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Medical debt may not be the number one cause of bankruptcy

Many studies have suggested medical bills are the number one cause of bankruptcy in the United States. A 2009 study, coauthored by Sen. Elizabeth Warren and physician Dr. David Himmelstein, stated that over 60 percent of bankruptcies were a result of medical debt.

During his 2009 State of the Union, President Barack Obama used this study to state that a medical bankruptcy occurred every 30 seconds in the U.S. This became a talking point that may have helped push through his Affordable Care Act.

However, a new report by the American Economic Review suggests these numbers are much lower. The American Economic Review found that about 4 percent of people with insurance and 6 percent of uninsured people filed for bankruptcy because of medical debt.

Part of this drastic difference is likely due to the different methodology used in the studies. Those critical of the Warren and Himmelstein study say that its interpretation of the findings was too simplistic. Their study relied on responses from study participants who stated their bankruptcies were caused by medical bills.

Critics suggest that relying only on what respondents say is not very reliable research.

Certainly, the number President Obama quoted in his State of the Union was high. According to The Balance, Obama used bankruptcy numbers from the year Warren and Himmelstein’s study was published, not from the year the data came from. This made for a large difference because the recession significantly increased the number of bankruptcies. When the data was collected in 2007, 822,590 bankruptcies occurred. When the survey was published in 2009, 1.4 million bankruptcies occurred.

Another issue that skeptics point out is that for many people filing for bankruptcy, there is more than one cause of their debt. Though medical bills may have contributed to their financial burden, this debt is probably not the only factor that caused their bankruptcy.

All the researchers seem to agree that medical bills can often lead to financial difficulties. So, no matter what study is more accurate, many Americans still struggle to pay for high medical bills, and this is likely at least a contributing factor in many bankruptcy cases.

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