Blackadder’s Lair

The home of many a cunning plan

Give or Take a Million

Last night I while I was watching coverage of the Democratic convention, I saw an ad promoting an increased government role in health care. The ad depicted a woman and her father, and told the story of how her mother’s illness had driven the family into bankruptcy despite their having health insurance. At the end of the ad, text flashes across the screen saying: 1.85 Million Americans Go Bankrupt Due To Medical Bills In One Year.

Something about that number didn’t sit right with me. After looking around a bit, I found some statistics on bankruptcy in the U.S. According to those numbers, there were 850,912 bankruptcies in the United States in 2007, just under 30,000 of which were business bankruptcies. I’ll admit that math is not my strong suit, but it’s hard for me to see how you could have 1.85 million people a year declaring bankruptcy due to medical bills when the total number of bankruptcies is a million less than that.

According to the same statistics, the only year in which total bankruptcies exceeded 1.85 million was 2005. That year there were 39,201 business bankruptcies and 2,039,214 non-business bankruptcies, for a grand total of 2,078,415. For the statistic cited in the ad I watched to be true even of that year, one would have to believe that more than 90% of bankruptcies in 2005 were due to medical bills, which seems unlikely.

While I was looking around at bankruptcy statistics, I found this paper by David Dranove and Michael Millenson of Northwestern. The paper looked at a different claim, similar to but far less severe than the one in the convention ad, that medical problems contributed to 54.5% of the 1.5 million personal bankruptcies in 2001. According to Dranove and Millenson, even this lesser figure was inaccurate, as it counted as a “bankruptcy due to medical bills” anyone who had out-of-pocket medical bills totaling more than $1,000 in the two years prior to filing for bankruptcy, and in 90% of cases (according to a separate analysis by the DOJ) bankruptcy filers had medical debt of less than $5,000.

The ad was run by the AARP. I wasn’t able to find anything on their cite sourcing the statistic. I would assume (though I may be wrong) that the statistic wasn’t made up out of whole cloth. There is, I presume, some way of contorting the numbers and parsing the ad’s wording so that what it says is technically true. But I would also assume (though I may be wrong) that whatever the basis for the claim made in the ad, it was highly misleading at the very least. I also have little doubt that the people behind the ad feel little to no sense of shame about the ad’s misleading nature. They undoubtedly think they are acting for a good cause, and it is a sad fact about human nature that when people believe they are acting for a righteous cause, they often believe that anything they do to advance that cause is justified.


August 28, 2008 - Posted by | Health Care, Statistics


  1. Great Job on this! – I did the same research after seeing their ridiculous claim. AARP is rapidly becoming one of the worst advocacy groups in our country. I came across your blog by simply googling “1.85 million bankruptcies”

    Comment by Brendon Gallagher | August 29, 2008 | Reply

  2. I am the Dranove you cite. Let’s not minimize the plight of the tens of thousands (or more) of Americans who face financial catastrophe because of illness. But numbers do matter, and I am glad to see you call AARP to task for their blatant exaggeration.

    Comment by David Dranove | August 29, 2008 | Reply

  3. Great research.

    I know there was a recent “hurry-up” one year on bankruptcy filings because the laws were to change on who could declare bankruptcy related to credit card bills. Could that have been 2005?

    Comment by Pauli | August 31, 2008 | Reply

  4. I am just speculating, but perhaps AARP is counting not the number of bankruptcies, but the number of people directly affected by bankruptcy. That would include the spouse for jointly filed bankruptcies. But that still won’t get you to 1.85 million. So maybe they’re also including an estimate of the children of parents who filed bankruptcies.

    Either way, they must be stretching the number, and without a source, AARP loses all credibility.

    Comment by GUEST | September 1, 2008 | Reply

  5. Thanks for the homework on this. I saw the ad tonight and immediately knew it couldn’t be accurate. My investigation led me here.

    Now, how do we get someone in the mainstream to call these people out?

    Comment by Mark | September 4, 2008 | Reply

  6. Good post – I too noticed the bald-faced bullspin by AARP. They have no moral compass IMO. I find it hard to believe they are a non-profit? All they do is make money, put out propaganda to support DEM positions.

    I read the Warren / Harvard paper a while ago. Someone debunked it before just like you did. It is dishonest to classify a bankruptcy as “medical” if someone had only $2000 of bills. What crap coming out of likely high-paid communists teaching at Harvard.

    Comment by AJ Lynch | September 7, 2008 | Reply

  7. Financial catastrophe is a lot better than not getting treatment. ‘Nothing bad should happen to anyone anywhere’ is not in the Constitution.

    I saw this ad with my wife and I remember we were waiting to see the people who got denied medical care. But it didn’t happen.

    Comment by Adam Greenwood | September 16, 2008 | Reply

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