Friday, March 6, 2009

Obama Makes Up Health Care Stat

Is a bankruptcy really caused every 30 seconds by the cost of health care?

That is one of the outrageously misleading claims President Obama made in his remarks at his Health Care Summit yesterday.

I haven't had a chance to check out the others, but this one is patently false.

First off, lets calculate what this would mean. A bankruptcy every 30 seconds would mean approximately 1 million bankruptcies in a year. In the latest statistics on bankruptcies, the number grew from about 700,000 in 2007 to just over 1 million in 2008.

So to believe Obama's claim that a bankruptcy is caused every 30 seconds by health care costs, you would have to believe that 100% of bankruptcies are caused by high health care costs.

This leads to the question of what percentage of bankruptcies were caused by a major illness. Supporters of increased government involvment in health care like tax-dodging Tom Daschle have repeatedly claimed that about half of bankruptcies are caused by high health care costs.

The claim seems to be based on a Harvard study published in 2005 of over 1700 bankruptcies from 2001. The authors of that study, titled "Illness and Injuries As Contributors to Bankruptcy", very clearly intended to maximize the number of bankruptcies that could be claimed to have a medical cause.

The report is convincingly refuted by Gail Heriot, a University of San Diego professor of law, in 2005 right after it was published.

Even though the authors claimed that 54.5% of bankruptcies had a medical cause, buried in the report itself is the fact that only 27% of the bankruptcies even had unreimbursed medical expenses greater than $1000 over the 2 years prior to the bankruptcy!

Only 28.3% of those studied claimed themselves that their bankruptcy was substantially caused by illness or injury. The report failed to examine how many of those 28.3% actually had crushing amounts of medical expenses that could be considered the primary cause for the bankruptcy.

Careful examination of the study thus leads to the conclusion that no more than a quarter, and probably much lower, of bankruptcies in 2001 were truly caused primarly by excessive health care costs. Obama's statistic is off by at least a factor of 4.

You might say, "Well, even if it is 200 thousand instead of 1 million bankruptcies that are caused by bankruptcies, that is still a lot." True it is still a lot, but a further question is how many of the people that filed for bankruptcy had health insurance, and how many were uninsured, because only the uninsured would really be helped by universal health insurance coverage.

The fact is that the great majority of all bankruptcies are caused by lost wages, and the greatest effect that illness or injury has is in limiting the ability to work. This factor will not be fixed by more generous health insurance.

If Obama is worried about the number of bankruptcies, he needs to ask himself how many more Americans he will push out of work and possibly drive into bankruptcy when his oppressively higher taxes, which he will try to enact in order to pay for his health care proposals, hobble the economy.

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