Chart of the Day

Remember President Obama claiming that healthcare costs cause a bankruptcy every 30 seconds? That swiftly was shown false. Yet press and progressive health reform advocates still insist that healthcare expenses cause half of bankruptcies, typically citing flawed studies. (Senate Majority Leader Harry Reid repeated a milder version of the claim last month.) This, too, is wrong.

The November 25th New York Times re-examined the issue, in a surprisingly balanced article. The paper repeated the argument, but admitted the numbers were "not clear" and acknowledged the contrary findings: consumer debt, not medical expenses, drive personal bankruptcies. Though it cited a recent Harvard study asserting that medical bills contributed to 62 percent of bankruptcies, the Times actually linked to comprehensive critiques of that study. Ultimately, the article reached no conclusion about causation or the underlying numbers.

Critical Condition's Hanns Kuttner tries to plot the causality:


source: Critical Condition

Kuttner explains:

If the causality runs from health insurance to bankruptcy, then the lines should move together. Yes, the bankruptcy rules got tighter in 2005, leading to an upturn in bankruptcy filings, but before and after 2005 the bankruptcy line has a steeper slope. If there was a causal relationship, why would the number of bankruptcy filings have started moving up again post-2006 when the number without health insurance was comparatively stable?

He also correctly concludes that "[n]o one should expect universal insurance against medical expenses to bring about a large decline in bankruptcies." Quick, someone tell Harry Reid.