Ex­haus­tive med­i­cal study finds other rea­sons for strain

The Washington Times Weekly - - National - BY LAURA KELLY

Health-care-re­lated bank­rupt­cies, touted as a key jus­ti­fi­ca­tion for pass­ing Oba­macare in 2010, are not nearly as preva­lent as re­form pro­po­nents such as Sen. El­iz­a­beth War­ren have claimed, re­searchers say.

Find­ings of an ex­haus­tive report pub­lished in the Amer­i­can Eco­nomic Re­view this year have sparked a lively de­bate as the Trump ad­min­is­tra­tion rolls back key por­tions of the health care law.

Matthew No­towidigdo, an as­so­ciate pro­fes­sor of eco­nom­ics at North­west­ern Univer­sity, and fel­low re­searchers looked at the rate of first-time health emer­gen­cies and re­sult­ing debt lev­els for pa­tients. The re­sult: About 4 per­cent of in­sured pa­tients and 6 per­cent of unin­sured pa­tients ended up fil­ing for bank­ruptcy.

That was a far cry from the claim ad­vanced in a 2009 study by Ms. War­ren and in­ter­nal physi­cian Dr. David Him­mel­stein that over 60 per­cent of bank­rupt­cies in the U.S. were caused by ex­treme med­i­cal debt. Ms. War­ren at the time was one of the coun­try’s best-known bank­ruptcy law spe­cial­ists.

The 60 per­cent fig­ure cre­ated a furor at the right time. The U.S. was crawl­ing back from the Great Re­ces­sion, and health care re­form was be­ing pack­aged as a sav­ior to Amer­i­can liveli­hoods.

But crit­ics said the high num­ber didn’t ac­cu­rately re­flect the nu­ance and com­plex­ity of med­i­cal debt, and the Amer­i­can Eco­nomic Re­view re­in­forced the skep­ti­cism.

“The fact is it’s very dif­fi­cult to parse out the cause of bank­ruptcy and to sep­a­rate the med­i­cal costs from other fi­nan­cial strains,” said Sung Hee Choe, vice pres­i­dent of Avalere Health, a pol­icy con­sult­ing firm.

“The most com­mon-sense def­i­ni­tion of a med­i­cal bank­ruptcy is a bank­ruptcy that would not have hap­pened had there not been the med­i­cal event,” said Mr. No­towidigdo. “In eco­nom­ics, we say that’s a coun­ter­fac­tual ques­tion. You have to fig­ure out, ‘ What would have hap­pened had some­thing not hap­pened?’”

That was ex­actly what he and his core­searchers did.

Med­i­cal bank­rupt­cies are real, they con­cluded. “They’re just more rare. To the ex­tent that you wanted to mo­ti­vate health care re­form based on bank­ruptcy, that might be mis­guided,” they said.

Ms. War­ren and her co-re­searchers said the study helps clar­ify the re­la­tion­ship be­tween un­ex­pected health care bills and eco­nomic distress, but they filed a de­fense of their own work last month in the New England Jour­nal of Medicine.

“Con­trary to their claim that our in­fer­ences about the causal re­la­tion­ship be­tween med­i­cal bills and bank­ruptcy did not align with our re­spon­dents’ ex­pe­ri­ences, al­most ev­ery­one we la­beled ‘med­i­cally bank­rupt’ ex­plic­itly told us that med­i­cal prob­lems caused their bank­ruptcy,” they wrote.

But Mr. No­towidigdo and Amy Finkel­stein and Ray­mond Klu­en­der of the Mas­sachusetts In­sti­tute of Tech­nol­ogy re­sponded that re­ly­ing on pa­tient tes­ti­mony was re­peat­ing a flaw in the orig­i­nal re­search.

“It is akin to ask­ing pa­tients with car­diac dis­ease what caused their heart at­tack; they prob­a­bly do not know whether it was poor genes, poor diet, stress, or other fac­tors,” they wrote, adding that the so­cial stigma of bank­ruptcy may have col­ored the an­swers.

Talk­ing point

Con­gress passed the Af­ford­able Care Act in 2010, and sup­port­ers used the is­sue of med­i­cal bank­ruptcy as a main talk­ing point.

“The cost of health care now causes a bank­ruptcy in Amer­ica ev­ery 30 sec­onds,” Pres­i­dent Obama said in a March 2009 White House speech kick­ing off the drive for a bill.

Cit­ing Dr. Him­mel­stein’s find­ings, Reuters re­ported that year that “Med­i­cal bills un­der­lie 60 per­cent of U.S. bank­rupt­cies.” CNN fol­lowed with “Med­i­cal bills prompt more than 60 per­cent of U.S. bank­rupt­cies.”

In July 2009, Dr. St­effie Wool­han­dler of Har­vard Univer­sity, a co-au­thor of the Him­mel­stein report, told the House Ju­di­ciary Com­mit­tee that a sin­gle-payer health care sys­tem was the only pro­tec­tion for many Amer­i­cans against fi­nan­cial ruin re­sult­ing from an ill­ness.

“The strik­ing con­clu­sion from the study is re­ally that pri­vate in­surance is a de­fec­tive prod­uct,” she said in her re­marks.

But bank­ruptcy is an ex­treme per­sonal and le­gal de­ci­sion and, re­searchers ar­gue, it’s dif­fi­cult to put the re­spon­si­bil­ity for the de­ci­sion on a sin­gle cause such as med­i­cal debt.

“High health care costs can be a prob­lem. Bank­ruptcy can be a prob­lem. But the over­lap be­tween these two prob­lems isn’t large,” Ti­mothy Tay­lor, man­ag­ing ed­i­tor of the Jour­nal of Eco­nomic Per­spec­tives, wrote in an email to The Wash­ing­ton Times.

Mr. Tay­lor, an au­thor and fre­quent com­men­ta­tor on his Con­versable Econ­o­mist blog, called as­pects of the orig­i­nal re­search naive and said it mixes up as­so­ci­a­tion and cau­sa­tion. Many peo­ple who de­clare bank­ruptcy have a lot of med­i­cal debt, but it does not fol­low that med­i­cal debt caused their bank­ruptcy.

“In terms of so­cial sci­ence, it shows


El­iz­a­beth War­ren, who at the time was one of the coun­try’s best-known bank­ruptcy law spe­cial­ists, told Amer­i­cans in 2009 that over 60 per­cent of bank­rupt­cies in the U.S. were caused by ex­treme med­i­cal debt. She and her co-re­searchers filed a de­fense of...

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