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Ridiculous claim by the AARP

that 1.85 million Americans go bankrupt every year due to medical bills. In other words, the AARP is claiming that every single bankruptcy in the U.S. is due to medical bills. Even Elizabeth Warren doesn't go that far. The AARP has launched a mass media campaign, including television ads, based on this blatantly dishonest premise. One can only hope it will damage its credibility.

krs:
I can't get the link to work. And the link from this site to "divided we fail" seems to be dead too. Perhaps the error has been called to their attention...?
8.28.2008 7:24pm
KenB (mail):
It amazes me how many conservative people join AARP just as they would AAA or some other nonpolitical organization. I suppose the reason is that AARP does not present itself to potential members as partisan, though it clearly is. I am well wihin AARP's target demographic, but it will never see a dime of my money.
8.28.2008 7:33pm
Cornellian (mail):
How many of those bankruptcies would you regard as being a function of medical bills?
8.28.2008 7:38pm
The Man:
Much like the ACLU, its stated objectives are admirable but its implementation is deplorably one sided.
8.28.2008 7:40pm
DavidBernstein (mail):
Given Todd's post linked to above, much less than half.
8.28.2008 7:40pm
Opher Banarie (mail) (www):
I agree with KenB and the others. I'm also in the AARP demographic and have no interest in signing up with them. Maybe we need to start an alternative? How about ARRP (Association of Responsible Retired Persons)?
8.28.2008 7:45pm
Malthus:
Of the some 120 images of Amerikans that appear in a given issue of the AARP Magazine, some 1 or 2 are of black Amerikans, and those are usually ones of a basketball player, Oprah or Cosby.

It makes sense: the Black Amerikan who pays into Social Security for 45 years dies, on average, at 69, enjoying only 3 years of "benefits." He will rest well in heaven, however, thinking of all those White widows of 62 to 114 who, though they might NEVER have worked, are enjoying the fruits of his labors.
8.28.2008 7:45pm
phants (mail):
And how does this differ from the near constant stream of outlandish statistics constantly fed to the gullibly willing...? Similar to a popular "A woman is beaten or molested every ninety seconds" type of adverting claim.

Listen and keep track to find that every person in this country is constantly at imminent risk of something. Keep that money and supprt flowing; Please, it's for ...
8.28.2008 7:48pm
John Neff:
A quick check of the census data suggests that there are about 680,000 bankruptcies per year and the link suggests that perhaps half might be caused by a serious illness. A serious illness can also mean loss of employment as well as medical bills.

I guess fact checking is for nerds.
8.28.2008 7:49pm
Angus:
I'm sure the AARP is trying to spin it most favorably to themselves, but could they be technically correct? I honestly don't have the numbers to know or not.

1)Are they using "bankrupt" as a legal term as would a lawyer, or merely as a way to describe financial collapse? For example, I commonly say that I was "bankrupt" during grad school because I wracked up debt and my bills were more money than I had. I never filed for legal bankruptcy, however.

2)By specifying individuals rather than households, they leave it open to interpreting that if the Johnson family files for bankruptcy, the spouse and the 4 kids are also bankrupt. So one bankruptcy = 6 individuals.
8.28.2008 7:51pm
Smokey:
When the AARP starts to use a level playing field in its officer elections, such as allowing opposing candidates equal access to its newsletters during elections, and requiring reasonable term limits, and allowing the membership to vote on crucial questions by secret ballot, and requiring an annual public audit by a neutral, outside auditor of all income, expenditures and political donations, and allowing the same membership lists that AARP insiders have privy to, to be used by all candidates for elective office, and allowing signatures of 5% of the AARP membership to place a bylaw change on the ballot... wake me. Because then we'll be able to possibly discern at least some difference between the AARP and the NEA, and the DNC, and the old Soviet Politburo.
8.28.2008 7:59pm
Smokey:
Maybe we need to start an alternative? How about ARRP (Association of Responsible Retired Persons)?
Or maybe, the Association of Responsible Retired Geriatric Hipsters!

AARGH!
8.28.2008 8:02pm
ObeliskToucher:
Just another reason for me to rip up the "invitation" to join I received in the mail yesterday -- not that I needed one...
8.28.2008 8:02pm
Bruce Hayden (mail) (www):
Back when I turned 50, everyone seemed to get the obligatory AARP membership stuff. And, just like the ABA, you could join fairly cheaply the first year. So, I did for one year, including my, then, 43 year old girlfriend, to tease her a bit, but mostly for the discounts. I easily got my money back several times over with the AARP discounts.

However, no matter how hard they have tried over the years, I haven't sent them any more money, for just these sorts of reasons. And most of the places that have AARP discounts now seem to have equivalent AAA discounts, and I get three free 100 mile tows a year with my AAA membership along with unlimited maps and travel guides. Finally, I still have my old AARP card somewhere in my wallet just in case I need it for discounts.
8.28.2008 8:04pm
byomtov (mail):
I couldn't find the 1.85 million number at the link. What section is it in?
8.28.2008 8:05pm
Smokey:
OK then, the American Assoc...

...nevermind.
8.28.2008 8:05pm
James Ellis (mail):
I think the ambiguities might lie in phrases like "caused by" or "due to" and similar others. If the inclusion of one or more "medical" related debt(of any amount)on liability schedules suffices to render bankruptcy "caused by" or "due to" medical expenses, then it is probably true that the vast majority of individual bankruptcies fall within the category.

Medical expenses are extremely common and are almost overwhelmingly incurred on credit. Meanwhile, people who go bankrupt pretty much stop paying all their bills.

Thus, according to the AARP, all of these subprime borrowers who overleveraged and filed bankruptcy would be included as medical expense bankruptcies by virtue of their $100 unpaid eye doctor bills, etc.
8.28.2008 8:10pm
DavidBernstein (mail):
Byom, it flashes on the picture if you wait a second or two. I also saw a t.v. ad to the same effect.
8.28.2008 8:21pm
Crane:
Didn't some guy already try to found a conservative alternative to the AARP a few years back? Damned if I can remember what it was called, but the advertisements for it got some attention for implying that the AARP was anti-soldier and pro-gay-sex.
8.28.2008 8:27pm
JB:
Crane,
It's the great shame of this country that you can't get honest economics without social bigotry, and sometimes even not then.
8.28.2008 8:33pm
LM (mail):
I wish they'd all tell the truth, but since the drug and health insurance industries demagogue their side of the debate, I'm glad AARP responds tit for tat. Someday I'll be a member, but for right now I'll send them a few bucks.
8.28.2008 8:35pm
John Burgess (mail) (www):
AARP had alienated me long before I was in their demographic. Their politics and single-issue hammering was enough to ensure that they'd never get a penny from me. Now that I am in their demographic, I'm happy that there's a trash can next to my mail box. A little aerobic hip swivel and the bleating is gone.

John Neff: Does that mean you're not going to bother doing the fact checking?
8.28.2008 8:36pm
Big E:
I think I know what happened here, there's supposedly 1.5-2 million bankruptcy filings a year. According to other sources about 1/2 of those are related to medical bills. Assuming a typical family size of 2.5 or so they then can claim that 1.85 million Americans went bankrupt due to medical bills.
8.28.2008 8:54pm
mls (www):
LM- interesting logic. How do you know that AARP didn't start it and the drug and health companies aren't just responding "tit for tat"?
8.28.2008 8:56pm
DavidBernstein (mail):
I think I know what happened here, there's supposedly 1.5-2 million bankruptcy filings a year. According to other sources about 1/2 of those are related to medical bills. Assuming a typical family size of 2.5 or so they then can claim that 1.85 million Americans went bankrupt due to medical bills.
Nope. First of all, the 50% stat is bogus, as per the link provided. Second, the AARP website clearly implies that there are 1.85 million different individuals who went bankrupt, given different individual stories and given the individual a number (of less than 1,850,000). I'm afraid it's either blatant dishonesty or blatant incompetence, more likely the former.
8.28.2008 9:03pm
Modus Ponens:
As Big E points out, "bankruptcy filing" =/= "[an] American[] go[ing] bankrupt."

pls lern2english, David.
8.28.2008 9:03pm
Fub:
Smokey wrote at 8.28.2008 7:02pm:
AARGH!
Kewl! Do we get special discounts every September 19?
8.28.2008 9:04pm
NYer:

Nope. First of all, the 50% stat is bogus, as per the link provided. Second, the AARP website clearly implies that there are 1.85 million different individuals who went bankrupt, given different individual stories and given the individual a number (of less than 1,850,000). I'm afraid it's either blatant dishonesty or blatant incompetence, more likely the former.

I don't know if that's necessarily true - the 50% stat seems to be bogus, per Todd's post, but if it was widely reported in the media, you can at least see where the AARP got it. Also, even though the AARP is numbering people, it's conceivable that ~4 people could have the same story (they don't give 1.85 million stories, just a few). I'm not defending the number by any means, but I think this might give some explanation other than blatant falsity.
8.28.2008 9:17pm
Lily (mail):
If we have government provided health care, fewer people will go bankrupt due to medical bills. However, based on experiences in the UK and Canada, people might die earlier due to rationing of health care and long wait lists.

I'd much rather go bankrupt than die!
8.28.2008 9:30pm
M.L.Johnson (mail):
Hear Hear, Smokey. As a 54 yr. old, I'd welcome an alternative to AARP, neutral or conservative. This is a vacuum waiting to be filled.
8.28.2008 9:35pm
Matt_T:
Malthus: Amerikans

Fail.
8.28.2008 9:39pm
The General:
just more shilling for more big government socialism from greedy seniors, who should know better. what else do you expect?
8.28.2008 10:06pm
byomtov (mail):
DB,

OK. I see it. Thanks.
8.28.2008 10:18pm
theobromophile (www):
IIRC, some of the reason for rising health insurance premiums is the deep discounts given to Medicare and Medicaid. When doctors provide services to those patients at a reduced price, or when pharmaceutical companies give them discounted drugs, they need to make their money up elsewhere. Invariably, that involves charging everyone else more money.

Somehow, though, I can't see the AARP arguing for dismantling the Medicare system in order to prevent Americans from bankrupting themselves over medical bills....
8.28.2008 10:29pm
JJFM (mail):
AARP is a marketing company that promotes itself as an advocate of seniors. It is just another liberal mouthpiece that often takes positions contrary to the best interests of seniors. AARP actively supported anti-social security forces and took out anti-Bush, anti-privatization ads.
8.28.2008 10:29pm
LM (mail):
mis,

I don't.
8.28.2008 10:54pm
CFG in IL (mail):
One can hope it will damage their credibility, but I doubt it. Stuff like this has pretty much been the stock-in-trade of (at least) one of our political parties over the last eight years, and it hasn't damaged them much ...
8.28.2008 11:09pm
Ameryx:
Junk science. See here.
8.28.2008 11:09pm
Bill McGonigle (mail) (www):
They keep sending me invitations every couple months to join when I'm not eligable for 15 years. Maybe I should try to join up anyway so they can either disqualify me for good or give me something interesting to write about.

Eh, they're probably going to go away anyway when the elderly dole collapses from gene therapy. Either that or they'll be leading the charge for 80% marginal rates.
8.28.2008 11:18pm
Justin_F (mail):
The AARP ad is clearly misleading. Here's a link listing the number of bankruptcies for each year since 1998. Only one year had more than 1.85 million bankruptcies, 2005, when there were 2.078 million bankruptcies. Around 30,000 of those were probably business bankruptcies. 2005 was the year BAPCPA was introduced, and there was a flood of bankruptcies right before it became effective in October. So the only way the ad could be true is if it was relying on that year, and 90% of that year's bankruptcies were medical. That is extremely unlikely, and even the study Warren relies on, if taken on its word (which it shouldn't be) would not support that. This year, there will probably be around 1.1 million bankruptcies. Most of them, anecdotally speaking, will be caused by the drop in housing prices and the subsequent diminished ability to tap into home equity. Others will be people who are laid off. Some will be entrepreneurs who failed. And yes, many will be people who lived beyond their means.
The AARP ad clearly implies that there are 1.85 million people who filed bankruptcy, not just 1.85 million people who are broke because of medical bills. Each one of the people featured in the "Hear their stories" section is someone who actually filed a bankruptcy petition. So the implication is clearly deceptive. Whether it is incompetence or intentional, I have no idea.
That said, medical bills are a major cause of bankruptcy. In my opinion, they (and the time off work they cause) probably cause around 20-25% of bankruptcies. BAPCPA makes bankruptcy much more difficult for these debtors. There's enough ammo here, I don't know why the AARP has to fudge the stats.
8.28.2008 11:21pm
Justin_F (mail):
And here's the link: Link
8.28.2008 11:24pm
Lior:
Is 1M people filing for bankruptcy each year even the right order of magnitude?

The average American lives about 70 years. At a bankruptcy filing rate of about one third of a percent per year, about 20% of all Americans would declare bankruptcy at least once during their lifetime. Is this right? I would guess that the rates are off by a factor of ten.
8.28.2008 11:41pm
WillbKing (mail):
NASCON, www.nascon.net, is a recently formed alternative to AARP
8.29.2008 12:31am
Cornellian (mail):
Hmm, advocacy group makes exaggerated claim in order to get more stuff for its members.

I'm shocked I tell you - shocked!
8.29.2008 12:31am
RPT (mail):
The consensus here seems to be that medical bankruptcies in whatever amount are not a matter of concern. Social Darwinism in action.
8.29.2008 12:34am
Allan (mail):
Medical bankruptcies are just fine. It's getting the number wrong in some public statement that is the problem.
8.29.2008 1:29am
Andrew J. Lazarus (mail):
I immediately assumed this was not the number of separate bankruptcy petitions, but the number of individuals (including spouse and dependent children) affected.

I don't know if this number reaches to 1.85 million per year, but that's the number to be arguing over. Nor would I be greatly relieved to learn that the correct figure is only, say, 1.1 million.
8.29.2008 1:32am
Eli Rabett (www):
Lily said:

If we have government provided health care, fewer people will go bankrupt due to medical bills. However, based on experiences in the UK and Canada, people might die earlier due to rationing of health care and long wait lists.


Life expectancy is longer in countries with universal health care. The issue is why we spend more for less in the US
8.29.2008 1:45am
Kevin. (www):
The "in one year" phrasing struck me as odd. The claim is "1.85 million Americans go bankrupt due to medical bills in one year."

It seems to be incorrect whether they meant "every year" or "in some year" but I wonder what they were actually trying to say.
8.29.2008 2:20am
therut:
Do not throw away their money begging letters and cards. Mail them back with their money paying for the postage with a nice comment across them. That is what I do with their mailings and those of lefty magizines I get. Take their money. That usually stops the junk mail real quick and will make you feel better. Beat them at the own game.
8.29.2008 2:57am
Smokey:
Fub 8.28.2008 8:04pm:

R!
8.29.2008 7:11am
Lior:
It seems that my guess was wrong: there are a lot of bankruptcies in the US. The rate in 1997 was 0.52%. Assuming multiple bankruptcies to be rare, this means that about one-third of all Americans will file for bankruptcy. That is astounding.

(The arithmetic is: $ (1-0.0052)^{75} \approx 2/3 $
8.29.2008 9:52am
David Chesler (mail) (www):
(1) AAA isn't apolitical either. They advocate for seatbelt laws, for instance. Better World Club is a greener alternative.

(2) A certain chess grandmaster said "I've never beaten a wholly well man." Or as my father used to say "You can always find a stick to beat a dog." I'm sure almost every single bankrupt had at least one medical bill. But as my father also said "It wasn't the last straw that broke the camel's back, it was the combined weight of all the straws."

(3) I also forgot who said "AARP, 50 million Americans united by their love of discounts."

(4) I got kicked out of the Massachusetts militia earlier this summer, so I've got 4 years to go before I get my discounts.

(5) I'm glad to see bankruptcies are back up, only because it demonstrates that so much of the sharp decline after reform was due to used-up demand from those who filed before reform; also in most cases the reform just delayed the inevitable; and as hardly anyone says "Bankruptcy more difficult, home foreclosures up -- coincidence? I think not." But now you get to lose your house and then go bankrupt.

(6) Elizabeth Warren is right that something is wrong. And don't give me that "houses are bigger now" excuse -- I live in a house built in 1955, on the same street as where my father-in-law bought then, I've got a more marketable degree than my father, and my American dream is just not happening.
8.29.2008 10:19am
justaguy (mail):

Ameryx:

No one thinks that "social science" is a science. The way that it is used these days it isn't even applied statistics. So instead of junk science- just junk.

Leave the junk science label for something that at least has the veneer of a science- like Global Warming.
8.29.2008 10:45am
pete (mail) (www):

Assuming multiple bankruptcies to be rare, this means that about one-third of all Americans will file for bankruptcy. That is astounding.


I think you are assuming incorrectly here. My guess would be the opposite and that people who end up bankrupt once are much more likely than the average person to end up bankrupt again later in life. Off the top of my head I have no idea where to start looking for stats to back that guess up since a quick search show lots of stats on the total number, type, and location of filings for various years, but nothing on the type of person who files. Maybe a bankruptcy lawyer could enlighten us.


Back when I turned 50, everyone seemed to get the obligatory AARP membership stuff. And, just like the ABA, you could join fairly cheaply the first year. So, I did for one year, including my, then, 43 year old girlfriend, to tease her a bit, but mostly for the discounts. I easily got my money back several times over with the AARP discounts.


Back in college a friend of mine got a mailer inviting him to join the AARP when he was about 20 and decided to join. He filled out the application with all of his correct information including birthdate and they let him in. Then he tried using his card to get discounts. Only a few places actually believed he was a member, but he said the membership fee eventually paid for itself. I have gotten several invitation to join as well and I am only 31.
8.29.2008 10:47am
SFAlphageek (mail):
It's a perfectly rational position for an organization that represents senior citizens to take - using a government fiat to force the middle-aged, middle class to take care of them in their dotage. It's not like its going to come around and bite them later. Between this and Obama's "mandatory volunteerism," it probably won't be long before seniors are afforded the right to move into your spare bedroom.

or, put another way:
a socialized medical system provides some short term benefits for a huge long-term downside. What reasonable person would opt for something like that?

Oh yeah, one who's going to die soon.
8.29.2008 12:33pm
Clayton E. Cramer (mail) (www):
The original study that most of this nonsense is based on is actually pretty careful. I analyzed it in some detail here.


The Himmelstein study is worth reading. I notice several interesting points about it, some of which were either not mentioned by CNN, or which were given so little attention that I missed them:

1. This study is of "medical bankruptcy" which includes bankruptcies caused by illness that caused someone to be out of work—not necessarily just uncovered medical expenses:


Under the rubric "Major Medical Bankruptcy" we included debtors who either (1) cited illness or injury as a specific reason for bankruptcy, or (2) reported uncovered medical bills exceeding $1,000 in the past years, or (3) lost at least two weeks of work-related income because of illness/injury, or (4) mortgaged a home to pay medical bills.



2. Some of the "medical bankruptcies" are "medical" only in a sense that most Americans won't recognize:


Our more inclusive category, "Any Medical Bankruptcy," included debtors who cited any of the above, or addiction, or uncontrolled gambling, or birth, or the death of a family member.



Well, yes, uncontrolled gambling or addiction can cause bankruptcy, and to the extent that an addiction is a medical problem, I guess you could call these "medical bankruptcies" but that's not what CNN wanted you to be thinking about, was it?

Still, let's not exaggerate how much contributes. The "Major Medical Bankruptcy" group was 46.2% of the bankruptcies; this goes up to 54.5% when you add the "Any Medical Bankruptcy" category as well.


8.29.2008 1:33pm
cheeflo (mail):
Another alternative to AARP.

http://www.americanseniors.org
8.29.2008 1:55pm
Aleks:
Re: I'd much rather go bankrupt than die!

Hate to break it to you, but you are going to die.
And while no one is proposing anything remotely like Britain's NHS, the life expectancy in the UK is still slightly higher than are own, so the NHS doesn't seem to be killing very many people off before their time.
8.29.2008 6:23pm