I submit that the study is designed to get that result from journalists. Readers have responded that my criticism is out of line, because after all, they only talk about the proportion, so who am I to say they're misleading the readers?
Yes, but why do they only talk about the proportion? In general, economics papers talk about absolute numbers whenever they can, and use proportions only when things like changes in income and inflation make comparisons between years too difficult. I submit that we want to know, not whether medical bankruptcies are a bigger or smaller proportion of overall bankruptcies, but whether more people are being pushed into bankruptcy by their medical bills. To take the extreme absurd case, if only one person had declared bankruptcy in 2007, but that one person had had huge medical bills, would this be a sign that we need national health care?
We can measure the absolute number of medical bankruptcies, and the changes in income, GDP, and population between 2005 and 2007 were too small to much affect these. Therefore, the appropriate measure was the absolute number. The proportion would have been an interesting inclusion. And it would have been the basis for a different, fascinating study: the relative "stickiness" of medical bankruptcies. But it was not the obvious choice if you are going to use one or the other. That is, unless you are determined to give the impression that rising medical bills are pushing ever-more people into bankruptcy.
Warren's defenders in my comments seem to think that this is simply libertarian bluster--after all, what we're concerned about is whether medical bills are driving the post 2005 increase. But, as Warren surely knows, it is very unlikely that medical bills are driving either the post-2005 increase in bankruptcies, or a post 2005 increase in medical bankruptcies.
Let's review the history.
In 2005, Congress passed a law changing the bankruptcy rules. There were a number of different changes to the code, but for our purposes, the relevant changes* are these:
- It became more difficult to do rapid serial filings
- Debtors were required to enter debt counseling before they filed
- Attorneys had to sign off on the debtor's claims
- Debtors had to provide pay stubs and tax returns
- Debtors whose income, after allowable expenses, was higher than the median for their area, had to file Chapter 13 instead of Chapter 7. This means they'd be forced into a five-year repayment plan.
In practice, these modestly increased the barriers to filing bankruptcy, and I was against them at the time. (Still am.) But overall, the barriers were not particularly costly. The requirement for high-income filers to enter Chapter 13 is theoretically the most onerous, but in practice, it affects almost no one. In 2005, it was widely estimated that 80% of filers were below their state's median income, and the allowable expenses are pretty generous. To return to an earlier story, Patty Barreiro, who I wrote about the other week, filed bankruptcy despite a household income above $150,000.