Elizabeth Warren and a Scholarly Debate Over Medical Bankruptcy That Won’t Go Away


Craig Garthwaite, a health economist at the Kellogg School of Management at Northwestern, who also studies medical debt, offered a more negative assessment: “There are no reputable economists who I deal with who believe the number in the paper or the methods in the paper are appropriate in trying to get at the true underlying question.”

Writing in Health Affairs in 2006, David Dranove and Michael Millenson, then both on the faculty at Kellogg, analyzed the underlying survey figures differently and concluded that medical problems were probably responsible for less than 20 percent of all American bankruptcies. Ms. Warren and her co-authors pushed back in a letter and defended their interpretation — noting that the authors had received financial support from the insurance industry.

Mr. Dranove said he was taken aback by the aggressiveness of their response, which he described as “disparaging our motives,” rather than engaging in a scholarly discussion about the best way to arrive at the right answer. (In an email this week, Dr. Himmelstein again noted Mr. Dranove’s industry funding.)

Last March, a team of economists from M.I.T., Northwestern University and the University of California, Santa Cruz, published another paper, making use of a California database of every hospitalization in the state. By examining the credit reports of all the hospitalized people to see who filed for bankruptcy afterward, the researchers concluded that medical shocks related to hospitalization could explain 4 percent of all bankruptcies.

Their paper was published in The New England Journal of Medicine under a bold title: “Myth and Measurement: The Case of Medical Bankruptcies.” The authors argued that their paper was the first to definitively demonstrate that medical shocks did cause some people to go bankrupt. It found that missed work caused by illness was often a bigger contributor to financial difficulties than medical bills themselves.

There is, of course, a huge difference between 4 percent and 62 percent.

Amy Finkelstein, a professor at M.I.T. and one of the authors, said the Warren paper’s approach is akin to trying to find out how to be successful in business by interviewing big technology entrepreneurs about how they got their start. Such a study, she said, might lead to the conclusion that you need to drop out of college to succeed, even though most college dropouts do not become billionaires.

“The original paper was extremely problematic precisely because it limited its analysis to the set of people who went bankrupt, and said how common really large medical bills are in that sample of people,” she said. “It says nothing about how common really large medical bills are in the nonbankrupt population.”


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