Here's the op-ed Todd & I published in the Washington Times yesterday:
No one has ever accused Congress of being overly meticulous about the scientific evidence it takes in. But the 110th Congress has been on a binge diet of junk social science. It’s no wonder it’s been looking sick lately.
Or should we say Sicko? An excellent example is last week’s hearing before the House Subcommittee on Commercial and Administrative Law. Preciously titled "Working Families in Medical Crisis: Medical Debt and Bankruptcy," the hearing purported to be a serious look at medical debt and bankruptcy. In reality, it was just another arm of the publicity leviathan behind Michael Moore’s new "documentary." The star witness was Donna Smith, whose story was featured in the movie--including her trip to Havana to seek the supposedly superior medical treatment available in Cuba. She was surrounded at the hearing by a bevy of nurses in brightly-colored "Sicko" t-shirts, who applauded her testimony enthusiastically. The hearing quickly developed into a cheerleading session for single-payer healthcare—an issue over which the Subcommittee has no jurisdiction.
But Ms. Smith’s testimony was the best–or the least bad-- part of the hearing. At least she had a story to tell, which she told forcefully and, as far as we could tell, forthrightly. Most policymakers can tell the difference between a serious inquiry into bankruptcy policy and a single-anecdote photo opportunity, so there is little danger that bankruptcy policy will be crafted in a way that is responsive only to Ms. Smith’s case.
The same cannot be said of the testimony from Harvard professors David Himmelstein and Elizabeth Warren. They purported to offer generally-applicable social science. In fact, it was junk. Blandly entitled "Illness and Injury as Contributors to Bankruptcy," their long-discredited 2005 study may be among the most misleading research ever placed before Congress–no small dishonor.
The study’s central findings were that 54.5% of all bankruptcies have a "medical cause" and that 46.2% of all bankruptcies have a "major medical cause." Even if this were true, bankruptcy law already provides adequate safeguards for the special problems posed by medical bankruptcies, as one of us (Zywicki) testified at the hearing. But it is not true. And the only way to make such a claim is to gerrymander the definition of medical bankruptcies to generate the desired results–true junk social science.
For example, the study classifies uncontrolled gambling, drug or alcohol addiction, and the birth or adoption of a child as "a medical cause." There are indeed situations in which a researcher may legitimately classify those conditions as "medical," but a study that is being used to prove that Americans are going bankrupt as a result of crushing medical debt is not one of them. A father who has gambled away his family's mortgage payment is not the victim of crushing medical bills. Similarly, new parents who find they can no longer afford their previous lifestyle now that one of them has to stay home with the baby will usually find the obstetrician's bill the least of their problems. Babies are a financial hardship even when hospitals give them away free.
But that’s just the tip of the iceberg. The authors also classified bankruptcies as having a "major medical cause" if the debtors had more than $1000 in accumulated, out-of-pocket medical expenses (uncovered by insurance) over the course of the two years prior to the bankruptcy, even if the debtors themselves did not cite illness or injury as among the reasons for their bankruptcy.
Nobody likes to have to pay $1000 in medical expenses, even if it is spread out over the course of two years. But for most Americans (particularly those with enough at stake to declare bankruptcy), it is not catastrophic. To put this figure in perspective, in 2001 (the year that provided the basis for the study’s sample) average per capita out-of-pocket medical expenses were $683—meaning that during that two-year period the average American spent about 30% more than their figure on uncovered medical expenses. To designate all cases involving expenses of more than $1000, regardless of circumstances, as bankruptcies with a "major medical cause" is both silly and deliberately misleading. A bankrupt with $1001 in uncovered medical expenses and $50,000 on a Bloomingdale’s card would constitute a "medical bankruptcy" in their study. Perhaps their expansive definition of "medical bankruptcy" should include self-proclaimed "shopaholics" as well.
We could go on. The point is simply that the study uses trick after trick to classify as many bankruptcies as possible as medical. It’s remarkable that they didn’t include them all.
What do the real data show? Numerous studies have found the number of bankruptcies caused by medical debt to be dramatically lower than Himmelstein and Warren report–down in the single digits. Among the most recent is a study of 5,203 bankruptcy filers (about three times the number examined by Himmelstein and Warren) by the Executive Office of the United States Trustee. It found that 54% of filers listed no medical debt at all and that medical debt accounted for about 5.5% of the total general unsecured debt. About 90.1% of filers reported no medical debt or medical debt of less than $5000. Of the 46% who reported medical debt, 78% reported medical debt of below $5000, with an average of only $1,212 within that group—hardly enough to send the average family into bankruptcy. Overall, 1% of the cases accounted for a total of 36.5% of medical debt, and less than 10% of all cases represent 80% of all medical debt.
In short, in a tiny number of cases, substantial medical debt does force bankruptcy. In a few others, medical debt combines with otherwise high levels of mortgage, automobile, or credit card debt to tip someone into bankruptcy. But the notion that half of bankruptcies are driven by medical debt is unsupported and insupportable.
Why did a Congressional subcommittee turn to such a thoroughly discreditable study when it needed information on medical debt and bankruptcies? We can only speculate. But the idea that Congress would consider revamping the bankruptcy law–or worse yet, the entire health care system--on the basis of junk social science is enough to make us feel sick.
Todd J. Zywicki and Gail Heriot are professors of law at George Mason University and the University of San Diego respectively.