New Research Questions Effect of Medical Costs on Bankruptcies
A reanalysis of data from a report on personal bankruptcies and medical bills published last year has found that medical debt caused only 17% of all bankruptcies studied, compared with the nearly 46% rate previously reported, according to research published Tuesday online in Health Affairs, the AP/Boston Globe reports (AP/Boston Globe, 2/28).
In February 2005, researchers from Harvard Medical School and Harvard Law School surveyed 1,771 U.S. residents who filed for bankruptcy in 2001, interviewing 931 of them. They found that 46.2% of people filing for bankruptcy in 2001 cited illness and medical bills as the cause.
The study says that between 1980 and 2001 the number of medical-related bankruptcies increased twenty-threefold (California Healthline, 2/2/05).
However, in a reanalysis of the data used in the original study, David Dranove and Michael Millenson of the Kellogg School of Management at Northwestern University found that only 17% of all bankruptcies in 2001 were related to medical expenditures. The reanalysis, which was funded by America's Health Insurance Plans, identified individuals who said illness or injury was the cause of bankruptcy and also said medical bills contributed to the bankruptcy.
"It is insufficient to show that medical problems are associated with bankruptcy," Dranove and Millenson write, adding, "one must determine whether, and to what extent, medical spending causes bankruptcies." Dranove and Millenson note that for the 17% whose bankruptcy could be tied to medical expenditure, it could not be determined whether medical costs were the primary cause of those bankruptcies (AP/Boston Globe, 2/28).
They also say previous studies have shown that "medical debt is like any other debt -- a cause but not the most important cause of bankruptcy" (Health Affairs release, 2/28).
In a perspective piece responding to Dranove and Millenson's report, David Himmelstein, a professor at Harvard Medical School and a co-author of the original report, and colleagues write that the new report "manipulate[s] the data far beyond legitimate reinterpretation." They note that the reanalysis does not include individuals who took out a second mortgage to pay for medical bills and then said they were filing for bankruptcy "to save our home" (AP/Boston Globe, 2/28).
Himmelstein and colleagues also say that the new analysis "misrepresent[s] the previous literature on medical bankruptcy," giving examples of one study's conclusion that "medical debts are often buried in credit card balances and second mortgages" and a Commonwealth Fund study's finding that "37.2 million adults annually are 'contacted by a collection agency about owing money for medical bills.'"
The Health Affairs Web site also includes a response by Dranove and Millenson to Himmelstein and colleagues' perspective, as well as second perspective piece on medical debt by Robert Seifert, policy director at the Access Project, and Mark Rukavina, executive director of the Access Project (Health Affairs release, 2/28).
The full texts of the new analysis, the two perspective pieces and Dranove and Millenson's response are available online.