Op-Ed: Medical Bankruptcy Is Much Less Common than Sen. Warren Tells You
Sen. Elizabeth Warren (D-Mass.) describes medical bills as "the leading cause of personal bankruptcy" in the U.S. She bases that opinion in part on her own research, in which she and her collaborators surveyed people who had experienced personal bankruptcy, asked them whether they'd experienced health-related financial distress, and concluded that 60 percent of all bankruptcies in the U.S. result from illness or injury, according to an op-ed published by Forbes. An article in the New England Journal of Medicine argued that Warren's estimates were seriously exaggerated due to faulty research methods. In addition, revised bankruptcy estimates still overstate the contribution of health care costs to bankruptcy rates. First, Warren's team surveyed people who had declared bankruptcy and asked them if they'd experienced health-related financial distress, then blamed bankruptcy on health problems for anyone who reported such distress. Second, it assumes that, lacking such health-related financial distress, none of these people would have become bankrupt. Third, a better methodology is to follow people hospitalized with a new illness or injury, and see how many end up in bankruptcy. In the study, researchers looked at people after they had been hospitalized for the first time in at least three years. They found that the rate of personal bankruptcy rose after hospitalization, causing them to conclude that 4 percent – not 60 percent – of bankruptcies are related to serious illness or injury. Most people who become bankrupt after illness or injury are not necessarily bankrupt because of health care costs. Many become bankrupt because they have lost income; they are too sick to work. Reducing people's exposure to health care costs won't necessarily have a huge impact on bankruptcy rates, according to the op-ed.
