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You have no doubt heard about the study purporting to show that 62% of bankruptcies are caused by out of control medical bills. It's been repeated on headlines across the country and is part of the monotonous repetition of talking points by progressive pundits. Isn't it amazing how this study (from Harvard! Oooooo.) came out just in time for our "national debate" about health care reform! Whew!

Well, Megan McCardle has taken the trouble to actually look at the study and has come to a startling conclusion - it's full of s*** and actively leaves out information that would undercut its conclusions: Elizabeth Warren and the Terrible, Horrible, No Good Very Bad Utterly Misleading Bankruptcy Study

Elizabeth Warren has another study out showing that medical expenses contribute to more than half of all bankruptcies--indeed, this time, it's 70%, up from the 50% she found in 2001.

Now, it is possible that this is true. The fact that it seems to disagree with every other study I've ever read that is not authored by Elizabeth Warren, and also, the self-reports of the people in her study (only about a third of whom attribute their
bankruptcy to a health problem) could just be a fluke. It doesn't necessarily mean that it's wrong.

Yet upon closer examination, it turns out that it is not just wrong, but actively, aggressively wrong. Warren and her co-authors have obscured important and obvious facts that call the integrity of the work into serious question.

The text itself raises huge red flags. It's hard to believe that more than half of people who have been pushed into bankruptcy by a medical issue don't understand this fact. Perhaps they are not the brightest bulbs on the Christmas tree, but could it really be true that most people catapaulted into a financial crisis by their medical bills don't even notice that health care expenses are their main problem?

My radar is further engaged by the fact that they're implying a really astonishing surge in medical-bill-driven bankruptcies, in a healthcare environment that just didn't change all that massively

Imagine that. And, that's not the biggest problem. The Warren Study fails to mention a fact that is basic to any analysis of BK frequency: BK's have dropped precipiotously since the 2005 BK Reform:

How could steadily, moderately rising medical bills, a roughly static business and legislative environment, and a small increase in the uninsured, possibly have driven up bankruptcies so massively?

Answer: they didn't. What Warren et. al. neglect to mention is that bankruptcies fellbetween 2001 and 2007. In fact, they were cut in half. Going by the numbers Warren et. al. provide, medical bankruptcies actually fell by almost 220,000 between 2001 and 2007, a fact that they not only fail to mention, but deliberately obscure.

You should really read the whole thing. You should also read McCardle's follow-up Why Warren's New Bankruptcy Study Is So Bad, which pointedly accuses Warren of preparing a misleading study intended to create the scare-headline "62% of Bankruptcies Caused By Medical Bills," to better prep the policy battlefield for the robustly misleading health care debate we're supposedly going to have.