The medical bankruptcy myth

The idea that there are high numbers of bankruptcies caused by medical bills is another one of those stats that just won’t die even though it is debunked over and over again, says health care expert David Catron, who has spent 20 years as a consultant to hospitals. This was a popular one in the headlines during the 1994 Clinton health care push, summer 2007, and then again leading up the passage of the latest health care law. The problem with this claim is that the most reliable study, done by Department of Justice’s Executive Office of the United States Trustee, shows there is no evidence of increase in the frequency or severity of job loss or income interruption as a result of health problems. Todd Zywicki, an expert on bankruptcy, former Director of the Office of Policy Planning at the Federal Trade Commission, and professor of Law at George Mason University testified to Congress about medical bankruptcies. He says the best data show that medical bills are a factor in less than ten percent of bankruptcies. Even among bankruptcies where medical bills are a factor, they only account for about 13 percent of the debt on average. His full testimony is available as a Word Document.