President Obama’s push for healthcare reforms gets a boost today from a new study by Harvard University researchers that shows a sizable increase over six years in bankruptcies caused in part by ever-higher medical expenses.
The study found that medical bills, plus related problems such as lost wages for the ill and their caregivers, contributed to 62% of all bankruptcies filed in 2007. On the campaign trail last year and in the White House this year, Obama had cited an earlier study by the same authors showing that such expenses played a part in 55% of bankruptcies in 2001.
There’s just one problem with this study: [url=http://meganmcardle.theatlantic.com/archives/2009/06/elizabeth_warren_and_the_terri.php]It’s hokum[/url], written by two axe-griding doctors belonging to a group [url=http://pnhp.org/new_bankruptcy_study/]thumping the tub for nationalized healthcare[/url].
thanks #1, I was looking for the debunking of this story, this is not the first time (nor will it be the last) that the “medical bills drove me to bankruptcy” meme. it should be re trotted out as a bill works its way through congress. my prediction: a Senate filibuster.
Well, personally I think that a single payer health system would be cheaper than the current mess. However it needs to be explained that this would indeed come with rationing, by both disease and age. Folks who have a less than 5 year anticipated life span will not get elective surgery. That includes folks with cancer, folks with endstage renal disease and folks who are simply about 73 or older. Folks with a less than 2year life expectancy would be automatically DNR. That includes folks who are 95 but in wonderful health.
There is no way to reduce health care costs other than rationing. We spend 50% of costs on folks who die in 2 years. That has allowed us the healthiest and oldest seniors in the planet, but is the main driver of health costs, with the gigantic burden of administering 500 different plans being second, and the need for ordering tests and documentation to reduce malpractice suits being third.
I might add that the only way to get to such a system is to force physicians into a national health system, with a computerized record that can ensure that they “follow evidence based guidelines”. This is why Obama is pushing comperized records, and why the AMA is saying okay we can go along, but we need immunity as long as we follow your “evidence based guidelines”.
I actually see nothing terribly wrong with rationing. Right now we ration by hassle factor and by access. We ration irrationally. Rational, open and understood rationing would be an improvement over irrational rationing. Every nation that has a national health system has rationing, and we will all be old and sick one day, so it is “fair” in that rationing will eventually affect everybody. It will solve both the Medicaid/Medicare and social security problems, which promise to bancrupt us and future generations, and that too is a “justice issue”.
I do think that the democrats should be honest about what it is they propose, however. I think it is very reasonable to have an open debate about rationing in the US. That is not, however, what is happening
Atul Gawande has written an [url=http://tinyurl.com/qwh8yg]interesting article[/url] in the New Yorker about health care costs.
“About fifteen years ago, it seems, something began to change in McAllen. A few leaders of local institutions took profit growth to be a legitimate ethic in the practice of medicine. Not all the doctors accepted this. But they failed to discourage those who did. So here, along the banks of the Rio Grande, in the Square Dance Capital of the World, a medical community came to treat patients the way subprime-mortgage lenders treated home buyers: as profit centers.”
We need to decide if the needs of the patient come ahead of personal profit, or not. The rest follows.
There is that verse in scripture about serving God and Wealth.
Indeed it’s not, Clueless, and the consequences will be dire. As Virginia Postrel asks, [url=http://www.dynamist.com/weblog/archives/003001.html]”Why not start with Medicare?”[/url]
There are a number of factors which contribute to the high rate of bankruptcies associated with medical bills. One is indeed a lack of health insurance on the part of a large number of Americans. This is a serious problem and one that needs to be addressed. But it is not the subject of my post.
Another part which is too often ignored is poor planning on the part of many Americans. Even in the current economic mini-depression Americans are [i] still[/i] the worlds most prolific consumers and spenders. But they spend poorly. Huge numbers of working class people with no insurance have an expensive car or in some cases more then one!
And very large numbers of Americans who do have insurance look for policies that will provide some coverage for routine medical expenses like the occasional doctors visit or a possible trip to the ER because someone gets stupid with a hammer and smashes a couple of fingers (been there and done that). But these same policies usually leave the buyer inadequately insured against the real danger to their finances and health.
That is not the flue or the measles or a broken arm from a fall. It is the catastrophic medical crisis.
Most Americans who are stably employed could cover routine medical bills themselves if they set aside a little money in a rainy day fund. If you have a little over $5000 in bank account somewhere that is understood to be untouchable except for medical expenses then the average family could get the insurance they really need, which is major medical.
Most insurance policies held by Americans provide some coverage for the routine things and also some coverage for hospitalization and emergency medical care. The typical policy today covers around 70-80% of hospitalization bills. But that is frankly inadequate. The bare minimum needed to protect yourself from financial ruin is probably 90% coverage for major medical with 100% being ideal.
Consider a case from my own family. On March 30th of this year my step-mother had a major stroke while visiting her natural son in Florida. She was taken by ambulance to the local hospital which quickly diagnosed a probable stroke. Following protocols she was airlifted to a nearby regional medical center which specializes in neuro-medicine. She had emergency brain surgery performed on her that night. She spent the next 3 weeks in intensive care. And she is [i]STILL [/i] in the hospital today, though not in ICU. I don’t know what her medical bills are but I would be surprised if they were not north of $500k. Fortunately for her she is a retired teacher with excellent health benefits.
But a person whose insurance covers routine doctors visits but only 70-80% of hospitalization would be wiped out by this kind of event. Far too many Americans base their insurance needs on covering small minor expenses without considering what would happen if there were a serious medical crisis with very steep bills.
I can cover a few thousand dollars in bills from a quick trip to the ER if I needed to or even could arrange a payment plan if I was short on cash. But a high five or six figure medical bill would I suspect push most ordinary Americans over the financial cliff.
I believe the solution is for Americans to steer clear of the types of insurance that are most common today. They should save $5k-$10k to cover ordinary expenses and low level medical emergencies. If the money is not needed then they are ahead with money stashed and collecting interest. They should then purchase a major medical policy that will insure excellent care and protect them from financial ruin in the event of an extreme medical crisis. These policies are offered by most insurance companies with high deductibles of $3000 to $5000 (again you pay for the routine things) but they cover 100% after the deductible. They also have the added advantage of being generally less expensive than the ‘cover a little of everything’ policies most people buy.
If many Americans are being bankrupted by staggering medical bills, I suspect it is in part a result of poor planning and bad spending habits.
In ICXC
John
Wise counsel, AO. First-dollar coverage is indeed a big part of the problem as it greatly increases administration cost relative to the cost of the services performed. Can we imagine what auto insurance would cost if it covered fill-ups, oil changes and car washes?
Jeffersonian, you may be right about the axe grinding doctors and the way they use the statistics, but the figures are not far off. Most studies of personal bankruptcys conclude that the main causes of bankruptcy are unanticipated medical bills, loss of job, divorce.
A quick follow up to my previous post. Many, indeed probably most Americans get their insurance from their employer. In some cases they have no real choice in polices and employer offered medical insurance rarely covers more than 80% of hospital bills these days.
In these cases the individual needs to consider his/her options.
There are essentially two ways to deal with the inadequate major medical coverage typical of employer provided insurance. The first is to opt out of the employer provided plan and buy the major medical policy on their own. The second, and usually the better choice, is to purchase a supplemental policy solely to cover any major medical expenses not covered by the employer’s insurance. Again these policies are available from many providers and are usually quite inexpensive since they would only kick in in the event of a major medical crisis and then only to cover the 20-30% not covered by the employer provided policy.
But again for the math challenged, 20-30% of a six figure medical bill is pretty substantial. A lot of families could not cover that on their own.
A large part of the problem is that we use health insurance for the wrong things. “Insurance” is designed to cover “unforseen” and catastrophic events. You do not (or should not) insure your house against a window breaking or against someone accidentally knocking a hole in your wall. These things are realitvely minor to repair.
As a thought experiment, try imagining that your office had “lunch insurance” where the rising cost of lunch was paid for by your company such that you were only responsible for 10% of the cost of lunch after a $1.00 copayment. Would you be more likely to go to MacDonald’s for lunch or would you go to the nicer dining establishments?
If we are going to have some form of nationalized coverage, it should be for catastrophic care with a very high deductible (say $5k or 10% of you last AGI), but cover every dollar after that amount. This would stop bankruptcy from medical bills and would be relatively low cost to provide for every American.
YBIC,
Phil Snyder
Phil,
I like that idea of yours. If my memory has not failed me I think Ronald Reagan actually pushed through a national catastrophic health insurance bill during his last year in office. He referred to it as the single greatest accomplishment of his presidency though ironically it is now all but forgotten. It was quickly repealed by the first Bush administration backed by a Democratic Congress that was worried about where the money was going to come from.
Some form of major health reform is clearly needed. We simply can not continue with 20+% of the population uninsured while mandating that hospital ERs must treat anyone without regard for their ability to pay. And since I doubt that many people are willing to sever this sole lifeline for the poor (even my generally cold monarchist/libertarian heart is not that far gone) we need a new plan.
With the understanding that no government plan will ever be a good plan, some ideas are clearly better than others. Currently I am leaning towards a mandate for all employers (excepting small businesses) to offer insurance to all of their employees. A Federal health plan should be available for the unemployed-indigent or those employed by small businesses that could not afford to pay benefits for employees.
This kind of mandate will have some rather unfortunate side effects. Anyone who wants a part time job will find such fairly hard to come by since major employers will not want to pay more in employee benefits than necessary. They will logically reduce or eliminate altogether part time staff. But it is probably the lesser of evils.
For years employers have been cutting back on full time staff for the exact same reason, avoiding the expense of health benefits. I know this from first hand experience. One of my previous employers eliminated ALL full time positions below management level with only about a months notice. Full time employees were converted to PT and told to lump it or find another job. That was almost enough to make me rethink my normally implacable hostility to labor unions.
The first thing that strikes me is that this will become a crises, and Emanual’s statement “never let a crises go to waste” looms large, now that Obama wants to take over health care this is an opening shot, expect sob stories ad infinitum. Some of the problems that run up health care costs will not be addressed. Tort reform, forcing insurance companies to insure extremely large groups under one policy to prevent uneven liablity and exposure etc. Rationing is OK until you or your loved one can’t get treatment! In England breast cancer mortality is 47% compared to 27% in the US because of rationing!
http://meganmcardle.theatlantic.com/mt-42/mt-tb.cgi/9562
A succinct take down of this story.
Try this link instead – sorry.
http://meganmcardle.theatlantic.com/archives/2009/06/why_warrens_new_bankruptcy_stu.php
Thanks for the link- I had read this debunking story earlier in the week, but forgot where I had seen it. It is really important to get all sides of an issue these days, when we know very well that politics will trump most any truth with the present setup. But it is increasingly difficult to determine the “truth” on most issues. Strange times we live in.
[blockquote]Jeffersonian, you may be right about the axe grinding doctors and the way they use the statistics, but the figures are not far off. Most studies of personal bankruptcys conclude that the main causes of bankruptcy are unanticipated medical bills, loss of job, divorce. [/blockquote]
I’ll have to find the other McArdle posts on this, but I’m pretty sure the #1 cause of bankruptcy is plain ol’ overspending. There might be a trigger that includes one of the causes you mention, but most tread pretty close to the insolvency line until the first little thing pushes them into bankruptcy.
As I said earlier, this is just the start. Alan Colmes show tonight featured people who were put finnacially under water by health care costs. Next week cover of Time magazine will feature the insured poor who went broke because of copays etc…
2010 seems so far away.
It’s easy to start with a conclusion, “Medical bills main cause” and then focus only on that data that supports that conclusion. Sort of the same process that Human caused Global Warming activist scientists use.
These three comics illustrate that point with humor:
http://www.arcamax.com/nonsequitur/s-556600-145574
http://www.arcamax.com/nonsequitur/s-556602-363405
http://www.arcamax.com/nonsequitur/s-556925-470807