Bankruptcy crisis invented

Published 1:19 am Saturday, September 5, 2009

Very early in the Obama Administration White House Chief of Staff Rahm Emmauel was quoted as saying, “Never waste a good crisis.” He should have added “… even if you have to invent a crisis” because that is what it appears Obama and the Democrat Congressional leadership have done on the issue of medical cost-driven bankruptcy.

In a statement made in March, President Obama said, “The cost of health care now causes a bankruptcy in America every 30 seconds.” He added, “By the end of the year, it could cause 1.5 million Americans to lose their homes.”

In an August 10th article in USA TODAY, Speaker of the House Nancy Pelosi and House Majority Leader Steny Hoyer wrote, “Never again will medical bills drive Americans into bankruptcy.” In that same article, they condemned as “un-American” what they called an “ugly campaign” by people who oppose a government takeover of our health system to “misrepresent the health insurance reform legislation.” Pelosi and Hoyer wrote, “Drowning out the facts is how we failed at this task for decades.”

First of all, Obama quoted an August 2008 study entitled “Get Sick, Get Out: The Medical Causes of Home Mortgage Foreclosures” by Robertson, Egelhof and Hoke which reported that unaffordable medical costs could result in 1.5 million Americans losing their homes. But a Bloomberg article pointed out that of the 80 million homeowners, the total number projected to lose their homes because of the current economic crisis is 1.5 million. Obviously, it is very unlikely that every one of the 1.5 million foreclosures will be because of medical expenses. And given that there were only 1.3 million bankruptcies last year, it is unlikely that more people are losing their homes than are filing bankruptcy as the Robertson report claims.

In their USA TODAY article, Pelosi and Hoyer further misrepresent the issue by characterizing it as “health insurance reform.” Practically everyone knows the Democrats are not trying to reform health insurance, they are trying to replace it with a single-payer government-run health system. Pelosi and Hoyer echo Obama when they misrepresent the facts regarding medical bills forcing Americans into bankruptcy. They claim “Never again will medical bills drive Americans in bankruptcy.”

Other studies, including a study from the University of California-Davis, have found that medical bills are not the primary cause of personal bankruptcy. According to the UC-Davis study, the vast majority of bankruptcies are caused by households consuming beyond their means.

By misrepresenting the facts on personal bankruptcies, liberals attempt to create a false national crisis which they claim a nationalized health care system will solve.

Gary Palmer is president of the Alabama Policy Institute.