Go, Megan, go

by Russ Roberts on June 8, 2009

in Data

Megan McArdle points out the flaws in a recent study of bankruptcy and people get really angry at her. She's right. It's a lousy study. Not every sentence of it. Not every number. But it's not a quest for truth and this kind of critique is always worth making.

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Daniel Kuehn June 8, 2009 at 10:49 am

Ya – I partly agree and partly disagree with McArdle's analysis.

Clearly, if the story is "medical bills are getting a lot worse", the bankruptcy statistics are not an honest way to do it.

But if the story is "if you want to address bankruptcy, address the medical bills" Warren's presentation is just fine.

I also agree that the central story is the post 2005 bounce back, but there's nothing flawed about the Warren report so long as she's not actually saying that medical bankruptcies and bills are getting worse in the data. I didn't read the original report, so I'm not sure if she said that or not.

David June 8, 2009 at 11:10 am

I haven't read McCardle's analysis or the study itself, but when one of the co-authors was interviewed last week on NPR, she said something to the effect that "pretty soon you'll have to have as much money as Warren Buffett to pay for medical care in this country". She actually mentioned Warren Buffett by name even if the quote isn't right. At that point I assumed the study was less about bankruptcy and more about arguing for gov't. supplied medical care.

Daniel Kuehn June 8, 2009 at 11:14 am

David -
Haha. Yes, I didn't read the report either, but that sounds pretty unambiguous! Megan seems to imply that at least the report itself doesn't seem to be that distorted – but if a co-author is saying it on the radio, that's disconcerting!

K Ackermann June 8, 2009 at 4:57 pm

It's just more noise to confuse people.

We are on a trajectory that will crush us well within our lifetimes. The number of uninsured is still increasing, everybody has their hand in the pie to the point where the pie is being eaten by everything except the actual delivery of health services.

All the opposition to a public plan is stunning. Industry claims that it would be a terrible plan that limits choice should make them agnostic to the plan. Instead, they are outright scared of the plan because it has all the ingredients of competition that will decrease their margins. Competition is something they are not willing to accept.

They said the same thing about Medicare. It was going to be the death of private medical insurance and usher in socialized medicine like the rest of the world has.

Until private industry figures out a way to cover 61 million uncovered people, they should STFU.

Dr. T June 8, 2009 at 8:51 pm

K Ackerman said: "Until private industry figures out a way to cover 61 million uncovered people, they should STFU."

Since when is private industry responsible for providing health care insurance coverage to those who chose not to buy it? And if they don't do this, they have no right to argue about government policies? Please move to a fascist country where you'll feel more at home.

A lack of health care insurance does not imply a lack of health care. I'm unemployed and have no health insurance coverage. My family still gets all the medical care it needs. Many young adults can get insurance but choose not to because the costs of insurance exceed the benefits (or at least they believe so).

You set up a straw man for Medicare: no one believed it would destroy private health insurance, only health insurance for the elderly. And, Medicare is socialized medicine. Sure, the doctors are rented, not owned, but otherwise it meets all the criteria of a socialized industry: the government mandates it, patients cannot opt out, doctors must accept all Medicare patients or none, benefits and payments are determined by fiat, usage of Medicare is far beyond original projections, and it sucks down more of our tax dollars every year. Sounds like socialized medicine to me.

K Ackermann June 9, 2009 at 12:52 am

I'm unemployed and have no health insurance coverage. My family still gets all the medical care it needs.

Now that's a neat trick. First, I am glad your family is covered. It's a lousy feeling not having coverage. How did your family get coverage?

Last year, a friend of mine never told anyone that he had an infected foot that wouldn't heal. He didn't know he had developed diabetes and crashed. They had to take off his leg below the knee.

He had no insurance and still owed the hospital some money so he thought they wouldn't see him.

Now he costs everybody money.

wintercow20 June 9, 2009 at 8:14 am

I pointed out McArdle's piece to a long-time "fan" of Warren, and here is what he said back:

"She both was and is (worth something). Most of the critics have never been in bankruptcy court (in any capacity). Things are different there. It’s an equity court, not a law court.

The critic here (McArdle) makes at least one erroneous assumption of the same magnitude but opposite direction as Warren. Health care expenses (insured or not), she seems to think, run about 5 percent of income. Remember that you get an itemized deduction for health care expenses out of pocket in excess of 7.5 percent of adjusted gross income (AGI). There are analyses of individual tax returns available (with a lag) that would show how many claim this deduction.

Remember that the young don’t spend even 5 percent but the middle-aged and older spend a higher percentage. And for the senior citizens, it is only the combination of Medicare and Medicaid that keeps them out of bankruptcy court (unless they were state employees and have good pensions, which is my father’s case … Anyway, it’s a testable hypothesis about how many income tax returns (there are about 130 million individual/family tax returns filed each year) show medical deductions, and if so, what the arithmetic mean of those deductions is."

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