Earlier this week, President Obama introduced his new nominee for Secretary of Health and Human Services, Kansas Governor Kathleen Sibelius, and also asked Congress to appropriate $634 billion for healthcare reforms that he will announce (or, as we have seen, secretly slip into massive spending bills that no one cares to read) in the upcoming months. President Obama was direct in his reasoning behind his new proposals:
As he nominated Kansas Governor Kathleen Sebelius as his new health secretary, Obama argued that relieving families and businesses of the soaring costs of healthcare payments was a key to solving the crisis.
He made latest bid to advance an ambitious political agenda on another miserable day for the economy, as stocks plunged to levels last seen in 1997 and insurer AIG needed a new government bailout — worth 30 billion dollars.
“We cannot fail to act yet again,” Obama said, vowing to make good on a campaign promise to offer “quality, affordable healthcare” to every American.
“Fixing what’s wrong with our health care system is no longer just a moral imperative, but a fiscal imperative.”
“The crushing cost of healthcare causes a bankruptcy in America every 30 seconds, and by the end of this year, it could cause 1.5 million Americans to lose their homes“. (emphasis added)
Wow – health care costs are the upcoming decade’s new ‘weapon of mass destruction,’ so to speak. Hang on, it’s a good metaphor, because — as with those pesky Iraqi WMD’s — it seems that financial devastation caused by health care costs is not nearly as significant as our Administration wishes to make it appear:
The figure comes from a 2005 Harvard University study saying that 54 percent of bankruptcies in 2001 were caused by health expenses. We reviewed it internally and knocked it down at the time; an academic reviewer did the same in 2006. Recalculating Harvard’s own data, he came up with a far lower figure – 17 percent.
A more recent study by another group, approaching it another way, indicates that in 2007 about eight-tenths of one percent of Americans lived in families that filed for bankruptcy as a result of medical costs. That rings a little less loudly than “one every 30 seconds.”
The extrapolation of Harvard’s data to “a bankruptcy every 30 seconds,” which Obama also mentioned in his address to a joint session of Congress last month, comes, per the White House, from a 2005 Washington Post op-ed by Prof. Elizabeth Warren, a co-author of the Harvard paper. Fact-check.org has noted that even using Harvard’s numbers, it’s more like a bankruptcy every minute; indeed if you add up all bankrputcies in a year you barely get one every 30 seconds. (I’ve e-mailed Warren for comment.) But more to the point is that the Harvard data are clearly inflated, or at best, mischaracterized.
Himmelstein tells me that the reason for the difference is a change in federal law that sharply reduced the number of bankruptcies. In 2005, the year he and Warren wrote their op-ed, there were just over 2 million bankruptcies. Data out just today say that in 2008 there were 1.1 million (up sharply, by the way, over 2007). So this error in the White House claim stems simply from the fact that it’s using out-of-date information. The next question is whether the estimate of “medical bankruptcies” is reliable in the first place.
A good part of the problem is definitional. The Harvard report claims to measure the extent to which medical costs are “the cause” of bankruptcies. In reality its survey asked if these costs were “a reason” – potentially one of many – for such bankruptcies.
Beyond those who gave medical costs as “a reason,” the Harvard researchers chose to add in any bankruptcy filers who had at least $1,000 in unreimbursed medical expenses in the previous two years. Given deductibles and copays, that’s a heck of a lot of people.
Moreover, Harvard’s definition of “medical” expenses includes situations that aren’t necessarily medical in common parlance, e.g., a gambling problem, or the death of a family member. If your main wage-earning spouse gets hit by a bus and dies, and you have to file, that’s included as a “medical bankruptcy.”
When I asked the lead author, Dr. David Himmelstein, about his definitions of medical bankruptcy back in 2005, he said, “It’s a judgment call,” and added that any death, for example, “to our mind is a medical event.” (emphasis added)
I’m not denying that America has a problem providing the same quality of health care to all its citizens and residents. But if the chattering class wants to naval-gaze and perpetually blame the Bush Administration for “lying us into war” using “fixed” intelligence, shouldn’t they also be questioning the motives of an Administration that really is using “fixed” statistics to lead us straight into a big-government bureaucratic nightmare that will be far more costly and stifling to individual freedom than our military involvement in Iraq?