The Sovereign Mind

Free thought on politics and real life

Lies, Damn Lies, and Obama’s Healthcare Statistics

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When Republicans tried to explain the size of the stimulus bill based on the amount of money it amounted to per day since the birth of Jesus, I objected: “I’ve never really thought these sorts of number analogies all that useful. I can make just about any number look large or small using some visualization.”

I had a similar reaction when Obama said that healthcare costs cause a bankruptcy every thirty seconds. But I have ever greater reason to be annoyed, because it turns out Obama’s number is not only a meaningless statistic, but is actually dead wrong:

“The cost of health care now causes a bankruptcy in America every thirty seconds,” Obama said at the opening of his White House forum on health care reform. The problem: That claim, based on a 2001 survey, is simply unsupportable.

The figure comes from a 2005 Harvard University study saying that 54 percent of bankruptcies in 2001 were caused by health expenses. We reviewed it internally and knocked it down at the time; an academic reviewer did the same in 2006. Recalculating Harvard’s own data, he came up with a far lower figure – 17 percent.

Himmelstein tells me that the reason for the difference is a change in federal law that sharply reduced the number of bankruptcies. In 2005, the year he and Warren wrote their op-ed, there were just over 2 million bankruptcies. Data out just today say that in 2008 there were 1.1 million (up sharply, by the way, over 2007). So this error in the White House claim stems simply from the fact that it’s using out-of-date information. The next question is whether the estimate of “medical bankruptcies” is reliable in the first place.

A good part of the problem is definitional. The Harvard report claims to measure the extent to which medical costs are “the cause” of bankruptcies. In reality its survey asked if these costs were “a reason” – potentially one of many – for such bankruptcies.

Beyond those who gave medical costs as “a reason,” the Harvard researchers chose to add in any bankruptcy filers who had at least $1,000 in unreimbursed medical expenses in the previous two years. Given deductibles and copays, that’s a heck of a lot of people.

Moreover, Harvard’s definition of “medical” expenses includes situations that aren’t necessarily medical in common parlance, e.g., a gambling problem, or the death of a family member. If your main wage-earning spouse gets hit by a bus and dies, and you have to file, that’s included as a “medical bankruptcy.”

You might think, “So what? Healthcare reform is important, so why so much fuss over a statistic?” I would agree that healthcare reform is important, as I’ve blogged about before. But to illustrate why I think this mischaracterization (and the many that take place every day in the world of politics) is important, let’s do a little thought experiment:

Imagine that you are an HR rep, and you come to your boss with a new brilliant idea to increase employee retention:

You: “Sir, I believe we should give away free soda in the break rooms.”

Boss: “Why’s that?”

You: “Well, did you know that someone quits every five days because there is no free soda in the break room?”

Boss: “Every five days? Wow, that’s a lot. Where did you get that number?”

You: “Well, in 2001, we gave everyone who quit a survey, and some said that no soda in the break room was a reason they quit. And actually it’s closer to one person every 9 days, but that’s not the point…”

Boss: “Wait, we’ve cut the number of people who quit in half since 2001 due to other policy changes. And just because someone says it’s a reason they quit, doesn’t mean it was the main reason. But even so, that number seems high.”

You: “Yes, well I also included people who said they liked soda even if they didn’t list it as a reason they quit. I assume that if we had free soda, they might not have quit.”

Boss: “I see. How much do we pay you again?”

I hope that makes it clear. We would never tolerate this sort of fudging in our real lives, but for some reason we tolerate it from our politicians. I don’t mean to single out Obama. Almost every politician does this. But of all the politicians that have come along, Obama was the one who had the most power to change the norms that we have come to accept. Looks like the opportunity will be wasted.

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Written by Mike

March 5, 2009 at 10:27 pm

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