Jacoby and Holman on The Politics of Medical Bankruptcy

I've asked Melissa Jacoby and Mirya Holman to post a little bit more about their paper, which I mentioned yesterday.  This is the first of three guest posts they'll be doing over the next few days:

We’re grateful to the infatigable Al Brophy for discussing our Managing Medical Bills on the Brink of Bankruptcy paper and inviting us to talk about its findings and implications for health care and bankruptcy.   To Tim Zinnecker, who challenged us to inspire him to read the paper: not sure if we can convince you to read it (during baseball season, no less!), but you prompted us to spruce up and re-post our abstract, so thanks for the wake-up call.  

On this generalist renaissance blog, we should start by framing our story with politics (next post will have visuals).  Scholars, politicians, and pundits have been fighting over whether medical bills substantially contribute to high rates of bankruptcy.  This politically and ideologically charged question has been closely linked with a methodological one about the source of data and method of analysis.  Survey data are the source for prominent studies (e.g., Harvard Law Professor Elizabeth Warren’s 2005 and 2009 papers with Professors Himmelstein, Woolhandler and Thorne that found that medical bills contribute to a substantial number of bankruptcies).  But critics of these studies like to point to an analysis of court records conducted by a division of the Department of Justice that found limited medical debt.   

Just last week at a hearing, Representative Conyers cited the Warren studies as evidence that health care finance reform is urgently needed.  But a witness at the hearing from the American Enterprise Institute cited the DOJ analysis, which was referred to as the “closest comparable study,” to cast doubt on the Warren studies’ findings.  Two years ago, in Congressional testimony, Professor Todd Zywicki cited the DOJ analysis to dispute the earlier Warren study.   In floor statements and press releases in 2005, Senators Grassley and Sessions used the DOJ analysis to disparage the Warren study as “myth,” “misrepresentation,” and “fiction.”  Although many factors were at play, refuting the study helped clear the way for passage of the Bankruptcy Abuse and Consumer Protection Act of 2005, the largest overhaul of bankruptcy law in a generation.   

Our paper is the first to use both methods – survey question analysis like the Warren study and court record analysis like the DOJ – on a single nationally representative dataset of bankruptcy filers.   Using both types of analysis with the same filers allows us to understand the inconsistencies between the approaches.  The findings are striking:  same filers, two very different measures of medical burden.

We are struck by how similarly our court record data are patterned to those in the DOJ analysis (we present them side-by-side in table 1 of our paper).  Anyone who cites the DOJ analysis for the proposition that medical debts are “no big deal” could presumably cite our court record data for the same proposition.  But court record medical debts look markedly different from the results of survey data about out-of-pocket medical expenses shortly before bankruptcy.  Bear in mind that, like the surveys, the court records we use are based on self-reported information (debtors complete schedules listing creditors to whom they owe money).  So this isn’t an instance of a debtor saying one thing and the court or creditor another.   Rather, they are answering different questions, and the court record question isn’t measuring medical burden on patients and their families.

More later, but we’ll say for now that for many filers who report substantial medical debts, the court records show no medical bills at all.  Indeed, over a quarter of respondents who report a medical bill reason for filing have no obvious medical debt in court records.   Many other filers had medical bills by both measures, but the court record debt was much smaller. 

Comments

[Jim Hawkins]

I really like this paper and recommend it Tim! In addition to what the authors have written about it, the thing that seems particularly compelling to me about this paper is the description of how doctors and patient-debtors act in the context of medical debt. The article draws on health care consultants’ advice and current legal distinctions to offer a rich account of why doctors push patients towards third party creditors, and it presents evidence that patients often actually pay off medical debt owed to doctors (which is contrary to what health consultants think). For people interested in consumer credit, both of those points seem noteworthy.