Is health care the number one reason for bankruptcies, as one Florida GOP leader put it?

Health care is one of the biggest reasons Americans are in debt, said Florida House Speaker Jose Oliva, R-Miami Lakes.

“The two issues Floridians and Americans are most financially controlled on these days are their health care, the #1 reason for bankruptcy, and student loans, the #1 debt for young people,” said Oliva told reporters on The Associated Press Legislative Day on Jan. 1. 30.

Oliva declared that the only way to curb rising health care costs is to allow more competition in the free market. The Republican-led legislature rejected Medicaid expansion, which is part of the Affordable Care Act.

We found that it is not so simple to determine whether health care is the main reason Americans declare bankruptcy.

It is difficult to disentangle the main factor of bankruptcy, because people can find themselves in debt for several reasons at the same time. But medical bills and illnesses can play a role in Louisiana bankruptcy attorney, including when people can’t work because of their medical condition.

There are a few key studies on the extent to which medical expenses and illnesses contribute to bankruptcy. The Oliva spokesperson also cited studies on the financial burden of medical debt, but we will focus on research specifically on bankruptcies.

Bankruptcy and Medical Expense Research

Medical bankruptcy was a frequent talking point among Democrats when discussing the Affordable Care Act.

In 2009, President Barack Obama said, “The cost of health care is now causing bankruptcy in America every 30 seconds.” Democrats in the Senate, including hillary clinton and Chris Dodd, has made statements about the percentage of bankruptcies attributed to medical issues.

The research attracted a lot of attention because the key research was co-authored by Elizabeth Warren, then of Harvard Law School and now a US senator running for president.

In one paper 2005, Warren, along with David Himmelstein, then at Harvard Medical School, found that 28.3% of bankruptcies were attributed to illness or injury based on 2001 data alone. But that number jumped to 46, 2% when researchers asked about additional factors such as unpaid medical bills, loss of income due to illness, or mortgaging a house to pay medical bills. The researchers interviewed about 900 people who had filed for bankruptcy and reviewed bankruptcy records.

They updated their research in an article in 2009 and found for 62 percent of people, illness or medical bills contributed to their bankruptcy. The researchers designated bankruptcies as medical based on the debtors’ stated reasons for filing, loss of income due to illness, and the extent of their medical debts. (Oliva spokesman Fred Piccolo included this study among several he sent to PolitiFact, but said the 62% figure was likely too high.)

The Harvard research led to years of disagreement between the authors and other academics. Critics of the research said it relied too heavily on people claiming their medical bills led to their own bankruptcy, rather than independent confirmation. David Dranove and Michael Millenson at Northwestern’s Kellogg School of Management analyzed the data and concluded that there was a causal link in only 17% of personal bankruptcies.

“It is not enough to show that medical problems are associated with bankruptcy; it must also be determined whether, and to what extent, medical expenses cause bankruptcies,” they wrote in 2006.

Himmelstein and Warren pushed back, noting that an industry group supported Dranove and Millenson’s research.

More recent research on the subject has renewed the debate.

A group of economists from the University of Southern California, MIT and the Kellogg School wrote an article published in 2018 in the New England Journal of Medicine, “Myth and measure: the case of medical bankruptcies”.

Using data on California adults from 2003 to 2007, they found that hospitalizations caused only 4% of adult personal bankruptcies. The researchers acknowledged that this did not cover all potential bankruptcies due to illnesses or injuries that did not result in hospitalization, or hospitalizations of children or the elderly.

In an interview with PolitiFact, Himmelstein focused on those caveats, saying it led to a big undercount of bankruptcies.

“Families can drown in medical debt without hospitalization – they can spend hours in the emergency room after an accident, followed by months of physical therapy, or have chronic illnesses requiring drugs costing tens of thousands of dollars,” Himmelstein and his colleagues co-authors wrote in a response to the 2018 study.

Neale Mahoney, an economics professor at the University of Chicago, said the research by Warren and his co-authors exaggerates the share of bankruptcies caused by health shocks. One problem is that those who declare bankruptcy may attribute it to health issues, while downplaying other factors such as financial mismanagement.

On the other hand, the California study underestimates the impact of health shocks on personal bankruptcy because it only looks at hospital admissions.

“More generally, I think it’s difficult to pinpoint exactly what causes bankruptcy, because bankruptcy usually has multiple causes – excessive borrowing, job loss, health issues, etc.,” he said. . “That being said, I believe Jose Oliva’s statement is not outside the range supported by the research literature.”

We interviewed two other professors who said the 62% figure was too high and that the 4% figure was probably closer to the truth: Craig Garthwaite, professor at Northwestern’s Kellogg School of Management and Martin Gaynor, professor in health economics and policy at Carnegie Mellon University.

“That doesn’t mean health care spending doesn’t cause people financial hardship — it does,” Gaynor said. “It just means that (medical issues are) not responsible for nearly as large a percentage of bankruptcies as some people claim.”

Our decision

Oliva said health care is the “#1 reason for bankruptcy.”

Research in 2009 found that in 62% of cases, illnesses or medical bills contributed to bankruptcy, based on surveys of people who filed for bankruptcy.

But other academics disagree with this conclusion, particularly those who worry that people tend to blame financial problems for illness when there are other reasons as well.

A 2018 paper concluded that adult hospitalizations accounted for 4% of personal bankruptcies, but this data also has limitations.

It is difficult to pinpoint a main reason for bankruptcy because several factors can collide, causing a person’s debt to increase and leading to bankruptcy. Researchers are still debating the contribution of different problems.

We rate this statement as half true.

Correction, February 1, 2019: We have revised our description of the 2018 California Personal Bankruptcy and Hospitalization Study in the Our Decision of History section. The original version was inaccurate.

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