For years, advocates of “single payer health care” have been warning that middle-class Americans are only “one serious illness away from bankruptcy”—even if they have insurance. Obama has claimed that medical costs cause a bankruptcy in America every 30 seconds. Divided We Fail claims that “millions” go bankrupt every year because of medical costs.

American companies are also going bankrupt and losing out to global competition, allegedly because they are having to bear workers’ high health costs.

Both problems would be solved, say proponents of a government takeover, if the U.S. adopted a universal tax-funded medical system, which would purportedly drive down expenditures, while imposing them on taxpayers instead of individuals and employers.

The facts are these:

• The actual number of “medical bankruptcies”—by the single-payer advocates’ definition—fell by 220,000 between 2001 and 2007. There were a total of 822,590 bankruptcies filed in 2007.
• According to Ning Zhu of the University of California at Davis, author of a study of 2003 bankruptcies in Delaware, only about 5% were caused by medical problems. If this percentage holds, (.05) (822,590) or about 41,000 were caused by medical costs—far from Obama’s 30/sec or 1,051,200.
• The mean net worth for “medically bankrupt” households was –$44,622, while their average out-of-pocket medical costs came to $17,943. Single-payer advocates attribute bankruptcy to medical reasons if the debtor reported uncovered medical bills exceeding $1,000 in 2 years, or lost at least 2 weeks worth of income because of illness or injury. Bankruptcy is caused by debt, and a loss of the income needed to service it.
• Many companies are in trouble, especially if they have acceded to union demands for unsustainable “gold-plated” benefits that encourage overconsumption of medical services. But American industry as a whole also faces an increasingly hostile business environment of taxation, regulation, and litigation, as well as high wages compared with the developing world.

Universal tax-funded medical care only compounds the bankruptcy problem. The existing single-payer systems in America—Medicare and Medicaid—are themselves unsustainable and on a course to bankrupt both federal and state treasuries. The price controls they impose on physicians and hospitals lead to cost shifting to private insurers and self-paying patients.

European social welfare systems are even more financially challenged than those in the U.S. Spending growth is about the same in the U.S. and other developed countries.

The entire world is in an economic crisis. “Universal health care” is much more likely to be a contributory cause than a solution.

Additional information:

• “Medical Bankruptcies Hyped,” AAPS News, July 2009, p 2.
• “Distorted Evidence, Juggled Statistics, False Logic,” AAPS News, April 2009, p 2.
• “Medical Bankruptcy,” AAPS News, October 2008.
• “Bankrupt Medical Bankruptcy Claims” by David McKalip, M.D., FMA Council on Medical Economics 9/9/08.
• “Bankruptcy,” AAPS News, March 2005.