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Saturday, March 05, 2005

Tom Oliphant in the Boston Globe: Blaming the bankrupt

[Thanks to Dick Bernard for passing this on.]

I was going to write a lengthy tirade on the health care system and its role
in burgeoning bankruptcies. But Oliphant's column states it pretty clearly -
and now we have yet another reason to work for universal health care, let
alone subvert this attack on victims of bankruptcy. Ten years ago I had to
file for Chapter 7, and it ain't pretty and it's no out for anyone. People
are deeply shamed when they have to file, and the shame is heaped on them
afterward by creditors, credit-reporting companies, prospective vendors and
all sorts of nefarious others. To imagine that bankruptcy is used as a
conscious money management system is to be utterly deluded. But Republicans
are treating this matter the way they do welfare recipients as lazy
ne'er-do-wells. Blaming the victim to push bad policy is an old tactic. We
must not let it happen again.

Blaming the Bankrupt

By Thomas Oliphant,
Globe Columnist  |  February 15, 2005


I BUMPED into an arresting fact the other day about personal financial
catastrophes while studying an important new examination of bankruptcy in
this country.

Four out of 10 people interviewed as part of a Harvard Law School and
Medical School study of Americans who were going through the agony of the
process said they had lost their telephone service during the two years
before they filed. More than half had skipped doctor or dental appointment
because of the cost, more than 40 percent had not filled a prescription, and
nearly one in five had missed meals.

This genuine cross-section -- more than 900 interviews of people in five
federal court districts plus a detailed look at more than 1,700 cases --
clashes with the stereotype the Bush administration and its business buddies
favor in their unrelenting campaign to make bankruptcy even more of a
demeaning, draining ordeal than it already is. The Harvard study comes at a
time when the administration and its conservative congressional bosses are
about to start a new effort to tighten the bankruptcy law screws.

This kind of organized cruelty demands a stereotype -- of the profligate,
irresponsible conniver who spends more effort trying to hide assets and
dodge creditors than working hard and paying off. In the Bush propaganda,
bankruptcy is a financial planning tool for the irresponsible.

The reality is heartbreaking -- bankruptcy as the only way out for upwards
of 3 million adults and children who have gone through a living hell. Most
arresting of all is the study's discovery that roughly half of these cases
stem not from spending sprees on credit cards but from medical bills flowing
out of illness.

It is a fact of economic life today, not a symptom of cultural decline, that
personal bankruptcy is not uncommon, with roughly a third more filing now
than there were a generation ago. In the same period, the available evidence
is that medical causes of financial catastrophe have increased explosively
-- by a factor of something like 23 -- right along with exploding costs and
declining availability of adequate insurance.

Among the researchers working on the Harvard study -- in many respects the
first detailed examination of the medical roots of personal financial stress
-- was Harvard Law professor Elizabeth Warren. With her daughter two years
ago, she wrote ''The Two-Income Trap," a pioneering examination of the
extreme fragility of working family life right up through the middle-class.
It's important to remember that while vitally important by itself,
bankruptcy is but the tip of an even larger iceberg of vulnerability and

Having the trappings -- a job, health insurance, etc. -- of middle-class
life is no defense against the economic ravages of illness. Fully
three-quarters of the filers had health insurance at the onset of the
illiness that broke them. They ended up with average, out-of-pocket costs of
nearly $12,000.

The study found that increasingly common lapses in insurance coverage were a
major indicator of susceptibility to bankruptcy; nearly 40 percent of the
filers had experienced such a lapse. Of those covered at the outset,
three-fifths were under private insurance plans and a third lost that
protection during their emergency. Sixty percent cited bills from healthcare
providers as the major contributor; 47 percent cited drug costs; and more
than half cited curtailed employment income because of their own illness or
the need to care for a family member.

It also showed how the primary cause can produce others. Fifteen percent of
those with second or even third mortgages on their homes cited medical
expenses as the reason. According to the survey, delinquencies in mortgage
and rent payments, credit card payments, and utility bills were often the
result of dipping into those accounts to try to keep up with vital medical

The evidence from the study also underlines the extent to which inadequate
insurance coverage contributes to family distress when emergencies occur and
that such stingy policies are more the result of employer choices than
personal ones. As the study put it, ''We doubt that such under-insurance
reflects families' preference for risk. Few Americans have more than one or
two insurance options. Many insured families are bankrupted by medical
expenses well below the catastrophic thresholds of the deductible plans that
are increasingly popular with employers."

The obvious implication is that the separation of health insurance from
employment via universal, comprehensive coverage of the kind available in
Canada and Western Europe is the sensible alternative. Short of that ideal,
there is much that could be done to help, but the Bush solution is to
restrict the already painful choice of bankruptcy on the basis of a false

The study concludes with a useful allegory. ''In 1591, Pope Gregory XIV fell
gravely ill. His doctors prescribed pulverized gold and gems. According to
legend, the resulting depletion of the papal treasury is reflected in his
unadorned plaster sarcophagus in St. Peter's Basilica. Four centuries later,
solidly middle-class Americans still face impoverishment following a serious

Thomas Oliphant's e-mail address is

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