numbers were obtained from hospitals in New York and extrapolated to calculate the number in the entire nation. A study using similar methodology was conducted based on data from Colorado and a figure of around 50,000 resulted. Why is the 100,000 rresult the one that gets all the attention? My theory is that the Institute of Medicine, an appointed board sponsored by the US government, was about to publish an agenda driven report called "To Err is Human," which concluded with recommendations for a number of institutional changes in medical care, chief among them an electronic medical record.
The electronic record has a number of features that are attractive. But its effect on reducing medical errors beyond raising red flags about drug interactions or dosing errors has yet to be demonstrated. The EHR will certainly raise the cost of health care. Its proponents, naturally, would like everyone to believe that the cost will be justified by large numbers of lives saved and extra days of hospitalizations eliminated. They can point to small pilot studies that seem to demonstrate that, but of course they are just pilot studies being run by people with a visted interest in proving that EHRs save money and lives.
In my state, Minnesota, the legislature has mandated that deaths in hospitals defined as being preventable should be reported. The system has been in operation for several years and two things stand out. First, the number of preventable deaths averages about 20 per year; second, in spite of determined efforts made by hospitals to reduce the number of deaths, it has not dropped. In fact, it increased during the first few years of reporting. This suggests to me that the marginal cost of reducing errors is infinite. Not that we shouldn't try to improve things, but realize that they are not as bad as advertised (the 100,000 number is probably closer to 1,000) and that we will never eliminate all errors. Adopting EHR or a national single payer system is not going to change that.
Mouse,
You Must Be Younger Than This Line to Ride
That would work - 75+ all you get is hospice. If you want to buy supplimental insurance you are free to do so. It would work like long term care insurance. If you want to ensure your right to get a hip replacement or cancer treatment when you're 75+ you have to buy a supplimental policy. If you buy it when you're 30 it may only be 50 a month. But, if you buy it when you're 50 it may be 200 a month and by 60 it's 450 a month - just like long term care insurance.
So the old person has their premium care policy, but what if they still get bumped down on the waiting list by gummint health care for being old? It will happen. Once you're no longer working age and tax paying, the gummint doesn't give a crap and sees you as a net liability.
Your premium insurance might get you to the top of the senior citizen waiting list, but you'll still be behind the economically productive younger people.
Sorry RW, but I think you don't understand my point. As I said in my post, the changing background of bankruptcy regulations are *exactly* why measuring healthcare bankruptcies as a percent of total bankruptcies is a meaningless measure of the impact of the cost of healthcare on society. You are comparing your data set (medical bankruptcies) against an arbitrary pool (total bankruptcies) that are being influenced by significant exogenous, unrelated factors (changes in bankruptcy regulations). The comparison merely tells us that people who file for medical related bankruptcy were less able to change their behavior than other types of filers once the bankruptcy code changed.
I agree-- this means that on the margin, medical related filers have less flexibility about how they file than other filers. But since the overall number of medical filers fell *significantly* during the period, then it is impossible to say that this proves that the overall burden of healthcare on people has increased. Presumably, the basis for this argument is that increasing healthcare costs tip the marginal family into bankruptcy. But fewer people filed bankrptucy-- both overall and for medical reasons-- because the law changed. This confounding factor makes any argument about how medical costs are impacting society as a whole impossible to make. The data simply do not support it.
Healthcare costs are rising. Outcomes are worse than in other countries that spend less. The system needs to change. I agree with all of these points.
But as Megan points out, the case this paper tries to make, using bankruptcy data (which you point out is incomplete anyway) is deeply, fundamentally flawed.
That isn't even economics, it is basic Statistics 101.
I don't think this critique is quite right. On any interpretation of the data, a large fall in the total bankruptcies accompanied by a much smaller (much smaller!) fall in medical bankruptcies, in the company of a big exogenous cause that shrinks all bankruptcies, suggests that whatever is causing medical bankruptcies but not causing other bankruptcies -- that is, rising health care costs. The only way the proportion gives a misleading result is if the bankruptcy "reform" bill had a larger effect on non-medical bankruptcies than on medical bankruptcies. But Warren et. al. specifically consider that possibility (page 5 of the study) and argue against it!
(I've elaborated on my problems with Megan's argument at some length here.)
(Last comment should have said "suggests that whatever is causing medical bankruptcies but not causing other bankruptcies is increasing" -- sorry.)
he only way the proportion gives a misleading result is if the bankruptcy "reform" bill had a larger effect on non-medical bankruptcies than on medical bankruptcies.
True, that is the "only" way, but it requires rather more than a paragraph of hand-waving to dismiss the possibility.
Rob, Warren has lots more than a paragraph of hand-waving. For one, she cites to an entire previous paper discussing the question of who the bankruptcy law eliminated, in depth. See footnote seven, which cites to this paper. Then, in the subsequent paragraph, she gives a bunch of information about increasing medical costs suggesting that they are the more likely cause for a relative increase in medical bankruptcy.
The "Army of One" style of citing only your own previous papers is usually a sign of a problem.
If these 30% cost savings are possible, and your data shows that the same 30% cost savings are available in Medicare (which they do, as the various New Yorker and other articles show), then I won't believe that the reforms and efficiencies are politically possible unless you can achieve them in Medicare.
This is one of those things that can't be fixed piecemeal. Address only Medicare, and you'll still have a highly inefficient system that absorbs the cost of the conflict management take takes place between insurer and provider, with all of the overhead associated with it.
People with pre-existing conditions seeking "coverage" don't want insurance, they want somebody else to step up and pay for their medical costs so they don't have to. Now, that maybe something we want to do as a society, but we should not confuse it with "insurance." It's welfare, plain and simple.
Absolutely agree. Which is why a free market system doesn't make sense for this sort of service, if you presume that the purpose of a health care system is to treat people, irrespective of their abilities to pay for it.
An insurance-based system is necessarily going to try to cherry pick the pool, and to stall and deny claims when it can. If management aspires to achieve above-average profits, those are precisely the ways to get there: avoid the worst customers, play the float.
There is no rational reason for an insurer to willingly pay for the most costly of patients. Those patients will never be able to pay enough premiums to carry their weight.
A state-private hybrid would find a way to cap the costs to the insurers, so that they are willing to take the risks, knowing that they don't have to pay for them if they are wrong. This tells me that disaster care should be farmed out to the government, and the insurers can be left to compete for the frills business, such as getting nicer rooms with better wallpaper.
From RW:
This seems to be missing the point. Sure, if there are problems in the rest of the system, then fixing it in Medicare/Medicaid won't fix it over the broad system, but I still don't understand what is preventing using Medicare/Medicaid as a test run for the fix of the entire system?
if you presume that the purpose of a health care system is to treat people, irrespective of their abilities to pay for it.
If they can't pay they should only be given a minimal level of care: treatment by NP's at public hospitals using only generic drugs. Anything above the minimum should come as part of more expensive plans.
You want a specialist to treat you at a private hospital with state of the art drugs? That will cost extra.
Warren has lots more than a paragraph of hand-waving. For one, she cites to an entire previous paper discussing the question of who the bankruptcy law eliminated, in depth
That would be an "entire" paper on which Warren is a co-author, which in the abstract refers to the 2005 reform as an "assault on all debtors" and includes many of the same people in its studies on this paper? One that doesn't deal with medical bankruptcies except to lump them in with other unsecured debts, but rather focuses on incomes?
Warren has, at best, two paragraphs of hand waving, featuring at most three facts: 1) the new law didn't change the income distribution of filers, 2) the number of uninsured people is rising, and 3) health care inflation is faster than general inflation.
All facts that suggest that the explanation for the lower impact of "reform" on medical bankruptcies vs other bankruptcies has less to do with fraud elimination (since the legislation didn't eliminate fraud, proxied as best as possible by higher-income filers) and more to do with medical costs (since medical costs increased over the same period, as did uninsured).
Don't confuse "hand-waving" with reasoning.
It occurs to me that there is yet another problem with the conclusion of the "no effect on income distribution" conclusion. Namely, we're talking about filings, not discharges, right? So there's no telling how many of those high-income filers got kicked involuntarily into Ch.13, thus showing that the law is indeed working as intended.
As I said in my post, the changing background of bankruptcy regulations are *exactly* why measuring healthcare bankruptcies as a percent of total bankruptcies is a meaningless measure of the impact of the cost of healthcare on society.
Again, this misses the point. The underlying argument that Ms. McArdle is really making here is that many of these alleged medical bankruptcies are bogus, and that these are just bad people with poor spending habits who enjoy getting unnecessary root canals and gratuitous bouts of scarlet fever.
The bankruptcy reform law was allegedly designed to prevent bad cases from being filed. If her contention was correct and the BK law did what it was supposed to, then the proportion of medical filings should have remained consistent, in line with their pre-reform bogusness.
But that didn't happen. The fact that it didn't implies that the medical cases are fairly legit, because they survive this higher level of scrutiny.
This effort to just blow off medical costs, as if they are some excuse for hypochondria or cleavage enlargement, doesn't appear to be reasonable on its face. It sounds to me as if filing BK got harder, and it still sucks to be sick and uninsured. Your posts miss this.
Possibly true if you're talking about someone who has never purchased health insurance, finds himself seriously ill, and now wants coverage. Not at all true if you're talking about someone who has purchased health insurance for her entire adult life, finds herself seriously ill, and cannot - for example - move to another state because she will be unable to purchase health care there without a waiting period for pre-existing coverage.
The non-portability across state lines is a function of state and federal insurance law--that is, it's the government's fault. The government can fix it rather easily without nationalizing health care.
Non-portability between employers is a more complicated problem to fix.
Also, I don't mean to imply anybody is trying to scam anyone. It's a simple fact of life that insurance must be purchased before the loss or it isn't insurance. Somebody might well deserve our money for help with health care--say, a 19 year old injured on duty in Afghanistan--but that person does not want anything that can reasonably be called "insurance."
I posted my response above before I saw this. I have no quarrel with any of your points.
The underlying argument that Ms. McArdle is really making here is that many of these alleged medical bankruptcies are bogus
I don't see that at all, anywhere. The underlying argument is that we don't know why medical bankruptcies are rising as a proportion of total bankruptcies, and Warren's sweeping conclusion that it must be because health care is becoming more burdensome on families is not justified by the contents of her article.
Don't confuse "hand-waving" with reasoning.
Don't confuse facts consistent with a conclusion with facts compelling that conclusion. Warren might be right, she just hasn't show it yet. What if credit counselors, now a mandatory part of the process, find it easier to arrange workouts with credit card companies than hospitals? Well, then medical bankruptcies will increase their share even if medical costs are flat, because it turns out the law does have a disparate impact.
Just reposting Ted's comment to keep it current with a fast moving thread- especially since it was the best of the lot:
This is also what a fair critique looks like -- much fairer than Megan's.
The underlying argument is that we don't know why medical bankruptcies are rising as a proportion of total bankruptcies, and Warren's sweeping conclusion that it must be because health care is becoming more burdensome on families is not justified by the contents of her article.
Ms. McArdle is arguing on the other thread that consumers spend too much money and that they could afford these bills if they didn't have McMansions, fancy cars and credit card debt. You should read between the lines here, and understand that there is an underlying agenda on this blog to cast bankruptcy filers as refugees fleeing their uncontrolled spending habits, and to avoid any appearance of them being victims of the health care system, lest said victimization result in the loss of her own personal private health coverage.
I still don't understand what is preventing using Medicare/Medicaid as a test run for the fix of the entire system?
Because the systemic problems would not be addressed by reforming Medicare.
Medicare already controls cost below the norm; it pays less than private insurers for the same services. It has high costs because it deals with man of the most expensive patients in the system, e.g. the elderly who are dying, the point at which care is the most expensive. They're spending money because of heroism (treatment that won't don't much), not because they're organizationally inefficient.
The cost problem is not caused by Medicare as it exists now and can't be fixed by Medicare. The private insurers suck up margin, and pass the cost of servicing their profits onto us. Money that could go to patient care goes into their pockets. Just so long as they continue to do business as is, there will be no cost reductions.
Then you still have a lot of explaining to do, RW. Why can't Medicare control its costs for these most expensive patients? These are the patients that it actually has control of, so why are their costs exploding out of control? You still haven't explained what it is about the private insurance system that is leading to "overspending" on the elderly, and you actually imply (maybe unintentionally) that the private system is actually subsidizing even this care to some extent.
In part because medicare are the most prone to expensive end-of-life treatments; Obama's Grandmother is a good example. She broke her hip a few months before her death. The hip replacement she received (presumably from medicare) relieved the discomfort of her last months, but was never given with the presumption she'd be ambulatory.
Should she have received it?
My dad died of prostate cancer which had spread to his bones. He broke his shoulder a year before his death, and spent that last year basically writhing in agony every time he moved the broken shoulder.
The real-time cost savings have real-life costs, Yancey.
I argued no such thing, RW. I argued that if someone who is already way overextended with debt chooses to stiff their doctor rather than the credit card company, it's arguable whether we should call that a "medical bankruptcy". People who declare bankruptcy overall have a lot more debt than those who don't at the same household income level. How many "medical" bankruptcies does this account for? I don't know, and didn't say I did. I was merely working out a hypothetical, which you began busily inflating into a gigantic straw man in order to beat the snot out of it.
I was merely working out a hypothetical, which you began busily inflating into a gigantic straw man in order to beat the snot out of it.
I'd like to pause and contemplate this mixed metaphor. It has such a lovely haiku-like density.
You should read between the lines here, and understand that there is an underlying agenda on this blog to cast bankruptcy filers as refugees fleeing their uncontrolled spending habits, and to avoid any appearance of them being victims of the health care system, lest said victimization result in the loss of her own personal private health coverage.
Translation: You all should be reading this blog through the lens of my smug prejudices, because then you'd see how right I am and how my debate opponents are so clearly motivated by nacissistic greed.
Way to make a cartoon out of yourself, bud.
RW says is part:
"expecting the free market to magically fix health care is unreasonable, unless you are content with the idea of a lot of people dying because of it."
This illustrates quite well what is wrong with free market critics. People who could be saved die every day, and will continue to do so under any health care system we devise. It is not within our power to prevent this. The question is not whether people die, but which system delivers a better totality of outcomes.
The side of this argument regularly engaging in fantasy are those who compare free markets to perfection claiming any deviation disqualifies a free market solution. These same people refuse to subject their preference to the same standard. People dying in government controlled systems are simply explained away, and other unseen effects are simply ignored and denied.
For evidence on how this works in practice, see critics who claim that "free markets have failed" in response to the financial crisis. This claim ignores that financial markets aren't free, and therefore the crisis is at least as much an indictment of regulation as free markets. It also ignores that free market theory does not postulate perfection, just better performance over long periods. FM/FM teaches us that government involvement leads to negative events also, just without the corrrsponding growth freedom can generate. Neverthless, there seems to be a mystical belief among government control supporters that more government control would have prevented the issue.
We have thousands of years of economic history which prove free markets deliver services more effectively to more people. The conclusions are twofold: (1) When you interfere with the market you will have worse outcomes over the long-term. (2) If you decide to interfere you should do it in the least disruptive way possible to minimize the net negative. In this case, that probably means a combination of:
(1) Making health plans retail rather than through employers,
(2) Mandating that insurance companies offer policies to all groups,
(3) Subsidizing the purchase for desired groups.
We have thousands of years of economic history which prove free markets deliver services more effectively to more people.
We have plenty of economic history that shows our private system is vastly more expensive and less effective. Deal with the data, which is blunt and not on your side.
A private system will produce exactly what we have now. Those who can afford it (and who have attorneys to represent them if their insurers balk from meeting their obligations) get service; those who lack these things don't.
A free market system assures that resources are distributed to those who can pay, not to everyone. You're expecting free markets to serve everyone, when that was never their intention in the first place.
"The former was a 5-state study"
It covered judicial districts in five states. The implication is that it did not encompass the entirety of each of the five states.
Five states might have as few as 5 districts or as many as 18 (TX, CA and NY have 4 each, several have 3). This is probably findable in the 2001 study, but I'm not looking. It is *highly* unlikely that BKs in the selected districts are well correlated with BKs in the whole country.
You should read between the lines here...
I'd have to actually read the lines first, which I usually don't do when a threat accumulates 100+ comments in my absence. So fair enough; I didn't see any of that.
But still...Warren's study remains deficient in the identified respects.
"A private system will produce exactly what we have now. Those who can afford it (and who have attorneys to represent them if their insurers balk from meeting their obligations) get service; those who lack these things don't. "
What's wrong with that?
RW,
If people chose to spend their money on other things, or indeed to consume a great deal of leisure, to the point that they can't afford health care - how badly should I feel?
The confusion between "insurance" and "give me health care for free" is at the root of our whole crisis.
This sentence should be repeated in large letters in every discussion of health care. Insurance can be provided by the free market; subsidies can't. Once you start mandating community ratings or coverage of nonessential procedures, you're just creating a particularly convoluted and inefficient form of welfare. Why can't we just take care of the people who aren't candidates for free-market insurance directly, like we do for food and housing? We have food stamps and Section 8; we don't have government running the agriculture and real estate industries.
Why can't Medicare control its costs for these most expensive patients?
It already does. It is already operated more cheaply, and it pays less for comparable services. The government gets the best pricing available, so your objective has already been met. You're trying to reform the entity that doesn't need it, while ignoring the reforms that would actually accomplish something.
You still haven't explained what it is about the private insurance system that is leading to "overspending" on the elderly
I did. The insurers need to make a profit. They achieve that profit by playing the float (stalling), selecting their pools (cherry picking) and denying care (denying and litigating).
Their means to profit are exactly contrary to what makes the system work for the patient. The conflict is fairly obvious. There is not much of a win-win here; when the insurer prospers, the patient generally loses. Win-lose systems like this don't make for free market miracles, they only lead to capital being allocated to the party with the most power.
But we are talking about Medicare/Medicaid, RW. Read that sentence again- I wrote, "You still haven't explained what it is about the private insurance system that is leading to 'overspending' on the elderly."
You wrote earlier that Medicare's costs are so high because it has the highest cost patients. There is no doubt this is true, and Medicare/Medicaid's future costs are expected to explode even further. How does reforming the system covering non-Medicare/Medicaid patients translate into lower costs for Medicare/Medicaid going forward? I still don't see the connection that you are attempting to make. Writing "insurers need to make a profit" doesn't show me the connection you are trying to make.
Medicare and Medicaid patients are not largely covered by private insurance, and to the extent they are, they pay their costs out of pocket, and to the extent that the government contracts the coverage out ot private insurance, Obama and the Democrats can end that tomorrow if they wish, and I would be quite willing to use that as an experiment on cutting out any middlemen in healthcare provision. What say you?
Medicare patients often have Medigap and drug policies or employer retiree policies that cover the gaps. My dad was one. Still, Medicare only pays for 21 days in a nursing home after a three day hospitalization. My dad was in a nursing home for a few YEARS. Because he didn't buy LTC insurance and those benefits weren't included in his other purchased policies, he was a cash client in the nursing home to the tune of about $8k per month, which he was able to pay out of his social security, pension, IRA RMD income without raiding his assets.
Medicaid nursing home is for poor people. It's paid for if you're poor. And you don't get to choose the fancy nice nursing home with the nice staff.
"The insurers need to make a profit."
BCBS is a non-profit.
"The insurers need to make a profit."
Kaiser Permanente is a non-profit.
RW,
It's important to note:
"About 60 percent of community hospitals are nonprofit, all community
health centers are nonprofit, almost 30 percent of nursing homes are nonprofit, and about 17 percent of home health care agencies are estimated to be nonprofit. Nonprofit health plans are estimated to serve over 40 percent or more of all private health insurance enrollees."
The real-time cost savings have real-life costs, Yancey.
I believe that is the point that every conservative is trying to make when pointing out that government rationing is the natural result of a desire to cut costs. Probably that hip replacement would not have occurred in Canada or England.
We spend a lot because we consume a lot. We can wring out some some savings at the margins, but if you want a 30% cost reduction, you're going to need something approximating a 30% consumption reduction.
Nonprofit health plans are estimated to serve over 40 percent or more of all private health insurance enrollees.
"Non-profit" status is a corporate tax designation. It just means that they don't pay taxes. It doesn't mean that they don't make enough money to pass it in the forms of executive perks and salaries. The profits line the pockets of the people who work there.
Keep in mind that the NFL is a non profit.
We can wring out some some savings at the margins, but if you want a 30% cost reduction, you're going to need something approximating a 30% consumption reduction.
Or, you can just do what RW suggested - tell the nurses that as much as we appreciate them dealing with the occasional "code brown", we're are going to cut their pay 30% to equalize it with their European counterparts.
I mean why should you be paid a decent middle class wage to care for the sick and dying.
What say you?
As I keep saying, you are creating a straw man. You want to use Medicare as a demonstration case to fix systemic problems, when these problems are evident in the Medicare system.
It's a bit tough to use something as a demonstration case for the fixing the problems when the problems aren't present in that particular organization. If you want a useful test case, you would need to address one of the components that is actually broken.
So, are you really saying that the increasing costs of Medicare/Medicaid are no problem? I have to ask because that is exactly how your multiple statements read.
RW,
It doesn't mean that they don't make enough money to pass it in the forms of executive perks and salaries.
I'll put Kaiser Permanente up against the University of California system any day when it comes to salary and perks. Why would would a public system be any better?
http://www.sfgate.com/news/special/pages/2005/ucsalary/
(Oops, typo: I should have said "...when these problems are **not** evident in the Medicare system."
It's a bit tough to use something as a demonstration case for the fixing the problems when the problems aren't present in that particular organization.
The problem of exploding unaffordable costs is present in Meidcare. What are we going to do about it?
Add into the mix that there seems to be confusion in how language is used in an academic paper and outside a peer-reviewed journal:
But really, from the way you have worded your objection, this applies to just about any social science study. You can always mumble something about confounding factors. What you are saying here is, essentially, 'how do you know that this change didn't affect one group of filers more than the others?' The short answer is, you can't. Not without doing another study, which will in turn raise another round of objections of the same type. The point is, you've got to dig in and get a toe-hold somewhere. And in fact, they do address your objection, perhaps not as thoroughly as you would like, but address it they do.
You can also turn it around, and think about what it would mean if the number of bankruptcies due to medical expenses fell in proportion to the total. What would some of the properties of the confounding factor(s) have to be? Would it even make sense? What would happen to the number of medical bankruptcies assuming everything else was equal, e.g., no inflation from year to year. Well, it turns out that the average age of Americans is increasing:
And since there is a correlation between age and medical expenses . . . Note, btw, that while in the absence of any other change simple aging will still tend to increase medical expenses (and presumably, bankruptcies), this is not quite the confounding factor you were thinking of.
Yes, there are methodological issues, such as the stratification problems someone mentioned above (although logistical regression isn't one of them), issues that if properly addressed would have made this a more authoritative paper.
But dishonest? Disingenuous? Deceptive? I think not. And btw, those are some rather heavy accusations to level, particularly given the flimsiness of the critique, which I alluded to on the other thread.
SoV, BAPCPA is the central event in bankruptcy analysis over the last 10 years. The unexplained steepness of the fall in bankruptcies is *the* topic of debate among experts. Eliding it the way they do is simply inexplicable.
On a side note, the elderly are not your prime medical bankruptcy cases. For one thing, they're covered by Medicare. For another, they don't have income shocks, because almost none of them have jobs. Your prime medical bankruptcy candidate is in peak earning years, when fixed obligations are highest, and an income shock is most disastrous.
The point I am making is how the confounding variable of bankruptcy reform must behave in the abstract to get certain results. And it seems very easy to make the argument that if BAPCPA is the skewing the results against other types of bankruptcies, it must be doing so in very strong way to counter the natural trends in the other direction.
Nor did I say they were. I'm merely noting that all other things being equal, the medical costs for a group of forty-somethings is going to be less on average than for a group of fifty-somethings. Another cost driver which is the one libertarians keep pointing to as a - perhaps the - culprit, is advancing, and more expensive medical technology. More generally, I can think of quite a few reasons why health care costs - and therefore health care related bankruptcies - would be increasing. I can't think of a trend or a driver affecting this statistic that bankruptcy reform that would send in the other direction.
And that is the crux of the problem. You aren't allowed to simply say, 'What if BAPCPA itself is the culprit for the skewed statistics?' You can always point out (especially in the social sciences) that X isn't accounted for, and that without knowing this, you can't firmly make these sorts of conclusions. But if that's the case, then by those same objections, a lot of other research must be thrown out as well. That's just the way it is. Now, if you have a specific reason for believing that this variable would have the sort of influence you describe, fine. Let's hear it. But vague 'how do you knows . . .' simply won't cut it.
Note, btw, that in fact, this issue was addressed in the paper(Paul Gowder linked to the specific quote.) You might not like how it was done, but you can't say that it was 'ignored'.
. But if that's the case, then by those same objections, a lot of other research must be thrown out as well.
I can live with that. There's a reason I say that putting "social" in front of anything is the same as putting "not" there.
Now, if you have a specific reason for believing that this variable would have the sort of influence you describe, fine. Let's hear it. But vague 'how do you knows . . .' simply won't cut it.
I grant that vague "how do you know" objections are often weak; it's hard or impossible to catch every variable, so you do your best to catch the big ones and hope the others are small enough (even physicists do this; often you'll spend longer controlling for systematic error than taking actual experimental data).
But we're talking here about something that was known to cut bankruptcy filings in half. If you administered an LD50 dose of something to a bunch of rats, you'd better have a damn good argument for why the difference between the survivors and the original population didn't have something to do with you poisoning them.
Megan has erred in two fundamental ways:
1. She ascribes normative significance to the lower absolute numbers.
"Total number of medical bankruptcies is lower; therefore medical bills can't be the driver. So we ought not to be so fixated on health reform."
2. She calls the biased ratio (+50) an (05-law) fluke.
The first point is wrong for two reasons: First, Lawless shows absolute numbers catching up with pre-05 values, so the fluke she is desperately seeking is right there, in the absolute numbers -- not the ratio. Second, even without the post-05 upward trend, the lower numbers would say absolutely nothing about how we ought to feel about the impact of health costs. It would only say something about the law.
2. The ratio fluke she postulates is debunked in the study itself. In fact, the study suggests that the 05 hiccup should have produced a bias, if any, in the other direction, since current filers are identified as long-term debt "strugglers," hence presumably not the victims of unforeseen catastrophic illnesses -- so there goes Megan's only point of substance. If she wants to speculate, fine. Anyone else can do it too and nothing is learned.
What the Warren study shows is that the broken health care system in this country is increasingly often the straw that breaks the camel's back and drives people into bankruptcy. In other words, if the US didn't have a 3rd world health care system, many of these bankruptcies would not happen.
If Megan wants to debunk that, she needs to work harder and more seriously.
Finally, if the biased ratio is a fluke AND ratios of medical bankruptcies went down in 05-07 (as she says may well be the case), then Warren's case is even stronger! It's odd to see Megan provide comfort to the enemy without even realizing it.
SOV-- You are correct-- you can always "mumble something" about a confounding factor that will tend to impact outcomes in a way not accounted for in the study. And as they examine the different factors that impact people's marginal propensity to file, they will never be able to account for all of them.
But in this case-- over the time period this study was conducted-- there was such a significant confounding factor that it reduced the sample size by 50%. That is enormous. Furthermore, as i said in my first post, the increase of medical filers as a percentage of total filers was very easy to predict ex-ante the change in the law if you assume:
1) personal medical crises are uncorrelated with economic events in someone's life,
2) when someone is faced with a medical crisis, they will seek medical attention regardless of their economic situation, and
3) medical costs will remain high despite the change in bankruptcy law.
I think these are all very reasonable assumptions. (In fact, you could probably argue that someone with financial stress has an increased risk of a medical crisis.)
so, if you accept my three arguments, and then accept that the impact of the bankruptcy reform law was to make it more difficult for the marginal filer to file, then i would easily expect that medical filers would grow as a percent of the total because they have less flexibility to influence the expenses that lead them into bankruptcy and the expenses they face are higher than a lot of other expenses people face in their lives.
But you cannot infer from this increase anything about cost of medical care for the population overall, relative burden of medical for the population overall, or just about anything else-- against the total population overall. You need a "toehold" somewhere, but this piece is too flimsy to provide one *because* the confounding factor 1) is so large, and 2) has exactly the effect an economist would expect.
and to Megan's point in her OP, the first i heard of this study was a headline on CNN that said "70% of all bankruptcies are now due to medical bills".
Which is precisely correct, and wildly misleading.
FWIW, so could I. Bear in mind that this would wipe out huge chunks of economic 'theory'. 'Poof' goes rational expectations etc.
I don't understand what you're trying to say here, nor your LD50 analogy. Maybe you could attach some numbers and walk through an example. But anyway . . .
Look at it this way. There are very good reasons to believe medical costs are going up, going up faster than inflation in fact. There are also excellent reasons to believe - at least we all agree on them - that these costs would go up whatever health system we have. Single payer or free-wheeling free market, both have to contend with an aging population and ever more expensive technical advances.
Given that increased bankruptcies would be a natural consequence of these increasing costs, why would anyone be surprised at a study which confirmed a reasonable presumption? Why would anyone think bankruptcies would go down in such an environment?
That's the problem; or to kick it up a notch or two technically speaking, your confounder has to have a pretty strong effect, strong enough that you should be able to make a stab at what it could be. Go ahead, use the numbers given and work it out for yourself. It's just arithmetic.
I don't understand what you're trying to say here, nor your LD50 analogy.
Simple: the new law "killed" half of all bankruptcies. If you knowingly do something that kills half your rats, then it would actually be surprising if the survivors weren't different, in some important way, from the non-survivors. Something allowed them to survive, after all.
So too, here: half of filings are "dead" due to change in the law. A 50% "death rate" is what one might call a confounder with a "pretty strong effect." Especially if, before the law was passed (or poison administered), it's creators specifically touted its ability to change the composition of the population.
Given that the law was intended to restrict bankruptcy to people who "deserve" it, and given that people with large unanticipated medical costs "deserve" bankruptcy more than Ed Andrews, why should anyone be surprised at a study which confirmed that the law was working exactly as intended?
So, are you really saying that the increasing costs of Medicare/Medicaid are no problem?
No. What I'm saying that you can't solve the problems that occur within the insurance system with those of the Medicare system by using Medicare as a demonstration case, because their problems are different.
Those of us who are critics of the private insurance system are focused on the obstacles faced by patients who deal with private insurance, such as denied claims, policy cancellations and a lack of universal coverage. Medicare patients don't have to worry about such things, such as their coverage being dropped. Medicare has already proven that a public insurance system can work from the standpoint of the patient, so in that regard, it has nothing left to prove.
Ah, I see the difficulty. You're comparing BAPCPA to the one-time effect of an LD50 dose on a population, which may, or may not have a differential effect on the variable we are attempting to measure. But this is not the case. Yes, there is an initial discontinuity. But more than that, BAPCPA is ongoing, it's not a onetime thing. A better analogy might be something like giving maze-running rats an LD50 dose of poison once a week and measuring their running times. Since susceptibility correlates to age, and age correlates to running times, you might be tempted to say after the first dosage, 'Ah-ha! this poison kills dumb rats.' But the reality is that very old and very young rats don't run mazes very well, and they make up the bulk of the population killed by the poison. The second, third, and fourth doses of poison kill off smaller and smaller percentages of rats. But in the meantime, their average running time in running new mazes once again disperses - not surprising, given that there really isn't a connection between poison susceptibility and intelligence(or maze-running ability).
This may or may not be true if you're talking about the initial disruption. Certainly a number of people, including Warren herself, disagree. But remember, we're looking at the change in proportion over time. The enactment of BAPCPA is merely a discontinuity to be accounted for. And those are still increasing post-2005, per the study we're discussing:
So if this confounding variable ever had an effect, it seems to be wearing off :-)
So to get back to my question, concerning the proportion of medical bankruptcies over time: All other things being equal, the average age of the population is still increasing, and per libertarian cant, the increasing sophistication of medical technology is increasing medical costs. So one would expect the proportion of medical bankruptcies to rise anyway(all other things being equal). This is indeed what the study finds, both before and after the changes in bankruptcy law enacted in 2005.
So I repeat: how does your confounding variable hypothesis account for this? How does it make the proportion of nonmedical bankruptcies get smaller over time? As I'll readily concede, it's certainly possible. But you're not allowed to simply say 'how do you know X isn't really the case'? You've got to give me some plausible idea of what this X is, rather than simply speculate on the existence of such an entity. So what is it that more than counters the effects of an aging, increasingly unhealthy population subject to increasingly expensive medical technology?
Are you seriously suggesting that somehow BAPCPA is cracking down harder on the 'frivolous' bankruptcy cases over the time since 2005? And that somehow BAPCPA also did away with the whatever was causing the relative increase in medical bankruptcies prior to 2005?
Well, lets see what you've got here. I freely confess that I certainly can't come up with anything like this.
Are you seriously suggesting that somehow BAPCPA is cracking down harder on the 'frivolous' bankruptcy cases over the time since 2005?
I am not, but I need not. The Warren study does not do an in-depth look at 2005. The quote you offer from Warren study cites to an entirely separate study on health system performance by something called "The Commonwealth Fund." The only two data points based on a Warren-style study of filings are 2001 and 2007. So there is no evidence, as of yet, of an increase in Warren-defined medical bankruptcy which is not confounded by the new law.
Granted, an increase is certainly plausible, and even expected, as you point out. But then I have to wonder what the fuss was about when they finally proved Fermat's Last Theorem; it was, after all, a plausible and expected result.
!?!?! Wait a minute here! Upthread, you objected to a Warren paper on the grounds that it was her work:
So in that instance you objected on the grounds that Warren was an author, now you are objecting because she isn't!?!?!? That's some consistency there. Further, this is an odd criticism, period. Scientists reference other papers all the time; you can't make that the basis of your objection. To indicate the importance of the BAPCPA confounding factor, Warren references a previous paper to show that there is no reason to believe that there is a differential effect on the types of bankruptcies. She references another to show that the proportion of medical bankruptcies is rising post-2005. If you've got a problem with that, you're going to have to work a lot harder; you're going to have to show why those papers don't support her statements. Bear in mind, the contention is that this is a horrible, no-good, dishonest study. From here, it looks as if you're trying to shift the goalposts.
'The percentage of medical bankruptcies is increasing over time, even with bankruptcy reform thrown into the mix.' No, there shouldn't be any fuss over this . . . but apparently conservatives and libertarians think there should be. Even though they agree with some very fundamental assumptions that would make this plausible, even to them.
Two points on your analogy to a math proof. First, in math, there are slightly higher standards than in other subjects, even fields that are as ostensibly rock-hard as physics or chemistry. In mathematics, when a statement is proven, it's proven. Done. End of story. Note that even with relativity, Eddington's observations of the bending of starlight were not considered conclusive proof of relativity (and even today, it's only considered a partial theory.) The social sciences? It never really gets much better than Warren's paper; even with extremely good methodology, diamond-clear statistical reasoning, and dozens or hundreds of confirming observations, the best you can expect is "We're reasonably sure that in these circumstances . . ."
In short, nothing in the social sciences will ever be as definitive as a proof of a mathematical statement. Second, there are plenty of proofs that were surprising and counterfactual, Godel's undecidability theorems being perhaps the best well-known to the layman. I have no idea why you tacked that last bit on, actually, it doesn't add to your argument at all.
More later.
Megan McArdle,
First of all, I want to say that you occasionally have thoughtful posts that I appreciate. But, you have exercised pretty bad judgment here. Maybe you should, you know, READ the study before accusing the authors of concealing facts.
Your claim:
From the study:
Since I actually did read the study, and did not just lazily link to it like you did, I know that this "central fact" about the number of bankruptcies was in fact been explained by the study. The number of filings spiked (an increase in bankruptcies) and then plummeted (a decrease in bankruptcies). Now, of course, maybe they could have been more precise in explaining that the fall in bankruptcies was greater than the spike (i.e. the fall was not just back to the "normal" level of bankruptcy filings.) But then again, the exact same sort of criticism could be directed at you. You only mention the fall in bankrutpcies, but not the spike.
Right now, you should be pretty embarrassed. Here you have gone and done a nice little public rant about how a particular "central fact" should have been included in the paper and how it is intellectually dishonest to not include that fact. But, guess what. The fact was included in the paper!
Now, you might critique this paper because, in your personal opinion, it should have included more details or more discussion of alternative theories of the data and why those theories do or do not hold water. But, this is only a six page paper. Really five pages, if you consider that the acknowledgements and references practically take up an entire page. Your expectation that so much can be accomplished in such a small space is objectively unreasonable.
Overall, your criticism of this paper has been extremely lame. I hope you hold yourself to a higher standard in the future. Next time, read the paper. Don't assert that it fails to mention a fact that it actually does mention. Make sure you get the facts right. If you are going to accuse others of intellectual dishonesty, then it is incumbent upon you to be much less sloppy. It is you that have come out of this looking like a fool.
And not only that, when I say you look like a fool, I should try to at least get basic grammar correct. So, let me say it again:
It is you that has come out of this looking like a fool.
Fixed.
So in that instance you objected on the grounds that Warren was an author, now you are objecting because she isn't!?!?!? That's some consistency there.
Oh, come on. It's not about authorship, it's about methods. Warren has a particular method, and whether or not we think it's a good one, we can only compare studies done by that method with each other. As you no doubt know, use of different methods is yet another "confounding factor." If the Commonwealth Fund used identical methods, then it's a key data point that supports Warren's claim. If it used different methods, then it's interesting but we still have only two "confounded" data points.
Scientists reference other papers all the time; you can't make that the basis of your objection.
The basis of my objection is that the paper of footnote seven does not support the contention it is cited for. Footnote 10 may support the conclusions, but it is not a substitute for an actual study using the same methods as the 2001 and 2007 studies.
To indicate the importance of the BAPCPA confounding factor, Warren references a previous paper to show that there is no reason to believe that there is a differential effect on the types of bankruptcies.
The other paper she cited in footnote seven showed (or purported to show) that BAPCPA did not affect the distribution of income of filers. That is all. Such a showing is interesting and important (although the distribution of discharges would be more interesting and more important), but it does nothing to demonstrate the effect of BAPCPA on the underlying causes ("type") of bankruptcy.
Bear in mind, the contention is that this is a horrible, no-good, dishonest study. From here, it looks as if you're trying to shift the goalposts.
I haven't said so clearly before, but I disagree with "dishonest" claim. At least, I don't see any real sign of dishonesty. I see sloppiness and and a willingness to assume what is to be proven, but not dishonesty.
I have no idea why you tacked that last bit on, actually, it doesn't add to your argument at all.
Merely to point out that plausibility does not lessen the standard of proof. Or shouldn't anyway, if we think what we're doing is science. Confirmation bias is a bitch.
I find it surprising that the other major financial trend of the mid 2000s didn't show up in this discussion. In '04, '05 and '06 people gained access to large amounts of credit due to big increases in their home equity. Many people who would have otherwise been disposed to bankrupcy had access to large amounts of cheap credit due to home equity. At least some people who were carried over the rocks of BK by a high tide of home values are now (surprise!) failing to pay their mortgages.