US Healthcare Costs--Not So Fast!

Last Friday, I wrote about an article in the Spectator (UK) comparing British and American healthcare. The author concluded the U.S. system was medically superior, but flawed:

Half the bankruptcies in America are people who had previously been ill. In Britain the system might kill you. In America the system will keep you alive but might bankrupt you.

Though article didn't footnote sources, the bankruptcy figure presumably came from a study recently published in the Health Affairs trade journal. One of the study's co-authors, Harvard Law prof Elizabeth Warren, repeated the 50 percent number in Senate testimony and a WaPo op-ed last week.

Well hold on--according to Todd Zywicki at the Volokh Conspiracy, the "half" figure "cannot be supported based on what that study actually examined:"

For instance, the authors claim (page W5-71) that from 1981-2001, medical bankruptcies increased 23-fold, citing a study from 1981 published in "As We Forgive Our Debtors:"

Our central finding is that crushing medical debt is not the widespread bankruptcy phenomenon that many have supposed. To the extent that the typical debtors in bankrutpcy are painted as sympathetic characters because they are struggling with insurmountable medical debts, these data show that 'typical' is the wrong adjective. Only a few debtors find themselves in such extreme circumstances... About half of all debtors carry some medical debt, and many carry substantial medical debt. Althoughthese medical debts are not the obvious cause of the debtors' bankruptcies they are part of their financial troubles." (p. 173).

Zywicki's conclusion seems fair and reasonable:

I do not deny that many bankruptcies are caused by health problems. This is why the bankruptcy reform bill carves out several specific exceptions for treatment of health expenses and health insurance. In theory, the number may be as high as some now say, although as noted, the overwhelming number of studies fail to find anything approximating such a high number. But if it is true, that conclusion cannot be based on this article that is published in Health Affairs that got so much press last week and so much interest in the United States Senate. The statistical classification and methods are just too questionable to support that conclusion.

Read it all--Zywicki's analysis undermines at least some of the doom-and-gloom inferences about US healthcare costs in the Spectator article.

(via Instapundit)