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Comment by ArnoVW | Hacker News Reader

In many countries there is the idea of bankrupcy. You make the debtor suffer for a couple of years (to ensure incentive against it) and then wipe the slate.

Bankrupcy is no fun. All your assets are wiped out (house, cars, etc). Sometimes you are excluded from the banking system. So it's not "without consequence".

Lending money is a risky business. That is why you get interest. Getting people off the hook is not ideal, but neither is the inverse. From a societal point of view, this arrangement allows people to take risks that they may not have otherwise. And we're all better off because of it.

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Do some countries not have a concept of bankruptcy?

Most of Europe does not have bankruptcy laws comparable to the US. Technically they do exist but the differences in the details are so large they may as well be called two different things.

Also, the reason people go bankrupt in the US are very different than the reasons people go bankrupt in Europe. 2/3 of personal bankruptcy in the US is linked to medical debt somehow. That is not the case in Europe.

> 2/3 of personal bankruptcy in the US is linked to medical debt somehow

Often cited, but wrong. When you dig in, it turns out to be one of those "wet streets cause rain" causal mix-ups:

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5865642/

Why would they exclude elderly from their study? It seems odd to exclude a population with higher rates of health problems. Is there assumption that bankruptcy only matters to those who would otherwise be working?

Because the goal is to discredit the 2/3 number by any means necessary.

Ah, there's the old "everyone who disagrees with me is arguing in bad faith" argument the internet loves to make. Wondered how far down I'd have to scroll.

Your meta-commentary is just as vapid as mine.

Tbf, the authors cite (their own) previous work indicating hospitalizations do not cause bankruptcy in the elderly

Technically true. It's paying the bills on top of the second mortgage after helping your 30 year old grandkids afford college, weddings, and starter homes that leads to bankruptcy. A surprise one-time medical cost is only a minimal contributing factor in the arc of recurring mandatory prescription, insurance, and care costs, at that point. My inner Humean rejoices.

That coupled with private equity's involvement in all late / end of life care ensures no one dies with a penny to their name to pass down.

It still paints a picture of an out of control, over-financialized system that only gets more expensive the more money is put into it.

While this article points out some potential problems in the methods used to derive that headline political figure, its own methodology seems to have pretty serious flaws. The most I'd take from this is "This is such a bad problem that even when you try pretty hard to look in the wrong place you find it anyway".

This study deliberately does not - just for example - count it as a "medical bankruptcy" if you weren't hospitalized. So magically every person who was bankrupted by the cost of their must-take prescription medicine, they don't count because they need to be admitted to hospital to count for this study.

The thing to take from it is not that the figure the linked study arrives at is "right", but that the cited 2/3 figure is seriously flawed to the point that it shouldn't be cited.

As it is, the 2/3 statistic is mainly used to score political points and indeed one of the authors of the original study that came up with the 60% number is Elizabeth Warren. Now, you could say she participated in her capacity as an academic, but I personally have a hard time believing she would have put her name on the paper if it had found, say, 4% of bankruptcies came from medical debt.

Why not? 4% is also awful. As a politician you'd probably say "One in every 25" rather than 4% if you wanted to emphasise that it's unacceptable.

Yeah I mean you can certainly have the opinion that any amount of medical bankruptcies greater than 0 is unacceptable, but that has nothing to do with my original point that the 2/3 number should not be cited in discussions about bankruptcy.

It's still pretty clearly far less wrong than stating 2/3 of bankruptcies are caused by medical costs.

If people are arguing about whether the Earth is flat or spherical, you cant use the fact that both are "wrong" (as the Earth is closer to an ellipsoid) to say that "flat" is as correct as "spherical".

If a study concludes that x/y bankruptcies are caused by z but makes no assertion of the total number of bankruptcies, I would be very suspicious that the author was forwarding his agenda via a weird counting methodology.

Ignoring any other issues here let's look at the article:

> people who were admitted to the hospital

Ah yes, because there's no other way to get large medical debt. Not like an ambulance and ER stay alone will be high.

> in California

Obviously representative of a wider area: the most expensive state in the country and #5 highest median income.

> adults 25 to 64 years of age

Yes, let's exclude those who tend to have the highest medical bills and lowest incomes.

> were admitted to the hospital (for a non–pregnancy-related stay)

Yes, let's exclude pregnancies, which can be extremely expensive (thank god medicaid covered ours).

> for the first time in at least 3 years.

Yes, let's exclude people who have the highest medical debt by virtue of having had multiple hospitalizations.

>> "wet streets cause rain"

So are you saying that 2/3 of personal bankruptcy cause medical debt?

No I'm saying that the conditions that lead to one declaring bankruptcy can also cause one to rack up medical debt.

Having medical issues and no way to pay for them?

More that bodies respond to stress of all forms and people who have a failing business might push themselves beyond reasonable healthy limits to avoid that outcome, leaving them in a situation where their finances are wrecked just in time for all the chickens they stored up not getting enough sleep, pulling a double shift, working through the pain, etc. to come home to roost.

And even were it true, would it necessarily be a bad thing? Personal bankruptcy is an orderly process in which an individual gets to legally terminate all his debts. If a person with medical debt declares bankruptcy, his creditors lose out but he still has all the medical treatment he went into debt for. He still has all the non-bankruptcy-liable assets (e.g. certain pension and retirement benefits, and in many states his home and vehicle) he started out with.

Medical bankruptcy isn’t really the problem. Medical insolvency might be, but the two alternatives are not to receive treatment at all, or for the State to pay for it. The former is obviously worse, and the latter is arguably worse when looked at in toto.

I would say, most of countries in Europe do not have bankruptcy laws that are lenient like in the US.

Here in Bulgaria we only technically have bankruptcy but it's extremely different from the USA.

Long story short, a judge plus two gorillas can and will confiscate every single thing you own and then put you in jail.

Bankruptcy is not a "haha, you'll never get me!" card like it's in the USA. It's actually diametrically the opposite.

How long do you stay in jail?

Haven't checked in a long time but I remember you can easily have 2-3 years with only 6 months in actual jail. But it leaves a lasting stain on you, after that nobody will want to give you money for a while. At least 5 years I think.

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