Bloggers, editorial pages, my parents - everywhere I go, liberals are bashing the bankruptcy bill that passed the Senate last week. And to be fair, it's an absolutely terrible piece of legislation. Professor Elizabeth Warren, a Harvard expert in bankruptcy law, says it isn't fair and that it "beats up the average family already staggering under the weight of bad luck and huge debts, while it lets real abusers go free."
Yet, I have trouble getting worked up about it. Killing this bill would be better than letting it go through, certainly. But there are better ways to deal with the question of bankruptcy.
The bankruptcy bill is certainly worse than worthless. It's been savaged by most prominent commentators on the left and the right as a shameless giveaway to credit card companies. Not surprisingly, support for the bill is concentrated - between Democrats and Republicans alike - among those who get donations from the same credit card companies. The bill, in essence, makes it harder for people to file for bankruptcy. Of course, it doesn't touch some of the most prominent scams for the wealthy (if you file in Florida, you're allowed to keep that mansion, for example), but it will devastate poor families. As a liberal - hell, as a decent human being, no need to keep this on my side of the aisle - I ought to be outraged. And yet I'm not.
The elephant in the room is that a solid proportion of bankruptcies - about half - are due to medical bills. Even people with health insurance are vulnerable, thanks to high deductibles, work-linked insurance and co-payments. One common scenario is that once someone gets seriously ill, they must leave their job; thus, they lose their health insurance and then resort to bankruptcy courts.
This is a burden that simply doesn't exist in most countries - certainly most developed countries. The United States has basically shoved the cost of our inefficient health care onto creditors, most notably credit card companies. Every time someone goes bankrupt because of health care costs - about 750,000 in 2004 - the cost is borne by Visa. Of course, some of that gets passed on to consumers, some to stockholders, and so on; in the end, everybody feels the pain. But the root of it all, the reason that America has such a problem with bankruptcy, lies in our astonishingly inept health care system.
It's time to abandon, once and for all, the idea that America has the best health care system in the world. We don't. The United States spends about twice as much as other developed nations on health care, in terms of gross domestic product. And yet, the outcomes we get are abominable. Emergency rooms are crowded and depressing; some drugs cost more out of pocket, ounce for ounce, than gold; about one person in six is uninsured; and life expectancy is actually lower than in most developed countries. For the kind of money we're spending, we ought to all be living until 90, spending the last few years getting pampered by nurses. Instead, ordinary people with insurance can't even afford to go to the hospital if they're sick.
Where does the money go? In short, it's lost to inefficiency, created by our blind insistence on private, employer-linked health care. There are a variety of reasons that this is the worst possible way to do health insurance; essentially, what it does is encourage the sickest people to not be covered (as they're likely elderly or too sick to work). The simple truth is that in health care, markets don't produce the best outcome.
What's needed is a real public conversation about national health care. Obviously, it won't happen under this president. But liberals should now be having this conversation in private. Every conversation on this topic should start from the proposition that the nation needs some sort of national health care; that way, it will eventually calcify into conventional wisdom, and eventually the politicians can start talking about it. Something like what the Republicans have done with Social Security, only not incompetent.
The simple truth is that the United States needs drastic reform of its health care system, including some form of universal coverage. The details can and will be hashed out in op-eds, policy journals and think tanks - but the conversation needs to happen, and it needs to start now. Real health care reform will produce more positive consequences than any bankruptcy system ever could. Once we reform health care, billions of dollars will be freed up for other national priorities. But first, we need to get to that point.
