In 2001, Harvard Professor David Himmelstein created a stir with a paper concluding that unpaid medical bills are leading cause of bankruptcy filings. Since then several academics have debunked that conclusion. The latest is Aparna Mathur, a reseach fellow with the American Enterprise Institute, who released a paper on Medical Bills and Bankruptcy Filings last week.
The report explains that
Studies based on surveys of bankruptcy filers, such as Himmelstein et al. (2005) using data from the Consumer Bankruptcy Project, claim that families with medical problems and medical debts account for nearly half of all bankruptcy filings.4 However, their classification of a medical bankruptcy is too broad.5 A big drawback of the study is that it does not include non-filers in the sample. This is a problem because there may be non-filers who experienced similar problems but did not
file for bankruptcy. Thus the sample lacks an effective control group.
The AEI study “finds that while medical debts are significantly related to bankruptcy filings, the magnitude is not as high as is claimed by other authors” such as Professor Himmelstein.