Mass. Health Plan Hasn’t Reduced Bankruptcies
Steffie Woolhandler and David Himmelstein, (Physicians for a National Health Program) are back. Their previous result (more than half of all US bankruptcies are caused by medical debts) was skewered by good economists everywhere. See our previous post. Their latest claim: health reform has not decreased the rate of medical bankruptcies in Massachusetts.
The problem? This study is just as bad as the previous ones. Here is Megan McArdle:
[T]he data quality is extremely low. The paper doesn’t account for obvious confounding factors. It uses a very small sample for comparison, one that wasn’t really selected to assess state-level effects. And by using an overly broad definition of medical bankruptcies, it practically guarantees that reform will show little effect. Health care reform won’t keep a plumber who’s been hit by a car at work instead of in the hospital. It isn’t going to mean that nobody ever has an unpaid medical bill at the time of declaring bankruptcy. It doesn’t pay the mortgage if Mom has to quit work to take care of a kid with autism. Canada still has medical bankruptcies, despite single payer, because medical problems cause income loss as well as higher medical bills.
It’s not that this is an entirely unbelievable result (they did find a decent-size drop, after all; it’s just that because their sample was so small, it wasn’t statistically significant). But this paper, like the ones before it, is simply too badly flawed to rely on. Their work wasn’t a good argument for health care reform (for all that it was used that way, over and over). It isn’t a good argument for repeal, either.
As far as their research is concerned, it’s garbage in, garbage out.
The purpose for this study (and the previous studies) is to advocate for a single-payer system of national health insurance.
One weakness of the study is their definition of “medical bankruptcy” – which included self-reported bankruptcy for medical reasons. Self-reported data is always suspect in economics. This suggests people could gorge on consumer goods and then, when hit with unexpected medical bills, blame medical costs for pushing them over the edge when consumer spending was the more likely cause.
Moreover, two weeks of lost-income due to medical bills in the past two years seems questionable as a cause for declaring a subsequent bankruptcy medical-related. You could be in bed sick with the flu twice in two years without significant doctor bills and still lose two weeks pay. Since this is a common enough occurrence, I would not consider it to be a travesty of our health care system.
Nor would I necessarily assume having medical bills that exceed 10% of take home pay to be serious enough to result in a medical bankruptcy. Many people have health coverage that equals 10% of take home pay. What is the difference between spending the money on coverage versus spending it on care? Yet public health advocates often assume responsible people should have comprehensive (i.e. costly) health insurance but worry when the uninsured face costly medical bills that are no more expensive than the coverage would have cost.
I hope they weren’t as sloppy when they treated patients — if they ever did.
Agree. It’s crappy research.
In the 2007 version, the study showed the average amount of medical debt discharged in a “medical bankruptcy” was just under $5,000, while the total indebtedness discharged was about $44,000. For me, that raised the following questions:
(1) If the total debt was the $5,000 in unpaid medical bills, would they still declare bankruptcy?
(2) If, conversely, they had no unpaid medical bills but $39,000 of debt, would they have avoided bankruptcy?
What these folks should have done is compare people with $5,000 of unpaid medical bills who declared bankruptcy with people with $5,000 of unpaid medical bills who did not declare bankruptcy.
I think the best rebuttal of this stuff comes from Professor Todd Zywicki – see:
http://mason.gmu.edu/~tzywick2/Medical%20Bankruptcies%20Testimony%20July%2017%202007.doc