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WORKING FAMILIES IN FINANCIAL CRISIS: 

MEDICAL DEBT AND BANKRUPTCY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

JULY 17, 2007 

Serial No. 110–90 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

LINDA T. SA ́ NCHEZ, California 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

KEITH ELLISON, Minnesota 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

PERRY APELBAUM, Staff Director and Chief Counsel 

JOSEPH GIBSON, Minority Chief Counsel 

SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

LINDA T. SA ́ NCHEZ, California, Chairwoman 

JOHN CONYERS, JR., Michigan 

HANK JOHNSON, Georgia 

ZOE LOFGREN, California 

WILLIAM D. DELAHUNT, Massachusetts 

MELVIN L. WATT, North Carolina 

STEVE COHEN, Tennessee 

CHRIS CANNON, Utah 

JIM JORDAN, Ohio 

RIC KELLER, Florida 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

MICHONE JOHNSON, Chief Counsel 

DANIEL FLORES, Minority Counsel 

(III) 

C O N T E N T S 

JULY 17, 2007 

Page 

OPENING STATEMENT 

The Honorable Linda T. Sa ́nchez, a Representative in Congress from the 

State of California, and Chairwoman, Subcommittee on Commercial and 

Administrative Law ............................................................................................. 3 

The Honorable Chris Cannon, a Representative in Congress from the State 

of Utah, and Ranking Member, Subcommittee on Commercial and Administrative Law ........................................................................................................... 4 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Chairman, Committee on the Judiciary, and Member, 

Subcommittee on Commercial and Administrative Law .................................. 6 

WITNESSES 

Ms. Donna S. Smith, Health Care Activist, Aurora, CO 

Oral Testimony ..................................................................................................... 12 

Prepared Statement ............................................................................................. 15 

Mr. Todd J. Zywicki, George Mason University School of Law, Arlington, 

VA 

Oral Testimony ..................................................................................................... 20 

Prepared Statement ............................................................................................. 22 

Mr. Clifford J. White, III, Director, Executive Office for U.S. Trustees, U.S. 

Department of Justice, Washington, DC 

Oral Testimony ..................................................................................................... 41 

Prepared Statement ............................................................................................. 43 

Ms. Elizabeth Warren, Harvard Law School, Cambridge, MA 

Oral Testimony ..................................................................................................... 50 

Prepared Statement ............................................................................................. 53 

Mr. Mark Rukavina, Executive Director, The Access Project, Boston, MA 

Oral Testimony ..................................................................................................... 71 

Prepared Statement ............................................................................................. 73 

Mr. David U. Himmelstein, Harvard Medical School, Cambridge, MA 

Oral Testimony ..................................................................................................... 83 

Prepared Statement ............................................................................................. 86 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, Chairman, Committee on the 

Judiciary, and Member, Subcommittee on Commercial and Administrative 

Law ........................................................................................................................ 8 

Prepared Statement of the Honorable Steve Cohen, a Representative in Congress from the State of Tennessee, and Member, Subcommittee on Commercial and Administative Law ................................................................................ 10 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Additional Information Submitted by Mark Rukavina, Executive Director, 

The Access Project, Boston, MA .......................................................................... 131 

Page

IV 

Bankruptcy Forms Submitted by the Honorable John Conyers, Jr., a Representative in Congress from the State of Michigan, Chairman, Committee 

on the Judiciary, and Member, Subcommittee on Commercial and Administrative Property .................................................................................................... 197 

Post-Hearing Questions Submitted to the Witnesses ........................................... 240 

Answers to Post-Hearing Questions from Todd J. Zywicki, George Mason 

University School of Law, Arlington, VA ........................................................... 248 

Answers to Post-Hearing Questions from Clifford J. White, III, Director, 

Executive Office for U.S. Trustees, U.S. Department of Justice, Washington, 

DC .......................................................................................................................... 251 

Answers to Post-Hearing Questions from Elizabeth Warren, Harvard Law 

School, Cambridge, MA ....................................................................................... 255 

Answers to Post-Hearing Questions from Mark Rukavina, Executive Director, 

The Access Project, Boston, MA .......................................................................... 265 

Answers to Post-Hearing Questions from David U. Himmelstein, Harvard 

Medical School, Cambridge, MA ......................................................................... 275 

(1) 

WORKING FAMILIES IN FINANCIAL CRISIS: 

MEDICAL DEBT AND BANKRUPTCY 

TUESDAY, JULY 17, 2007 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCIAL

AND ADMINISTRATIVE LAW, COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Subcommittee met, pursuant to notice, at 1:15 p.m., in Room 

2141, Rayburn House Office Building, the Honorable Linda 

Sa ́nchez (Chairwoman of the Subcommittee) presiding. 

Present: Representatives Sa ́nchez, Conyers, Johnson, Lofgren, 

Delahunt, Watt, Cohen, Cannon, Jordan, and Franks. 

Staff present: Susan Jensen-Lachmann, Majority Counsel; Daniel 

Flores, Minority Counsel; and Adam Russell, Professional Staff 

Member. 

Ms. SA ́ NCHEZ. The Subcommittee on Commercial and Administrative Law will come to order. 

Without objection, the Chair is authorized to declare a recess at 

any point. 

Before we begin with today’s agenda, we have some unfinished 

business from our hearing, last Thursday, regarding Ms. Harriet 

Miers. Having reviewed the pertinent part of the transcript from 

the hearing, reviewed relevant precedents, and consulted with the 

parliamentarian, the Chair is prepared to reconsider her ruling regarding the words of the gentleman from North Carolina. 

Without objection, that hearing is hereby reconvened, and the 

Chair’s ruling is vacated. 

I recognize the gentleman from Utah, our distinguished Ranking 

Member, to identify the words he believed to be unparliamentary. 

Mr. Cannon? 

Mr. CANNON. Thank you, Madam Chair. 

The Committee has provided a transcript. I think the easiest way 

to identify the words is by identifying the lines in the transcript, 

which I think should be sufficient for our purposes. 

So on page 51 of the Committee transcript, beginning with line 

1205 and continuing down through line 1224, and then on the following page, beginning with line 1239 and continuing through line 

1242. 

Mr. WATT. Madam Chair? 

Ms. SA ́ NCHEZ. I would recognize the gentleman from North Carolina and ask if he wishes to ask unanimous consent to withdraw 

those words. 

2 

Mr. WATT. I do ask unanimous consent to withdraw the words 

identified by Mr. Cannon. 

Mr. CANNON. Madam Chair, resuming the right to object. 

Mr. WATT. He has shown me the words, and I have reviewed 

them. So I ask unanimous consent to withdraw them. 

Ms. SA ́ NCHEZ. Thank you. The gentleman asks unanimous consent. 

The gentleman from Utah is recognized under his reservations. 

Mr. CANNON. Thank you, Madam Chair. 

First of all, I would like to thank you and also the staff for doing 

a remarkably thoughtful job on resolving this concern. 

Let me say that I really appreciate the passion of Mr. Watt. He 

has been a dear friend. We have worked together on many, many 

issues, including protecting voice-over protocol or voice on Net from 

regulation. I think he is actually the father of the fact that we can 

do Internet telephony without regulation and that through the 

Committee or his Ranking Member he had the courage to bring an 

amendment. And so, I reluctantly objected to his words the other 

day and appreciate him as a person. 

This is an issue that has encouraged a great deal of passion. And 

I understand that. I just hope as we continue that the majority will 

consider the evidence and proceed with calm rationality, which I 

personally expect will mean that we move on to other issues relatively soon. 

Thank you, Madam Chair. And I withdraw my reservation. 

Mr. WATT. Mr. Cannon? 

Mr. CANNON. I yield to the gentleman. 

Mr. WATT. Will the gentleman yield for a second? 

Ms. SA ́ NCHEZ. The gentleman yields time. 

Mr. CANNON. I would be pleased to yield. 

Mr. WATT. I just wanted to say a few words, if it is okay with 

the gentleman. 

Mr. CANNON. Certainly. 

Mr. WATT. First of all, I appreciate the spirit in which the gentleman has proceeded. And I appreciate the spirit in which the 

Chair of the Committee has proceeded. I operated in a legal framework for 22 years before I came to this Committee. And there are 

certain rules that applied there. 

And I have been in this context for 15 years. And there are certain rules of process that apply here. Once I became aware that the 

parliamentarian had decided that—had ruled or found that the 

words I used were unparliamentary, I certainly didn’t hesitate to 

seek to withdraw those words. 

There is one by-product of this that I wanted to comment on and 

actually apologize for because some people have interpreted what 

I said, although having reviewed the words that I said, I never said 

what people have interpreted as. 

Some people have interpreted what I said to be that I said that 

the President of the United States was a liar. I want to make it 

clear that that is not in the transcript, first of all. 

And if it were in the transcript or to the extent that people interpreted what I had to say as saying that the President is a liar, I 

want to make sure I apologize to the President for that because the 

President is a personal friend of mine. And I don’t want anybody 

3 

left with the impression that I think the President in general terms 

is a liar. 

So I appreciate the gentleman yielding. And I will yield back to 

the gentleman. 

Mr. CANNON. I thank the gentleman. 

And let me point out that having known the gentleman for years 

and having had many, many courtesies on this Committee extended to me by the gentleman, I want to reaffirm his words that 

his intentions were not, as has been characterized in some circumstances. 

And, Madam Chair, I would also like to make just one other 

point. That is that a Member of the full Committee who is not a 

Member of this panel, Dan Lungren, got engaged in this issue early 

and with some intensity. And I think his intentions were to maintain the integrity of this body. 

I think he acted honorably. And I just want it to be clear. There 

was an article in the newspaper that suggested I did things that 

he actually did. And those are thoughtful things. And I thought he 

ought to be credited with his position. 

The fact is this is a complicated environment that we live in. The 

rules are complicated. And unparliamentary speech differs from 

one person to another. And I appreciate, again, the very gentle way 

you have handled this issue and would yield back the balance of 

my time. 

Ms. SA ́ NCHEZ. I thank the gentleman. 

And I thank the gentleman from North Carolina also for his 

thoughtful remarks. 

Hearing no objection, the words of the gentleman from North 

Carolina that the gentleman from Utah has identified are withdrawn. 

And, without objection, those words are struck from the transcript and the record. 

The Chair would remind all our Members that as we debate the 

important and sensitive issues that come before this Subcommittee 

we must all take care not to misdirect the strong feelings that 

these issues can bring about toward our House and Senate colleagues or toward officials in the executive branch. I thank the 

Members for their time and their patience. 

And with that, the continuation of the Subcommittee hearing on 

Commercial Administrative Law from last week is adjourned. And 

we will now move on to today’s hearing. 

Pursuant to notice, this hearing of the Committee on the Judiciary, Subcommittee on Commercial Administrative Law will now 

come to order. I will now recognize myself for a short statement. 

Today’s hearing will focus on one of the most critical challenges 

facing hard-working American families, namely the financial consequences of medical debt and how it all too often leads to bankruptcy. Although our Nation is among the wealthiest in the world, 

the United States is one of the few industrialized countries that do 

not provide health care for all of its citizens, unlike most other industrialized nations. 

Medicare and Medicaid cover only the elderly and indigent. Everyone else is responsible for finding their own insurance, the cost 

of which has skyrocketed in recent years. 

4 

Sadly, many American families cannot afford to pay for their 

health insurance. Some simply earn too much money to qualify for 

public health insurance but earn too little to afford private insurance coverage. They are effectively caught in a catch-22, putting 

many at risk of financial ruin. 

As a result, many Americans are going without insurance. In 

2005, for example, approximately 45 million or 15 percent of Americans had no health insurance. Even the insured face possible economic disaster. Excessive premiums and deductibles, low coverage 

caps, and uninsured medical conditions are just some of the reasons why families that have health insurance risk financial ruin 

should somebody get sick. 

How is this crisis treating American families? Well, not very 

well, I think. Studies show that many are skipping recommended 

treatments, not filling critical drug prescriptions, postponing doctor 

appointments, and cutting back on other essentials like food. 

We know, particularly based on this Subcommittee’s last two 

bankruptcy hearings, that Americans file for bankruptcy relief for 

a vast variety of reasons. We learned, for example, that when a 

major airline shirks its pension responsibilities and cuts wages, the 

employees and retirees face possible financial ruin. 

This past May, we learned how the sub-prime mortgage industry 

is pushing more and more American home owners into bankruptcy. 

Today we will hear about a watershed study examining the role of 

illness and other medical factors contributing to bankruptcy. One 

of the shocking findings of this study is that nearly 50 percent of 

consumer debtors have had a major illness or health problem that 

propelled them into bankruptcy. 

I would be remiss if I did not recognize the leadership of Chairman Conyers in drawing attention to this important issue and 

thank him for his efforts to bring about legislative change. It is my 

sincere hope that today’s hearing will help us better understand 

the extremely serious consequences of medical debt and serve to 

galvanize us to work toward finding solutions. 

To help us learn more about this important issue, we have six 

witnesses with us this afternoon. We are pleased to have Professor 

Elizabeth Warren, Leo Gottlieb professor of law at Harvard Law 

School; Ms. Donna Smith, health care activist; Dr. David Himmelstein, associate professor of medicine at Harvard Medical School; 

Mr. Clifford White, director of the Executive Office for U.S. Trustees; Professor Todd Zywicki, George Mason University School of 

Law; and Mr. Mark Rukavina, executive director of the Access 

Project. 

I look forward to hearing today’s testimony. 

And at this time, I would like to recognize my colleague, Mr. 

Cannon, the distinguished Ranking Member of the Subcommittee, 

for his opening remarks. 

Mr. CANNON. Thank you, Madam Chair. 

I would like to extend a warm welcome to all of our witnesses 

and appreciate your being here today. We also have many people 

in the audience that have deep concerns about these issues. And 

I talked with some of them a little earlier. And we hope that some 

of their questions will be answered here today as well. 

5 

The question of whether the medical debt is causing, pardon me, 

many of the bankruptcies in the country is one that has been stirring since we passed the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005. At that time, Professors Warren and 

Himmelstein published results of their study on this issue. 

According to them, up to 54.5 percent of personal bankruptcies 

were caused by medical issues. But those alleged results have been 

hotly debated since publication. For example, Professor Dranove of 

the Kellogg School of Management at Northwestern University 

along with his co-author, Michael Millenson has argued that the 

Warren and Himmelstein study failed to demonstrate a causal relationship between medical spending and anything even approaching 

half of bankruptcies. 

By Dranove’s and Millenson’s analysis, the study’s data does 

show a causal link to medical expenses in only 17 percent of personal bankruptcies. They further suggest that even in that 17 percent of cases, the study had not established that medical debt was 

the most important cause of bankruptcy. 

Dranove and Millenson also highlighted that the Warren and 

Himmelstein’s preferred solution, that is, national health insurance, was actually unlikely to quell any crisis in medical debt 

bankruptcy. Other academics, including Professor Zywicki of 

George Mason University School of Law and Professor Heriot of the 

University of San Diego School of Law also questioned the positions 

of Professors Warren and Himmelstein. 

I look forward to hearing more about this debate from Professors 

Warren and Himmelstein and Zywicki. I also look forward to hearing from the executive office of the United States Trustees. To my 

knowledge, the executive office has not directly criticized the Warren or Himmelstein study, but the executive office does have data 

of its own based on its review of official bankruptcy numbers. 

I look forward to hearing about that data and whether the executive office believes the bankruptcy reform law is working for debtors with medical debt. I hope that it suggests that the BAPCPA is 

working, given the flexibility we left in the bankruptcy code for 

courts to take into account special circumstances such as medical 

conditions. 

I have to admit I am skeptical of figures claimed by Professors 

Warren and Himmelstein, and I doubt that the information we 

hear today will definitively resolve the debate. But this is a very 

important issue to me and to America. 

I would like to understand better the degree to which bankruptcy 

code may or may not be adequately serving the families and individuals beset by medical debt, which is an absolutely clear problem, whether it is 17 percent or less or 50 percent or more. The 

fact is that medical debt is a significant problem in America. 

This is not, I don’t think, the environment to deal with national 

health care. Although I understand there is some strongly held 

opinions on that issue. Rather, this is a place where we need to 

look at the bankruptcy act and see what can be adjusted or done 

to accommodate the needs of Americans, whatever the percentage 

of causality is. And certainly, health care is a significant issue. 

I might just say that in America on the broader issue rather 

than the narrow issue of bankruptcy that in America we are underVerDate Aug 31 2005 16:38 Jul 22, 2008 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6601 H:\WORK\COMM\071707\36783.000 HJUD1 PsN: 36783
6 

going a most amazing process of transformation in the medical industry, something akin to what happened in the telecommunications industry a few years ago. 

And when we join that broader debate about national health 

care, we need to be thinking about not just what is hurting families 

or what families can afford, but rather where we are going with 

medical care and with innovation in medicine, which will profoundly change—it has profoundly changed over the last couple of 

years and will continue to profoundly change everything about the 

way we practice medicine, how we find the cures and how we get 

cures to people in America and throughout the world. 

And with that, Madam Chair, I yield back. 

Ms. SA ́ NCHEZ. I thank the gentleman for his statement. 

I now would like to recognize Mr. Conyers, the distinguished 

Member of the Subcommittee and the Chairman of the Committee 

on the Judiciary for his opening statement. 

Chairman CONYERS. Thank you, Madam Chairperson and the 

Ranking Member. 

And Trent Franks is with us, as well as Zoe Lofgren, Bill 

Delahunt, Mel Watt, Steve Cohen. And sitting silently with us is 

Dr. Steve Kagen from Wisconsin, whose interest in this subject 

matter has brought us here. 

Members of the Committee and to our distinguished panelists 

and those of you who have come in to witness this hearing, it is 

really very difficult to separate the health care crisis in this country from the particular subject matter of medical bankruptcy because they are very much tied together. Because we start off with 

something that I got from Paul Farmer, a doctor and anthropologist whose book, ‘‘Pathologies of Power,’’ has just come to my attention. 

And what he suggests is that there is a violence more than guns 

and personal physical. There is a thing called structural violence. 

That is that you are in a system where things are so bad that the 

statistics and the outcome are going to be quite bad as well. And 

you can’t get out of it. The odds are very strong that it won’t 

change much, except for a very brave few. 

I mean, you think of a few people, Oprah Winfrey. I mean, she 

was against the odds and succeeded. And there are other examples. 

The former owner of BET comes to my mind. 

But mostly, you are trapped in where you find yourself. And so 

that the bad statistics on health care, longevity, birth, death at 

birth, the birth rate. All these things come in on you. 

And what happens is that I am beginning to take the attitude 

that medical bankruptcy is one of the consequences in America, not 

just of being poor because—as Michael Moore established and 

Donna Smith can tell us more about that—the people he was talking with were people of middle-income level who had health insurance. And so, we are beginning, or at least I am beginning, to look 

at this from a little bit different view. 

Health care should be a human right for everybody certainly in 

this country, the wealthiest in recorded history. And yet because 

the way the system is set up, a broken health care delivery system, 

bankruptcy, not only which tears up families and creates stress 

and suffering, but then we begin to find that there are a lot of peoVerDate Aug 31 2005 16:38 Jul 22, 2008 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6601 H:\WORK\COMM\071707\36783.000 HJUD1 PsN: 36783
7 

ple too courageous that don’t go into bankruptcy and then they experience another setback of suffering. 

And so, we have, for example, in Michigan we have people now 

being hit by health care experiences that could have never been anticipated. They were working at one of the big three automobile 

companies. They had health care. 

As a matter of fact, I used to have people tell me that H.R. 676, 

Universal Health Care, is great, except I am with UAW and Ford, 

so, I mean, quite frankly, we got a pretty good deal. Well, they are 

not saying that any more. 

As a matter of fact, their unions are endorsing the measure because the name of the game is when you go into—you start negotiating—and where did they ever get these contracts where—have 

you ever entered into a contract where after a year or so you come 

back to the person that you made the agreement with and say, 

‘‘Well, that contract is off, my friend. We have got a—we have got 

a—things went bad, very bad this year. Our bottom line is hemorrhaging. And so, you have got to rewrite that contract’’? Why, you 

would be laughed at. 

And yet, our automobile companies in Michigan are doing that 

to our workers saying, ‘‘If you don’t, we will go before a bankruptcy 

judge,’’ Mr. White, ‘‘and we will end up giving—he will end up giving you a much worse situation, a worse deal than we would give 

you. We will have then cut your health care benefits, your pension 

benefit, the whole works, plus you will be out of a job to boot because we are planning to relocate somewhere else and not have to 

worry about the United Automobile Workers.’’ 

And so, I am looking at bankruptcy from that light. And I look 

forward to hearing from the witnesses because, as my friend said, 

this is the first hearing on that subject. And we are looking at how 

bankruptcy affects people and also how not going into bankruptcy 

also has a harmful effect on people. 

And I just close with this example here. Whenever the companies 

start shutting down and closing up and threatening bankruptcy, 

why is it that the executives always get a bonus? I mean, it is puzzling. Here is United Airlines. The chief executive received compensation worth $39.7 million in 2006 just after the airlines 

emerged from 3 years of Chapter 11 bankruptcy protection, which 

during the course of the bankruptcy they terminated the pensions 

of 120,000 workers, shifted $5 billion in pension obligation to the 

pension trust fund, BPGC, resulting in one of the largest pension 

defaults in the history of the United States. 

These inequities and unfairnesses aren’t because somebody got 

sick. These unfairnesses exist because the system we have to deal 

with people getting sick needs to be examined much more closely 

than it ever has in Congress. And I think we can do a lot about 

it, particularly in the Judiciary Committee. 

And so, I thank you for holding these hearings, Chairwoman 

Sa ́nchez. 

[The prepared statement of Mr. Conyers follows:] 

8 

PREPARED STATEMENT OF THE HONORABLE JOHN CONYERS, JR., A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF MICHIGAN, CHAIRMAN, COMMITTEE ON THE JUDI- CIARY, AND MEMBER, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

America’s health care system is on life support. It is a broken system that is pushing millions of hardworking families into bankruptcy. 

Here are just a few distressing statistics: 

• 48 million Americans lack health insurance; 

• 5 million Americans filed bankruptcy since 2000 as the result of serious medical problems; 

• 80 million more Americans facing overwhelming medical debt could have filed 

for bankruptcy, but did not out of sense of pride or for other reasons; and 

• an estimated 58 million Americans are at risk of incurring medical bills they 

may not be able to afford. This includes 17.6 million adults with private 

health insurance. 

While we in the United States pride ourselves as representing the ‘‘First World,’’ 

sadly our health system equals that in certain Third World nations. To quote 

Amartya Sen: 

The situation does, of course, vary from region to region, and from one group 

to another. But unnecessary suffering, debilitation, and death from preventable 

or controllable illness characterize every country and every society, to varying 

extends. As we would expect, the poor countries in Africa or Asia or Latin 

America provide crudely obvious illustrations of severe deprivation, but the phenomenon is present even in the richest countries. For example, African Americans in some of the most prosperous U.S. cities (such as New York, Washington, 

or San Francisco) have a lower life expectancy at birth than do most people in 

immensely poor China or even India. Indeed, location alone may not enhance 

one’s overall longevity. 

Unfortunately, those in our society who are the most vulnerable are also among 

those who are suffering the most as a result of our health care system. As Paul 

Farmer observes, ‘‘The correlation between poverty, inequality, and increased morbidity and mortality is massive.’’ This helps explain why death rates in parts of Harlem among certain age groups rival those in Bangladesh. In both places, according 

to Dr. Farmer, the leading causes of death in young adults are infections and violence. 

Disparities based on race are particularly evident in our Nation’s health care system. The infant mortality rate for African American infants, for example, continues 

to be unacceptably high. African American infants were 2.6 times more likely to die 

in the City of Detroit than a white infant in the state of Michigan, according to a 

2005 report by the Detroit Department of Health and Wellness Promotion and the 

Wayne County Public Health Department. 

According to these agencies, the infant mortality rate that same year for black babies was 18.1. Translated into real life terms, this means that 202 African American 

babies never saw their first birthday. Wayne County black infants died at rates more 

than twice that of white infants, according to these agencies. 

Tragically, this drastic difference in the death rate of African American babies is 

also a national trend and a significant health disparity that demands action. The 

health care system in our Nation is simply stacked against poor people of color. 

As today’s hearing will show, our Nation’s current health care system is literally 

bankrupting hardworking American families with medical problems, including many 

who already do have insurance. 

Keep in mind that bankruptcy is no panacea either, especially in light of the 2005 

amendments to the Bankruptcy Code. These amendments force debtors to go 

through and pay for usually meaningless credit counseling, to file excessive documentation justifying their finances, and to complete onerous forms. 

But, worst of all, is the burdensome means test by which debtors have to essentially prove that they are eligible for bankruptcy relief. One means test form alone 

requires a debtor to answer 57 questions about his or her financial circumstances. 

Certainly, Americans are gravely concerned about our Nation’s health care system. A recent Gallup Survey reported that roughly half of all respondents said that 

they were worried about paying medical costs if they become seriously ill or have 

an accident. 

We should all be concerned about overwhelming medical debt. It is not just a 

problem that afflicts the uninsured. 

Many families who have insurance are still driven into bankruptcy by inadequate 

coverage, combined with rising deductibles, co-pays and premiums. The problem is 

9 

compounded when industries—such as the automobile manufacturers in my home 

state—lay off thousands of their employees, trim or cut the health benefits of their 

retirees, and force others to accept reduced medical insurance benefits. It’s estimated that total job losses in the automobile industry since 2000 is about 250,000 

jobs. 

At the same time as hundreds of thousands of Americans are losing their jobs, 

the top executives almost always get bonuses. Here’s just one example. The chief 

executive officer of UAL Corporation, the parent of United Airlines, received compensation worth $39.7 million in 2006, just after UAL emerged from three years of 

Chapter 11 bankruptcy protection. During the course of its bankruptcy, however, 

UAL terminated pensions for 120,000 workers and shifted $5 billion in pension obligations to the PBGC, resulting in one of the largest pension defaults in the history 

of the United States, according to the Associated Press. These inequities are astounding. 

Then, to make matters worse, families—already severely traumatized by their 

health problems—are pushed by our Nation’s health care system into financial distress. In addition to dealing with their health concerns, they must also fend off 

harassing calls from debt collectors and struggle just to make ends meet. The emotional burden of serious medical debt cannot be understated. 

Sadly, these families often become prey for predatory lenders, which only exacerbates their financial distress. Their damaged credit ratings cause them to have to 

pay higher interest rates when they refinance their mortgages or obtain loans. Surely, we can see how such circumstances drive American families further into an economic downward spiral into bankruptcy. 

Then, the need to pay medical debt forces many families to forego other necessary 

expenditures, such as required medical procedures, prescription drugs, and even 

food. Americans should not be required to choose between their health care and 

food. 

Indeed, everyone suffers when Americans, even those with full insurance, cannot 

pay their medical debt. Hospitals and other medical service providers must pass 

along the cost of bad debt to those who can pay, resulting in higher prices being 

charged for goods and services. This is a crisis that touches everyone. 

In the recent movie SiCKO, filmmaker Michael Moore brings the medical debt crisis to life by sharing real stories of Americans who become bankrupt as the result 

of unpaid medical bills. His film makes the tragic human consequences of our broken health care system impossible to ignore. 

I am pleased to welcome Donna Smith, who shared her story of sickness and financial ruin in that movie. Thank you, Donna, for turning the pain of your family’s 

crisis into a galvanizing force for fundamental reform so that no other family will 

have to go through what you did. 

Regrettably, this Administration has done little, if anything, in response. My bill, 

H.R. 676, the ‘‘United States National Health Insurance Act,’’ would go a long way 

toward resolving this national crisis. It would establish a program giving Americans 

free health care coverage for all medically necessary procedures as well as for primary care and prevention, prescription drugs, emergency care, and mental health 

services. 

H.R. 676 would create a single payer national health insurance program in America by expanding and improving Medicare. Nobody in America would ever receive 

a medical bill, and therefore, no American would ever have medical debt or have 

to declare bankruptcy because they got sick. No American would ever be turned 

away from a hospital, dentist, pharmacy, or a doctor’s office because they had unpaid medical debt. 

Remember that medical debt and medical bankruptcy are uniquely American phenomena that are a byproduct of our for-profit employer based health care system. 

Medical debt and bankruptcy are simply non-existent in the rest of the industrialized world. 

As we begin deliberations in Congress about how to provide health care to all 

Americans, we must ensure that we do not create a universal health insurance program that simply expands the current flawed system, in which medical debt and 

bankruptcies are the inevitable outcome of a patchwork of unaffordable, non-comprehensive coverage. If we just expand this broken system, it is logical to conclude 

that millions more Americans could be subject to medical bankruptcy or ruined credit due to medical debt. We certainly do not want to go down that road. 

H.R. 676 is an important first step in helping to resolve the undeniable health 

care crisis in our Nation, but it is not the only step. 

Today, as Chairman of the Judiciary Committee, I have issued a request to the 

Government Accountability Office to help us answer the following critical questions: 

10 

• How many Americans each year go bankrupt due to unpaid medical debt, and 

how many had insurance at time bankruptcy was declared? 

• How many Americans each year have medical debt placed on their credit 

score? 

• How much do hospitals and physician offices spend each year to pay for debt 

collection agencies to contact delinquent patient accounts for payment? 

• How many Americans each year are denied a mortgage, or denied follow up 

medical care as the result of medical debt? 

As policymakers, we need answers to these questions so that we can we address the 

core problems in an efficient and meaningful way. 

My other goal is to right the many wrongs inflicted by the 2005 Amendments to 

the Bankruptcy Code. Individuals with serious medical conditions should not be 

forced to take credit counseling when all the credit counseling in the world will not 

make one iota of difference in their financial lives. Individuals with serious medical 

conditions should not have to file reams of unnecessary paperwork to prove their 

eligibility for relief. For 25 years since the enactment of the Bankruptcy Code, the 

system worked perfectly fine without these requirements. 

Most importantly, I plan to devise a way to exempt these individuals from the 

onerous means test requirements that plainly are designed to catch the unwary, but 

unfortunate debtor. Obtaining bankruptcy relief should not be more completed than 

filing a tax return, but regrettably it is and we need to fix this problem. 

Yet another proposal that I intend to discuss with my good friends and colleagues 

on the Financial Services Committee—Barney Frank and Maxine Waters—is one 

that would except medical debt from credit reports. 

Our goal as lawmakers should be to once and for all end the medical debt crisis 

through common sense and pragmatic policies so no patient in this country will ever 

suffer financial consequences for getting sick. 

I very much look forward to hearing form our distinguished witnesses today. Let’s 

get to the bottom of the medical debt crisis and come up with concrete public policy 

options that will protect the American people from the powerful economic and financial forces that are causing millions to needlessly suffer financial hardships just because they got sick. 

No American should have to suffer the indignity of being evicted, not being able 

to buy groceries, or having to delay needed medical care because of medical debt. 

I think we can all agree that it is wrong, immoral, and un-American to allow theses 

conditions to continue in the wealthiest nation in the world. 

Ms. SA ́ NCHEZ. I thank the gentleman for his statement. 

Without objection, other Members’ opening statements will be included in the record. 

[The prepared statement of Mr. Cohen follows:] 

PREPARED STATEMENT OF THE HONORABLE STEVE COHEN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF TENNESSEE, AND MEMBER, SUBCOMMITTEE ON

COMMERCIAL AND ADMINISTATIVE LAW

It is a national shame that millions of Americans are being forced into personal 

bankruptcy because of illness combined with either a lack of health insurance or insufficient health insurance coverage. In a 2005 study by Professor Elizabeth Warren 

and Dr. David Himmelstein, both of whom will be testifying before us today, 46.2 

percent of consumer bankruptcy debtors filed for major medical reasons. Prior to entering bankruptcy, many of these debtors had no health insurance, and many were 

forced to forgo other life essentials, including food, telephone service, needed doctor 

and dentist visits, and prescription drugs, because of their medical debt. 

The fact that the cost of health care could be so high as to force someone to choose 

between medical care and eating is unacceptable in any civilized society, but especially so in the wealthiest nation on earth. That is why I am a cosponsor of H.R. 

676, the United States National Health Insurance Act, which would create a universal health insurance program. Contrary to the claims of critics, this is not ‘‘socialized medicine.’’ Rather, it is our fulfillment of a basic obligation to each other as 

Americans to ensure that no one in our society is denied the health care they need 

because they are poor or in difficult financial circumstances. I hope today’s hearing 

will highlight the need for universal health care and the consequences of failing to 

act. 

11 

Ms. SA ́ NCHEZ. And, without objection, the Chair will be authorized to declare a recess of the hearing at any point. 

I am now pleased to introduce the witnesses on our panel for today’s hearing. Our first witness is Ms. Donna Smith, a health care 

activist who has tirelessly campaigned for a universal health care 

system. Ms. Smith resides in Aurora, Colorado. 

Our second witness—you guys changed your order on me—is 

Professor Todd Zywicki. Professor Zywicki teaches in the areas of 

bankruptcy and contracts at George Mason University School of 

Law. Professor Zywicki was a visiting professor of law at the 

Georgetown Law Center for the 2004-2005 academic year. And in 

2003, he served as director of the office of policy planning at the 

Federal Trade Commission. 

Our third witness is Clifford White, director of the Executive Office for U.S. Trustees. Mr. White has previously served as an assistant United States trustee and a deputy assistant attorney general at the Department of Justice and as assistant general counsel 

at the U.S. Office of Personnel Management. Mr. White was recognized with a presidential rank award for meritorious executive in 

2006. 

Our fourth witness is Professor Elizabeth Warren. Professor 

Warren joined the faculty of Harvard Law School in 1992 and became the Leo Gottlieb professor of law in 1995. She is co-author of 

the article, ‘‘Illness and Injury as Contributors to Bankruptcy,’’ in 

MarketWatch and as well numerous award-winning books and case 

books. Professor Warren also serves as the vice president of the 

American Law Institute and is on the executive committee of the 

National Bankruptcy Conference. 

Our fifth witness is Mark Rukavina. Mr. Rukavina is the executive director of the Access Project, a national resource center. Mr. 

Rukavina manages multiple aspects of the national program providing technical assistance, information, consulting services, and financial support to community-based efforts to expand health care 

access and coverage. Prior to that position, Mr. Rukavina was a 

program director for the Summerbridge community health partnership. 

And our final witness is Dr. David Himmelstein. Dr. Himmelstein is associate professor of medicine at Harvard Medical School 

and practices primary care internal medicine. He serves as a chief 

of the division of social and community medicine at Cambridge 

Hospital in Cambridge, Massachusetts. Dr. Himmelstein is also coauthor of the ‘‘Illness and Injury as Contributors to Bankruptcy’’ in 

MarketWatch and has published more than 70 scientific papers, 

books, and articles. 

I want to thank you all for your willingness to participate in today’s hearing. 

And, without objection, your written statements in their entirety 

will be placed in the record. So we are going to ask you to limit 

your oral testimony to 5 minutes. 

You will note that we have a system of lights that starts with 

a green light. That is your signal to proceed. At 4 minutes, it will 

turn yellow, which is warning you that you have a minute to conclude your testimony. And then when your time has expired, it will 

turn red. 

12 

When your time is up, we will ask you to just finish the current 

thought that you are on and wrap up the testimony so that we may 

move on to the next witness and each witness can be heard. 

After each witness has presented his or her testimony, Subcommittee Members will be permitted to ask questions subject to 

a 5-minute limit. 

Ms. Smith, are you ready now to proceed with your testimony? 

Okay, you are recognized for 5 minutes. And you may proceed. 

TESTIMONY OF DONNA S. SMITH, HEALTH CARE ACTIVIST, 

AURORA, CO 

Ms. SMITH. Good afternoon, Madam Chair Sa ́nchez and Committee Members. My name is Donna Smith. And I live in the 6th 

Congressional in Colorado. Representative Thomas Tancredo is my 

congressman. 

I commend Representative Conyers on bringing this issue before 

you once again and ask that you try and walk a mile in my shoes. 

It has been a long time since I felt that any of my congressional 

representatives understood what the current health care crisis is 

doing to Americans like me. 

The last elected official who tried to help was Senator Tom 

Daschle of South Dakota who spoke about us on the floor of the 

United States Senate in the spring of 2004 and later offered a 

sense of the Senate resolution proffering that every American 

should have access to the same health care coverage as every 

American and every Member of Congress. The full Senate did not 

agree. And Americans like me languished onward in a seriously 

flawed private health care system. 

My family’s story is included in Michael Moore’s new movie, 

‘‘Sicko.’’ And though Mr. Moore took just 6 or 7 minutes in the film 

to outline our financial collapse, I can assure you that the health 

and economic disasters that made us perfect fodder for the film unfolded much more slowly and painfully than depicted on the movie’s screen. 

I want you to fully consider the plight of families like mine, the 

hard-working people you purport to represent here in the people’s 

house. I know many of you receive substantial financial support 

from the health care and pharmaceutical lobbies. But I am asking 

you to remember that you also received substantial funds from me 

and all of my fellow American taxpayers through your salaries and 

benefits. 

We the people are your employers. How did this body so remove 

itself from the reality of the people? 

My family is part of a grim statistic in America. Our health care 

issues and costs drove us to bankruptcy. Yet we were always covered by medical insurance. 

The shame of financial failure and bankruptcy should not be the 

end result of heart and artery disease and cancer. It is enough to 

fight those hellacious health battles without also fighting for our financial lives. And tonight thousands of Americans will not rest 

well because they sit on the edge of financial disaster, not because 

they are slackers or welfare cases or poor people with poor ways. 

They sit on the edge because they are sick and you have failed 

to act on their behalf. I urge you to read my written statement for 

13 

more detailed information on our medical and financial march to 

bankruptcy. 

My husband, Larry, and I have been married for 31 years. We 

have six children and 13 grandchildren. For most of his adult life, 

Larry was a machinist. I stayed at home with our little ones until 

our youngest was two. And then I went back to work. 

Unhappy working minimum wage jobs, I enrolled in college at 

the age of 31 while working full-time as a bank teller and caring 

for my family. I earned my bachelor’s degree cum laude and phi 

beta kappa from Colorado College. I believe in the value of hard 

work. And my parents, including my World War II veteran father, 

instilled in me a strong work ethic. 

My husband and I always maintained health insurance coverage 

for ourselves and our children. But our health did not hold up. 

Larry developed serious coronary artery disease, and I developed 

uterine cancer. 

We struggled against the darkness of bankruptcy for years until 

there was no other reasonable course. We even carried disability 

insurance, but that coverage excluded Larry’s arteries and heart 

issues. So it proved of little value in the worst situation. 

But over the next several years, health premiums, out-of-pocket 

expenses, medicine, and doctor visit co-pays combined with a steep 

reduction in our income forced us into bankruptcy. Our medicallyrelated expenses topped $1,000 each month by the year 2003. 

Debt collectors, especially the medical collectors, became rabid. 

Our bankruptcy in 2004 was the only way to stop the garnishments 

and the calls. My shame and my depression was difficult to endure. 

It was not only medical debt in that bankruptcy. Over the years 

and months leading to that point we did whatever we had to do to 

stay afloat. We put food and household items on credit. 

We borrowed against older cars. We ordered needed goods from 

high-interest, high-price mail order firms. So when we reached the 

point of bankruptcy, all of those debts had to be included. No one 

was spared. 

We tapped out family and friends, begged for community benefits, received food, toothpaste, and toilet paper from a local food 

pantry. And I was working full-time the whole time. 

The worry was exhausting. And the stress did not help the situation. Finally, Larry was fired from his job in the spring of 2004 on 

his return from surgery at the Mayo Clinic because his employer, 

the Gold Dust Casino in Deadwood said they could not accommodate his post-surgical lifting restrictions. 

The Mayo Clinic wrote, too, and said they were forgiving or writing off the $6,000 left on Larry’s bill after insurance payments, but 

that if we ever wanted to return, we would have to bring the cash 

up-front for our portion of the cost. Larry hasn’t been properly evaluated for his peripheral artery disease since. 

I took Larry onto my group health insurance, and he began the 

application for Social Security disability. His application was approved, but he went 6 months with absolutely no income and had 

to wait 2 years to qualify for Medicare health coverage. So our financial condition continued its decline. 

14 

Congress should also act to fix that deficiency. If an American is 

found to be too ill to work, making that person wait 2 years for 

Medicare coverage is cruel and just plain dumb. 

I even tried opening a small local business with the help of a 

small amount of local economic development funds while I continued my full-time work at the newspaper. But the business didn’t 

take off quickly enough. It seemed as if our last hope of saving ourselves was doomed. 

Larry got sicker and in February 2006 was told he would need 

yet another heart surgery. This time it took 12 hours to complete 

the quadruple bypass at Rapid City Regional Hospital. Larry was 

in intensive care for days and then home to heal. But that certainly 

pushed our deductible and out-of-pockets right back out of sight 

and reach for my income and his Social Security benefits. We were 

going under all over again just 2 years after bankruptcy. 

Finally, we moved in with our grown daughter in Denver. The 

life we worked so hard to build and the life we fought to save was 

lost. We had failed. The health care system had crushed us. 

Let me say again we are not in ‘‘Sicko’’ because our story is so 

unique. We are in this film because we are not unique. We represent what is happening to so many other Americans. 

I want the Members of this Committee to know that if H.R. 676, 

Medical for All, had been in place for us, we would have weathered 

that storm. We are hard working people who under normal conditions make sound money decisions. But placed under the strain of 

mounting premiums, co-pays, deductibles, and out-of-pockets, we 

did whatever we had to do to stay alive. 

I am so angry with you. I lived the American dream as my father 

taught me and his father taught him. I worked. I educated myself. 

I voted. I bought a home and then moved into a better home. 

I raised my children responsibly. And I served in my community. 

And you left me broken and battered because you failed to act on 

health care reform. 

Just as I have come out of the shadows of economic ruin and 

shame, so, too, will others come forward to hold you accountable. 

Remember the hard-working people who elected you. Their bankruptcy shame, my bankruptcy shame due to medical crisis really is 

your shame. You are the body that could have acted and have yet 

not done so. 

The current course of inaction takes no courage whatsoever. And 

I know each of you has shown courage in stepping up to serve this 

Nation. I just think many of you lost your way in remembering 

who elected you and who needs your bravery now. 

Please do not ignore those of us who elected you. Please help reduce the bankruptcies filed in this Nation by fixing the broken 

health care system. We will all be better off, individuals and businesses. 

And I dedicate this testimony to that of my brave husband, 

Larry, and three other Americans who gave me the courage to tell 

this story to millions with the conviction that it will do some good; 

to my late father, Howard Boyles, who proudly served his Nation 

in the United States Army during World War II and who told me 

that people have died to protect my right and my responsibility to 

speak up; to Senator Tom Daschle, who took an interest in my famVerDate Aug 31 2005 16:38 Jul 22, 2008 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6601 H:\WORK\COMM\071707\36783.000 HJUD1 PsN: 36783
15 

ily and who spoke up in spite of political consequences; and to an 

eagle scout from Flint, Michigan, named Michael Moore, who restored my dignity and my voice on a movie screen in Manhattan 

and is keeping his scout’s promise to better his community and his 

Nation. 

Please hold real hearings on H.R. 676 and pass universal single 

payer health care for every American. It is not humane to do otherwise. And your constituents deserve your recognition of their humanity. 

Thank you very much. 

[The prepared statement of Ms. Smith follows:] 

PREPARED STATEMENT OF DONNA S. SMITH

Good afternoon, Madam Chair Sa ́nchez and committee members. 

My name is Donna Smith. I live in the 6th Congressional District in Aurora, Colorado. My Congressional representative is Thomas Tancredo. 

But it has been a long time since I have felt that any of my Congressional representatives or my U.S. Senators truly understood what the current health care crisis is doing to Americans like me or acted with courage to correct a crisis that is 

permeating every facet of the American economy. 

The last elected official who took my situation seriously and tried to help was Sen. 

Tom Daschle of South Dakota who spoke about us on the floor of the U.S. Senate 

in spring of 2004. He would later offer a ‘‘sense of the Senate resolution’’ proffering 

that every American should have access to the same health coverage as every member of Congress does at the same cost or better. Unfortunately, Sen. Daschle’s sense 

was not that of the full Senate or of the House. And Americans like me languished 

onward in a private health care system that is driven by profit not health needs. 

Recently, filmmaker Michael Moore visited Washington, D.C., to share with some 

of you the issues and problems featured in his newest film, SiCKO. My family’s 

story is included in SiCKO, and our story represents a horrific set of circumstances 

unfolding in middle class families across this nation. 

Though Mr. Moore took seven or eight minutes in his film to outline our financial 

collapse, I can assure you that the health and economic disasters that made us perfect fodder for film unfolded much more slowly and painfully than depicted on the 

movie screen. Mr. Moore and his production staff did not know much of what is 

shared in this testimony, and I offer it now so that you might more fully consider 

the plight of middle-class American families—the hard-working people you purport 

to represent here in the people’s House. 

And being a part of this film project did not change the cruel reality for us or 

for any of the others in SiCKO. We were not paid, and the conditions we faced before the film are in most cases very similar to the conditions each of us face today. 

In order for our story to mean something you must act on our behalf. 

I know many of you receive substantial financial support from the health care and 

pharmaceutical industries, and you may feel hard-pressed to look at any plans that 

could put those funds at risk. But I am asking you to consider that you also receive 

substantial funds from me, my neighbors and all of my fellow Americans through 

your salaries and benefits funded by taxpayer funds and you hold office because we 

voted for you. We the people are your employers. 

I find it unacceptable and even difficult to comprehend how you can sit here and 

apparently not understand the severity of the problem. How did this body so remove 

itself from the reality of the people? I commend Rep. Conyers on bringing this issue 

before you once again and ask that you imagine yourselves walking a mile in my 

shoes. 

My family is part of a grim statistic in America. Our health care issues and costs 

drove us to bankruptcy as it has driven an estimated half of those filing bankruptcy 

to that point. And we were always fully covered by medical insurance. By sharing 

our story and our path to bankruptcy, it is my hope and it is my prayer that each 

of you will have the courage you must have to act on behalf of your fellow citizens, 

your constituents and your nation to pass meaningful health care reform. 

If you had made HR676 law when it was proposed back in 2003, I would still have 

my home, my dignity and better health. 

Instead, I come to you today, imploring you to act for the thousands like me who 

elected you and who count upon you to do what is best for our nation. In the course 

of human events today, bankruptcy should not be the end result of heart disease 

16 

and cancer. It is enough to fight those hellacious health battles without also fighting 

for our financial lives. The shame of financial failure and bankruptcy should not be 

the end result of needing health care in America. If you think it couldn’t happen 

to you or to your family, think again. And tonight when you lay yourselves down 

to rest, know that hundreds of thousands of Americans will not rest well because 

they sit of the edge of financial disaster not because they are slackers or welfare 

cases or poor people with poor ways. They sit on the edge because they are sick and 

because you have failed to act on their behalf. 

OUR STORY

My husband Larry and I have been married for 31 years, and we have six children and 13 grandchildren. For most of his adult life, Larry was a machinist. I 

stayed at home with our little ones until our youngest was two and then like so 

many other American families, we needed the income I could earn and I went back 

to work. 

Unhappy working minimum wage jobs, I enrolled in college and at the age of 31 

while working full time as a bank teller and caring for my family, I earned my bachelor’s degree, cum laude and Phi Beta Kappa, from Colorado College in Colorado 

Springs. I believe in the value of hard work, and my parents—including my World 

War II veteran father—instilled in me a strong work ethic. 

Throughout our early years together and at all times thereafter, my husband and 

I always maintained health insurance coverage for ourselves and our children. It 

was never our expectation that others care for us. We both stayed well-informed and 

exercised our right to vote. We owned our own home and stayed actively involved 

in every aspect of our children’s lives. 

For you to understand, you must realize that the health-related financial trauma 

we experienced does not happen overnight. Good, hard-working Americans like us 

struggle against the darkness of bankruptcy for years until there is no other reasonable course. 

Brewing in my husband’s body were the bad arteries that also plagued his father. 

And at age 46, Larry suffered his first significant heart-related difficulties, and he 

underwent his first heart bypass surgery in January of 1990 at Mercy Hospital in 

Miami. His recovery was remarkable at first but then quickly reversed. He was 

wasting away, and by July of 1990, another heart surgeon had concluded that 

Larry’s first heart surgery had been botched. His artery bypass had been placed too 

‘‘proximal’’ to the initial site of blockage and as his body built scar tissue, the newly 

opened vessel quickly closed again. 

His original doctors did not tell him this. He was told the bad news by Dr. Jack 

Greenburg, also of Miami, who then performed another coronary bypass on Larry 

in July of 1990 just six months after his first. The bills were awful at that time, 

but we managed to argue with some of the docs that since the second surgery was 

due to error in the first, perhaps it wasn’t quite right to bill us twice for the botched 

work. We recovered financially from that only after years of argument and bartering. No lawsuit was ever filed for the bad operation since Larry recovered and 

lawyers didn’t see a multi-million dollar case or a sizeable enough cash retainer 

from us to proceed. 

I consider the current argument that medical malpractice insurance rates are 

driving the current crisis as ludicrous and only to be believed by simple minds with 

simple ambitions—to protect the powerful and the wealthy by keeping average people from suing. Fixing the health care system for the top tier is as morally wrong 

as ignorance of the problem, but that’s an argument for other, brighter minds than 

mine. 

My husband did recover from those early heart surgeries, though he wasn’t nearly 

as strong. His work would suffer due to his health status in the mid-1990s, but we 

slowly worked our way back from the brink. He had to give up the physically demanding work of machining and worked more menial jobs—pizza delivery, light 

maintenance and eventually cashiering. What a decline of dignity for my proud and 

able husband. Yet he worked doing what he had to do to help support our family. 

I was staying relatively healthy although I had been diagnosed with sleep apnea 

and had to use breathing support at night with both a C-PAP machine and oxygen. 

But I always worked full time too. And I often took on extra projects or part-time 

efforts to supplement our income. 

But in 1998, Larry’s chest pains returned, and he would begin the spiraling downward that ultimately led him to several cardiac procedures, stent placement and another heart bypass surgery (the most recent in February of 2006). Our health insurance premiums were paid through our separate employers based on the most economical and comprehensive coverage we could purchase through these years, 1990– 

17 

2003. Monthly premiums ranged from $150 to $250 for each of us and though the 

cost seemed high based on our wages, we paid. In the meantime, his need for daily 

medications was also increasing. 

Late in 1999, I reluctantly went to my nurse practitioner with what I thought was 

early-menopausal symptoms. She was going to prescribe some hormonal therapy to 

control severe bleeding but then decided I should be seen by an OB/GYN. Thank 

God her intuition told her to take that course. Within a couple of weeks, I was diagnosed with uterine cancer. It was off to surgery and treatment for me. And I lost 

weeks of work with no way to recover the income. Friends and co-workers donated 

money to help us, but by now our medical problems were taking a heavy financial 

toll. 

Just weeks after cancer surgery, I returned to work where I was caring for developmentally disabled young people in a group home setting. I knew I couldn’t afford 

to lose more time from work, and I absolutely could not risk losing my health coverage, so I went back to the heavy lifting (some of the youngsters weighed more 

than 100 pounds and needed full assistance with basic life functions). It was way 

too soon to return to that sort of work, and though I wore an abdominal brace and 

a back belt to hold my gut together, I developed a huge abdominal hernia in my 

cancer surgery incision site and was back to surgery by the summer of 2000. 

This time I didn’t dare miss much time from work. Just six days after my release 

from the hospital, and against medical advice, I bound my now-surgically-meshed 

belly together and returned to work. I simply could not lose the pay and benefits. 

In the meantime, Larry’s artery problems had extended from already serious coronary artery disease requiring intervention nearly every six months or so to include 

peripheral artery disease. He was still working full time as a cashier in a Deadwood 

casino named Gold Dust. Because western South Dakota did not at that time have 

vascular specialty groups capable of performing the tests Larry needed and because 

our insurance carrier, DakotaCare, had a contractual arrangement with the Mayo 

Clinic in Rochester, Minn., that’s where Larry was sent for further evaluation. 

Because I could not afford to miss any more work, he went alone the first time— 

driving more than 600 miles alone to see the doctors who could potentially treat 

him. I tracked his progress by watching ATM transactions on our bank account as 

he went from place to place on his journey. We had no cell phone or way to contact 

each other without incurring more expense. 

During this period, our insurance premiums mushroomed (in part because we 

were a part of our employers’ group health risk pools). We also now needed several 

prescription medications each month, and our deductibles and out-of-pocket exposure soared to thousands every year. 

By fall of 2003, we had already sold our modest home to fund our loss of income 

due to Larry’s absences from work and to pay off some of our growing debt. We netted only $8,000 from the sale. And our monthly health costs (health insurance premiums, medicine co-pays, out-of-pocket expenses and transportation) swelled to over 

$1,000. 

We borrowed money from friends and family, sometimes launching our own benefit campaigns. It was sickening to beg for money, though folks generally helped 

without judgment. 

When we left for our second trip to the Mayo Clinic, all of our worldly goods went 

into storage, we had no permanent home and we knew only that if Larry was to 

live, we needed to do whatever necessary to make that happen. We spent Thanksgiving of 2003 alone in Rochester, Minn., waiting for Larry’s first of two surgeries 

on his iliac arteries. We left the Mayo Clinic just six days after his surgery and 

drove home to South Dakota to get me back to work. He was so ill during the drive 

that we stopped at nearly every rest stop and then made a local hospital the first 

stop back home before checking into a motel where we would live during his recovery. 

By now, Christmas of 2003, debt collectors had become rabid. They called me at 

work, they demanded sums I could not pay and even with explanations of our medical situation, they pursued me very aggressively. When a collector representing a 

Rapid City doctor 

who had already been paid thousands by my insurance company served me with 

garnishment papers; I thought I would die of humiliation and terror. My husband 

was very ill. I needed to keep up his insurance and medications, and if I were garnished, I would not be able to meet that obligation to the man I love. 

We sought the advice of a local attorney to see if we could negotiate something 

with this doctor, but to no avail. Bankruptcy was the only way to stop the garnishment. Even as quickly as the attorney moved to complete his work, one pay period’s 

worth of garnishment payment was collected from my check. I was horrified as I 

was now the local newspaper editor, and being garnished was simply not good on 

18 

many levels. But the bankruptcy went through in the spring of 2004, and the calls 

stopped—at least until the next round of medical issues and until the bills begin 

building again. 

It was not only medical debt in that bankruptcy. Over the years and months leading to that point, we did whatever we had to to stay afloat. We put food and household items on credit, we borrowed against older cars, we ordered needed goods 

through high-interest, high-priced mail order firms. So when we reached the point 

of bankruptcy, all of those debts had to be included. No one was spared. So our 

problems with extreme medical costs and the resulting bankruptcy hurt a wide variety of businesses and individuals. Collateral damage of the national health care crisis, I suppose. 

We had tapped out family and friends, begged for community benefits, received 

food from a local food pantry and yet we were still working. Every available amount 

of expendable income went to medical needs—even rent, utilities and food took a 

back seat. Larry tried his hardest to keep going. His employer followed only the absolute letter of law in terms of Family Medical Leave time off for illness and did 

nothing to help him. It was very clear that they wanted Larry off of their group 

health insurance sooner rather than later. The worry was exhausting, and the stress 

did not help the situation. My sleep diminished to just two or three hours each night 

as I worried myself sick about what would happen and how I could possibly keep 

Larry from feeling what I felt. 

In April 2004, we returned to the Mayo Clinic for the third and final time. Larry 

had surgery yet again. This time he was told he could return to work in six weeks 

but no heavy lifting was allowed. Without any prior notification as is required by 

the law and on the exact date when his 12-week Family Medical Leave for 2004 

was exhausted, and by way of a certified letter, Larry was fired from his job. They 

said that to accommodate his lifting restriction would be too tough for them. 

We sobbed together. The end of a working man’s life was reduced to a letter full 

of lies delivered on Memorial Day 2004. 

In the meantime, the Mayo Clinic wrote too and said that they were writing off or forgiving the $6,000 left on Larry’s bill after the tens of thousands in insurance 

payments but that if we ever wanted to return, we would have to bring the cash 

up-front for our portion of the costs. That ended our ability for Larry to return to 

that fine facility, and he hasn’t been properly evaluated for his peripheral artery 

disease since. 

I took Larry onto my group health insurance, and he began the application for 

Social Security Disability. His application was approved, but he went six months 

with absolutely no income and had to wait two years to qualify for Medicare health 

coverage, so our financial condition continued its decline. Congress should also act 

to fix that deficiency. If an American is found to be too ill to work, making the person wait two years for Medicare coverage is cruel and just plain dumb. 

I even tried opening a small local business (with the help of a small amount of 

local economic development funds) while I continued my full time work at the newspaper, but the business didn’t take off quickly enough. It seemed as though our last 

hope of saving ourselves was doomed. But we aren’t quitters, and we sure gave it 

our all in every way we could think of to pull ourselves out of the financial quagmire. 

Larry got sicker still and in February 2006 was told he would need yet another 

heart surgery. This time it took surgeons 12 hours to complete the quadruple bypass 

at Rapid City Regional Hospital. Larry was in intensive care for days and then 

home to heal. But that certainly pushed our deductible and out-of-pockets right back 

out of sight and reach for my income and his Social Security benefits. We were 

going under all over again just two years after our bankruptcy. 

One of our grown children offered to have us move into her home in the Denver 

area, and we decided that we had to throw in the towel once and for all. 

The life we worked so hard to build and the life we fought to save for the past 

few years was lost. We had failed. The health care system had crushed us. 

Michael Moore’s film crew came to South Dakota and documented our move. And 

they did so because they felt we represented middle class Americans who though 

fully insured can still lose everything because of health crisis. We packed up our 

stuff and the dog and drove to Denver. I left the editing and reporting I loved and 

the beautiful Black Hills of South Dakota. 

Let me say again, we are in SiCKO not because our story is so unique. We are 

in this film because we are not unique—we represent what is happening to so many 

others Americans. That is sad for us all. I worry every night that somewhere out 

there sits a woman like me who is at the end of her rope and has nowhere to turn. 

She works, so she earns too much for government-based help that do not allow for 

extreme medical emergency, but her pay after paying her insurance premiums is not 

19 

enough to support her family. And tonight she’ll sit alone and hurting, not knowing 

that I pray for her and for her strength to face another day. 

I want the members of the committee to know that if HR676, Medicare for All, 

had been in place for us, we would have weathered the storm. We are hard-working 

people who under normal conditions make sound money decisions. But placed under 

the strain of mounting premiums, co-pays, deductibles and out-of-pocket costs, we 

did whatever we had to do to stay alive. 

I am so angry with you. I lived the American dream as my father taught me and 

as his father taught him. I worked, I educated myself, I voted, I bought a home and 

then moved up into a better home, I raised my children responsibly and I served 

in my community—and you left me broken and battered because you failed to act 

on health care reform. 

And out there today are hundreds of thousands of people struggling to make ends 

meet at the same time they are dealing with cancers and heart attacks and all manner of terrible personal health crisis and yet you still fail to act. These people are 

average, middle class Americans like me who want nothing more than to live a good 

and decent life surrounded by friends and family in a modest home with enough 

income to make ends meet. 

I am also a Christian. And I do not know what type of Christianity, if any, the 

current system represents. I hear a lot about family values and respect for human 

life, but are those just empty words said to placate the religious right voting block 

or the powerful pro-life lobby? Other good and decent Christians might not share 

your blind devotion to those points of view. The Christ I learned about as a child 

attending Arlington Heights First United Methodist Church in Illinois and the 

Christ I continue to hear about in Sunday services at Cherry Creek Wesleyan 

Church in Colorado would not allow this to happen to the sick. In fact, I don’t think 

I’ve heard of any religious group that would allow the sick to be so deeply wounded—and especially not at the hands of other believers. I am asking you to value life 

and to value it outside the womb too. 

And my lobby group will be growing more powerful too. Just as I have come out 

of the shadows of economic ruin and shame, so too will others come forward to hold 

you accountable. My faith demands that I love God with all my heart, and to do 

that I must love my neighbors and care enough to speak up for those too downtrodden to speak for themselves. 

But I can only speak here today. You have the power to carry this onward to action. I ask you to search you hearts and your own value systems. Remember hardworking people, put yourselves in the shoes of your constituents and act accordingly. 

Their bankruptcy shame due to medical crisis really is your shame. You are the 

body that could have acted and has not. Move forward now, and please do not wait 

for a new president or for favorable political winds. That course takes no courage 

whatsoever, and I know each of you has shown courage in stepping up to serve this 

nation. I just think many of you have lost your way in remembering who elected 

you and who needs your bravery now. 

I dedicate this testimony to my brave husband and three other Americans who 

gave me the courage to tell this story to millions and the conviction that it can do 

some good: 

To my late father, Howard Boyles, who proudly served his nation in the United 

States Army during World War II and who told me that people have died to protect 

my right and responsibility to speak up; to Sen. Tom Daschle, who took interest in 

my family and who spoke up in spite of political consequences; and to an Eagle Scout 

from Flint, Michigan, named Michael Moore who restored my dignity and my voice 

on a movie screen in Manhattan and is keeping his Scout’s promise to better his community and his nation. 

And I am asking each of you to honor these Americans with me. Honor them by 

pushing this House to action. Please do not ignore those of us who elected you. 

Please help reduce the bankruptcies filed in this nation by fixing the broken health 

care system. We will all be better off—individuals, small businesses and even your 

corporate friends. 

Please hold hearings on HR676, and pass universal, single-payer health care for 

every American. 

Thank you. 

Ms. SA ́ NCHEZ. Thank you, Ms. Smith, for your courage in coming 

here today to testify. I know it is painful, but we are very mindful 

of the message that you are bringing. 

At this time, I would like to invite Mr. Zywicki to begin his testimony. 

20 

TESTIMONY OF TODD J. ZYWICKI, GEORGE MASON 

UNIVERSITY SCHOOL OF LAW, ARLINGTON, VA 

Mr. ZYWICKI. Madam Chairwoman and distinguished Members, 

it is my pleasure to testify today on the subject of medical debt and 

bankruptcy. I commend this Subcommittee for seriously studying 

this question. 

Medical debt, medical problems, and the rising costs of health 

care are a source of concern for many families today. And sadly 

these problems sometimes land them on the steps of America’s 

bankruptcy courts. It is precisely to deal with these sorts of misfortune and temporary financial setbacks that we have our honored 

American tradition of the fresh start to allow workers and families 

to get back on their feet. 

At the same time, we are all aware of the economic impact that 

bankruptcy can have on those conscientious doctors, nurses, hospitals, and other health care providers who deliver our babies and 

even save our lives and those of our loved ones in times of crisis. 

They are entitled to be paid for their valuable services that they 

provide. 

Although it is just and appropriate to preserve the fresh start for 

those overwhelmed by health problems and medical costs, we 

should keep in mind that when some are unable to pay their medical debts, those costs must be passed on somewhere else within 

the health care system, either to insurers and patients through 

higher costs for services or through lower quality care, innovation, 

and choice. There is no free lunch. 

Consider that every $100,000 discharged in bankruptcy may 

make the difference between a hospital being able to afford an additional nurse for a year or improved patient treatment. Indeed, elementary economics suggest that on a macro-economic level, an increase in uncollectable medical debts may exacerbate the problem 

of rising health care costs in the economy. 

Addressing the issue of health care and bankruptcy thus requires 

striking a delicate and complicated balance between the needs of 

innocent families who find themselves in dire straits because of 

medical problems on one hand and the claims of innocent doctors, 

nurses, and hospitals that provide needed and even lifesaving 

health services on the other. 

At the current time, there is little evidence that medical bankruptcies are creating some sort of crisis for the bankruptcy system 

or that the frequency of medical bankruptcies has been rising over 

time. Current data is sparse and provides a tenuous basis for 

sweeping reforms. And further research is needed. But current 

data does suggest a few tentative conclusions. 

First, some medical data is present in many bankruptcy cases, 

perhaps approximately half of cases. 

Second, in a relatively small number of cases, large medical 

debts are the primary cause of bankruptcy filings. 

Third, in some cases, medical debts combined with other debt 

such as mortgage, automobile or credit card debt to lead to a bankruptcy filing. 

Fourth, in the overwhelming majority of cases, there is either no 

medical debt at all, or the amount of medical debt present is relVerDate Aug 31 2005 16:38 Jul 22, 2008 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6601 H:\WORK\COMM\071707\36783.000 HJUD1 PsN: 36783
21 

atively small and unlikely to be the proximate cause of the debtor’s 

bankruptcy. 

Fifth, bankruptcies are insured in general at the same rate as 

the general population. 

Finally, although medical problems theoretically can also contribute to bankruptcy by leading to unexpected job loss or income 

interruption, empirical studies suggest that this is not a significant 

cause of bankruptcies and the number of bankruptcies attributable 

to this cause does not appear to be growing over time. 

Current law strikes an appropriate balance of these competing 

concerns between innocent doctors and innocent patients. Two 

years ago this body enacted the Bankruptcy Abuse Prevention and 

Consumer Protection Act of 2005 by a bipartisan 70 percent majority. BAPCPA should be given an opportunity to prove itself before 

Congress once again reopens the question of bankruptcy reform, especially in light of the lack of any concrete evidence to indicate a 

pressing problem. 

Under the means testing provisions of BAPCPA, low-income 

debtors, including those who are unable to work because of health 

problems, are entitled to file bankruptcy and discharge their unsecured debts, whether medical or otherwise. High-income debtors 

who can repay a substantial portion of their debts without significant hardship are required to enter a Chapter 13 plan and repay 

as much as they can of their unsecured debts as a condition for filing bankruptcy, whether 40, 60 or 80 percent of their outstanding 

unsecured debt. 

Moreover, in calculating the debtors’ income available to repay 

debts in Chapter 13, the law permits a deduction for health insurance and other health expenses. Finally, a judge retains discretion 

to permit an otherwise ineligible debtor to file a Chapter 7 if she 

can show special circumstances such as notably a serious medical 

condition. 

In short, current law adequately accommodate the claims of 

those debtors laid low by medical problems and expenses and other 

innocent parties who are affected by bankruptcy, including health 

care professionals and other health care consumers. It asks debtors 

to pay what they can and health care providers, consumers, and insurers to absorb the remaining costs. 

Although BAPCPA seems to be accommodating these concerns, it 

has been in operation for less than 2 years. Future research may 

suggest propriety of reconsideration of the issue. 

Finally, we should note that as a result of BAPCPA, the bankruptcy filing rate has been cut about in half, at least temporarily. 

To the extent that BAPCPA has succeeded in weeding out fraudulent and abusive filings, which it appears to have done, it would 

be expected that a greater percentage of cases today than in the 

past would involve true medical bankruptcies, even if the absolute 

number of such filings has not increased. Indeed, the primary effect 

of BAPCPA appears to have been to reduce the denominator on the 

filings ratio thereby leading to an increased percentage of legitimate filings, including medical bankruptcies. 

In conclusion, allow me to offer that if this Committee’s true concern is not with medical bankruptcies, but with the cost or quality 

of health care in America in general, an issue on which I express 

22 

no opinion today, it seems obvious to me that tinkering with the 

bankruptcy code is one of the least effective ways imaginable for 

dealing with those issues. 

Thank you. 

[The prepared statement of Mr. Zywicki follows:] 

PREPARED STATEMENT OF TODD J. ZYWICKI


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Chairman CONYERS. [Presiding.] Well, thank you for your testimony, sir. 

Director Clifford White is the next witness. He oversees bankruptcy matters in the Federal court and supervises the means tests 

that are administered as part of that process. 

Welcome to the Committee, sir. 

TESTIMONY OF CLIFFORD J. WHITE, III, DIRECTOR, EXECUTIVE OFFICE FOR U.S. TRUSTEES, U.S. DEPARTMENT OF JUSTICE, WASHINGTON, DC 

Mr. WHITE. Thank you, sir. Chairman Conyers and Members of 

the Subcommittee, I appreciate the chance to be here today to discuss the role that medical expenses play in consumer bankruptcy 

filings. 

The U.S. trustee program is that component of the Justice Department with the mission to enhance the integrity and the efficiency of the bankruptcy system. And our responsibilities range 

from consumer bankruptcy cases to reorganizations of large corporations. 

I would like to address three aspects of the topic of the hearing 

this afternoon. First, as the Chairman mentioned, one of the most 

significant changes made in the bankruptcy reform law was the establishment of a means test. And under the means test, individual 

debtors with income above their State’s median income level are allowed to deduct expenditures set forth in the statute. Most medical 

expenditures may be deducted. 

If the debtor has income above allowed expenses, the debtor may 

be presumed abusive and the case subject to a motion to dismiss 

by the U.S. trustee. A debtor may rebut that presumption by demonstrating special circumstances such as a serious medical condition. 

As of June 30, 2007, about 8 percent of debtors who filed Chapter 

7 petitions after enactment of the means test had income above the 

State median income level and thus were subject to the full means 

test. Of those debtors, approximately 12 percent were presumed 

abusive. But the U.S. trustee declined to file a motion to dismiss 

in about 22 percent of those presumed abuse cases. And the reason 

for about one out of every five of those declinations was high medical expenses or loss of income from illness or injury. 

So Congress established an objective system for determining eligibility but also resided in the U.S. trustee discretion to decide 

whether to seek dismissal, whether a dismissal would be appropriate. Accordingly, debtors who have incurred high medical debt 

or anticipate significant future medical expenditures or who have 

lost income due to medical conditions may be entitled to Chapter 

7 relief irrespective of the means test formula. 

My second point is that the U.S. trustee program does not have 

definitive data on the amount of medical debt owed by consumer 

debtors who seek bankruptcy relief. In 2003, however, we did review a sample of 5,000 cases utilizing data from official records of 

Chapter 7 cases closed between the years 2000 and 2002. 

In general, those data revealed that about 5 percent of total general unsecured debt was medical related. Forty-six percent of the 

42 

debtors listed medical debt. Of those debtors who listed medical 

debt, about 80 percent reported medical debt of less than $5,000. 

Fewer than 1 percent of the cases accounted for more than a 

third of the medical debt. And less than one out of 10 cases, about 

10 percent of the cases, represented about 80 percent of total reported medical debt. Now, for the most part, this accounting would 

not have identified medical debts that were charged on credit 

cards, placed with collection agencies or paid prior to a bankruptcy 

filing. 

Third and finally, the need for bankruptcy data that is readily 

accessible was recognized by the Congress in Section 604 of the reform law, which provides that the bankruptcy court should make 

data publicly available in an electronic format. This presumably 

would include financial information contained in schedules, statements, and other documents filed by debtors in bankruptcy court. 

Although medical debt is difficult to identify with precision on 

the current official forms, there may be ways that such data can 

be made more accessible for policy makers, for administrators, and 

researchers. The U.S. trustee program, for example, has been working with the administrative office of U.S. courts and the Judicial 

Conference of the United States on an automation solution which 

entails the tagging of data on bankruptcy forms. The resulting 

data-enabled, or so-called smart forms, among other things, would 

allow a computer system to automatically aggregate and simplify 

review of data. 

Data-enabled technology would allow researchers and others to 

more easily identify cases with high medical expenses and other 

features. In addition, much of the means tests which we perform 

could be done through data tagging allowing the program to perform its duties more effectively and allowing debtors to know earlier in the process whether the program will deem their case to be 

presumed abusive. 

The courts adopted a jointly developed technical standard for 

data tags about 2 years ago but has postponed their widespread 

use pending further study. If the courts ultimately adopt this new 

technology as a mandatory standard, then bankruptcy administration will be streamlined and policy makers will have more information to evaluate the effectiveness of the system. 

In sum, the U.S. trustee program is committed to improving consumer bankruptcy case administration for the benefit of debtors, 

creditors, and the public. And this will include the exercise of appropriate discretion in evaluating bankruptcy cases that exhibit 

substantial medical debt. 

I would be happy to answer any questions from the Subcommittee. Thank you. 

[The prepared statement of Mr. White follows:] 

43 

PREPARED STATEMENT OF CLIFFORD J. WHITE III 


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Chairman CONYERS. Thank you very much. 

Well, we have had Donna Smith already. We now go to Professor 

Elizabeth Warren of Harvard. 

We are so glad to have you here. And you may proceed with your 

testimony. 

TESTIMONY OF ELIZABETH WARREN, HARVARD LAW SCHOOL, 

CAMBRIDGE, MA 

Ms. WARREN. Thank you. And thank you, Congressman Conyers, 

for inviting me here to talk today about an important problem facing hard-working Americans. 

No family wants to file for bankruptcy. Bankruptcy is an unmistakable sign of failure. It is an indelible mark that will be remembered long after the creditors have moved on and the court records 

have been archived. 

It is costly financially and also often costs families their dignity. 

Moreover, it doesn’t solve the problem. As Ms. Smith pointed out, 

the medical bills can still stack up post-bankruptcy. And yet Congress in its wisdom has decided to lengthen the time before a family can file for bankruptcy a second time. 

For a family facing bankruptcy in the aftermath of a medical 

problem, the pill is especially bitter. Whether the problem was one 

of chronic disease or sudden accident, the typical family is already 

exhausted when it tries to cope with unpaid bills, indecipherable 

charges, a maze of insurance payments and denials, and time lost 

from work. Financial problems piled on top of health problems can 

be overwhelming. 

For too many hard-working middle class families, a single diagnosis or accident can mean financial ruin. Even a relatively routine 

problem such as an appendectomy or long-term care from diabetes 

can be enough to over-stretch a family budget. I will focus today 

on data that my coauthors and I have developed about families 

that file for bankruptcy and briefly note several other studies that 

have similar sorts of results. 

But I want you to keep one thing in mind. When we look at 

bankruptcy, we are looking at the tip of a very large iceberg. 

Economists estimate that for every family that goes into bankruptcy, there are another 16 families who would benefit financially 

from filing if only they were willing to do so. How many more families are struggling beyond that? We are getting a peek at different 

pieces of the data. And I will try to mention some of those near the 

end. 

So let us start with the numbers. About half of all the families 

filing for bankruptcy do so in the aftermath of a serious medical 

problem. Here is the breakdown. 

We start with families’ own description. That is we ask the families, and they tell us. Forty-six percent of the families filing for 

bankruptcy tell us, as Ms. Smith did, that medical problems were 

at least a part of what drove them into bankruptcy. That is the 

first, the pale blue, bar on the figure on the chart on the left. 

We also looked at the financial impact of medical problems from 

other perspectives. We saw there that about one in five debtors, 21 

percent of the debtors from the core sample, indicated that they 

had lost at least 2 weeks of income because of a medical problem. 

51 

Sometimes it was the worker who was ill or injured. Sometimes it 

was parents who had to lose time to deal with children who were 

ill or with elderly parents of their own. 

Some filers mortgaged their homes in order to pay off medical 

debts, 2 percent of the total sample, about 4 percent of all of the 

home owners. There are many overlaps among the categories, but 

the bottom line is the dark blue bar on the right. If we count those 

categories together, self-report, mortgaging a home to pay for medical bills, and missing at least 2 weeks worth of work, we end up 

with 56 percent of the families in bankruptcy in the aftermath of 

a serious medical problem. 

Now, we could take even more perspectives on this. Two percent 

of the sample identified that alcohol and drug problems were a reason for filing. For parents who explained that they had bankrupted 

themselves putting teenage children through substance abuse rehabilitation programs, this would seem to be an appropriate inclusion. 

One percent of the families identified a family member’s gambling problem as a reason for filing. Recognizing that families get 

left behind financially when a spouse or parent goes on a gambling 

binge, loses the house, and leaves everyone deep in debt. Twentysix percent of the core sample reported having unpaid medical bills 

at the time of their filing in excess of $1,000. The median debt was 

over $11,000, very close to Ms. Smith’s $1,000 a month. 

If we included this measure, then the proportion of families filing 

for bankruptcy would rise from about half to about two-thirds. Different people may have different opinions on whether to include 

them. I am simply trying to get all of the data out there. 

I should point out that our data are not inconsistent with other 

studies. For example, a study that may be particularly interesting 

to Congressman Cannon, a new study from Utah reported just 2 

weeks ago reports that 61 percent of families file bankruptcy in the 

aftermath of serious medical problems. That follows-up on an earlier Utah study showing that 60 percent of the families were in 

bankruptcy following serious medical problems, an especially poignant point in Utah, since Utah has one of the highest bankruptcy 

filing rates in the country. 

A Delaware study concludes that based on court record data 

alone that large medical bills led to a 50 percent increase in the 

likelihood of filing for bankruptcy. An Illinois study shows that 58 

percent of bankruptcy filings involved medical debt. Researchers 

specifically noted this number does not include medical debt that 

was paid with credit cards or by borrowing from a loan company. 

An upstate New York study found 58 percent of the families in 

bankruptcy were dealing with medical debt. Some of the research 

has focused on particular illnesses. For example, those with cancer 

indicate that their bankruptcy filing rate is about 3 percent, much 

higher than the national average. 

I just want to point out a little larger context and then I will 

stop. And that is the data in bankruptcy are there because of the 

data in the population generally. I just pick a few. 

Seventy-seven million Americans aged 19 and older, that is two 

out of every five adults, 37 percent of the population, report that 

they have difficulty paying medical bills and have accrued medical 

52 

bills they cannot pay. Twenty-one percent of non-elderly adults 

have been contacted by a collection agency over a medical bill within the past 12 months. Forty-four percent of medical debtors had 

credit card debts higher than $10,000. 

Forty-six percent of those in a Baltimore study report currently 

owing money from medical debts they cannot pay. Forcing families 

into bankruptcy is not an answer. 

Just last week, Bill Novelli, the CEO of AARP, cited a Gallop 

survey across the country in which he noted that almost half of all 

Americans are worried about paying medical costs if they become 

seriously ill or have an accident. Mr. Novelli urges the millions of 

AARP members to make health care reform their number one issue 

in the 2008 elections. 

Like Ms. Smith, I ask Congress to act to protect American families from the financial fallout of our current health care system. 

[The prepared statement of Ms. Warren follows:] 

53 

PREPARED STATEMENT OF ELIZABETH WARREN


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Chairman CONYERS. Thank you so much. 

Mark Rukavina, the executive director of Access, a national resource center. And before that, he was program director for the 

Summerbridge Community Health Partnership in Massachusetts. 

We welcome you to this hearing. 

TESTIMONY OF MARK RUKAVINA, EXECUTIVE DIRECTOR, 

THE ACCESS PROJECT, BOSTON, MA 

Mr. RUKAVINA. Thank you, Mr. Chairman. 

I would like to thank Chairwoman Sa ́nchez and the Chairman 

for the invitation to speak at this hearing today on such an important issue, the issue of medical bankruptcy. Far more common than 

medical bankruptcy, however, is the problem of medical debt. And 

I am going to focus my comments today on the prevalence and the 

consequences of medical debt. 

Year after year, the Nation’s health care spending outpaces the 

consumer price index. Health care costs now consume 16 percent 

of our gross domestic product. This spells trouble for the American 

public. Consumers are expected to pay nearly a quarter of $1 trillion this year in out-of-pocket payments. And this is on top of the 

health insurance premiums that they pay. For many these costs 

will convert to medical debt. 

Professor Warren mentioned the number of Americans with medical debt. It might come as a surprise to people that nearly twothirds of these people with medical debt have health insurance. 

Every fifth insured American carries medical debt. 

It seems many Americans are being sold faulty products. In the 

automobile or airline industry, this level of product failure would 

not be tolerated by consumers or regulators. 

Medical debt has implications. It is a barrier to care. The Access 

Project has conducted a study of uninsured patients treated at safety net providers. These are providers with a commitment to serve 

uninsured and under-served populations. 

And we have found that nearly half had unpaid medical bills. 

And of those with medical bills, a quarter of them expressed reluctance to go back to those providers in the future because of the 

debt that they had. 

When it comes to health access, medical debt trumps health insurance. Research from the Kaiser Family Foundation found that 

medical debt itself is a risk factor in terms of access. Insured people with medical debt have care-seeking patterns similar to the uninsured. They are less likely to fill a prescription, see a specialist. 

They are more likely to skip treatments or forego ordered tests. 

But medical debt also has financial consequences. It depletes savings, destroys credit, and it threatens the American dream of home 

ownership. 

We conducted a study of clients who were seeking services at a 

consumer credit counseling service. Two in five were there because 

a medical incident contributed to their debt problem. The commonwealth fund research on medical debt found that for those with 

medical debt, Americans with medical debt, one quarter could not 

pay for other basic needs because of this debt. 

Nearly two in five used all or most of their savings trying to pay 

off their medical debt. And another quarter charged their medical 

72 

debt on credit cards. People are trying to pay these bills. They simply can’t afford to do it. 

We conducted another study of people seeking tax preparation 

assistance at volunteer income tax assistance sites. This was done 

in early 2005. We found that nearly half of this population had 

medical debt. And of those with debt, more than a quarter reported 

housing problems as a result of this debt. 

Much of what we have learned about this issue we have learned 

from people like Donna Smith, people who call us for assistance in 

resolving the medical debt that they have. And what we see is that 

these bills pile up. They are bills for ambulance, hospital, physicians, prescriptions, lab services. 

On a credit report, all of these bills, each individual bill is a potential strike against them. If unpaid, it can linger for years often 

long after being written off by the health care provider is bad debt. 

In conclusion, I would like to suggest that these problems can be 

solved if America were to adopt the universal system that provided 

Americans with affordable, comprehensive access—or access to 

comprehensive benefits. While this may be years off, there are 

other steps that can be taken in the short run. 

For example, standards for insurance companies could be established that protects people when they get ill. And cost-sharing obligations should be tailored to people’s ability to pay. There are other 

steps that can be taken that address the issue of ruined credit for 

people who have medical debt. 

Too many Americans are healed by our fine medical institutions 

only to be harmed by the bills that they are unable to pay. Credit 

reports marred by medical debt can have all sorts of effects far beyond the medical system. It can drive up the cost of homeowners 

insurance, automobile insurance, limit people’s employment opportunities, and block access to affordable credit. 

Involuntary medical debt should not be allowed to tarnish people’s credit. Medical providers and their agents should be prohibited from reporting this debt to collection agents. 

In closing, I would like to thank the Committee for this opportunity to speak and be happy to answer questions when the time 

is appropriate. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Rukavina follows:] 

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Chairman CONYERS. Thank you for your very interesting testimony. 

The only thing not said about Dr. Himmelstein when he was introduced by Subcommittee Chair Sa ́nchez is that he is the cofounder of the Physicians for National Health Plan, some 20 years 

or more ago, where we now have tens of thousands of doctors who 

are looking at the same issue that this Subcommittee is looking forward to. 

And we commend you for your staying power in this, Dr. Himmelstein, and welcome you. 

TESTIMONY OF DAVID U. HIMMELSTEIN, 

HARVARD MEDICAL SCHOOL, CAMBRIDGE, MA 

Mr. HIMMELSTEIN. Thank you, Mr. Chairman. Thank you to 

Members of the Committee. 

I would just say, when we started that organization, a reporter 

told us that Physicians for National Health Program sounds like 

furriers for animal rights. But it is now the fastest growing medical 

organization in the United States. 

I am a primary care doctor for 25 years. I have taken care of patients at the public hospital in Cambridge, Massachusetts, and 

served on the faculty of Harvard Medical School. Caring for patients is tremendously gratifying. But our health financing system 

constantly thwarts my efforts to help my patients and inflicts financial suffering that I am powerless to alleviate. 

I have seen patients die because they have delayed care for diabetes, chest pain, high blood pressure fearing the costs of that care. 

This needless suffering has motivated me to undertake both the advocacy that you spoke of and the research that I am going to talk 

about today. 

I want to start by saying that health insurance is a little bit like 

a hospital gown. And for those of you who aren’t familiar with our 

gowns—I know the nurses in the audience will be—I brought along 

an example. It looks from the front like it covers a lot. But around 

back, there is a lot left uncovered. And that coverage hangs from 

a tenuous thread. 

Most Americans think they are covered, but few of us are really 

shielded from the financial ravages of illness. This is the key finding of our bankruptcy study. We went around the country and 

interviewed nearly 1,800 people in bankruptcy courts. If all we had 

to do was to look at court records, it would have been a much simpler study. And the problem with those court records, as has been 

mentioned, is that things like credit card debt hides, in fact, medical debt. 

When people take out a second mortgage on their home to pay 

a medical bill, that doesn’t appear in the court records as medical 

debt. And Mr. Millenson and Mr. Dranove’s findings that the Ranking Member, Mr. Cannon, spoke of ignore that fact and, in fact, fail 

to take in account that ours is the only study that actually asks 

people directly the question, ‘‘What caused your bankruptcy?′′ 

One can only dismiss our finding by saying that people like Ms. 

Smith when they tell us that medical care or medical bill caused 

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miss our study. Ours is not just a statistical finding, but one taken 

from actually talking to people. 

I want to emphasize three lessons from our work. First, medical 

bankruptcy is a middle-class problem. People who file for bankruptcy in the wake of illness are average Americans who did one 

thing wrong. They got sick. 

Most of the three-quarters of a million families bankrupted by illness or medical bills each year are middle-class. Fifty-six percent 

had gone to college. Fifty-seven percent had owned a home, at least 

until the financial crisis hit. Eighty percent worked in occupations 

that social scientists tell us are middle-class or above. 

Second, most people bankrupted by illness and medical bills, as 

has been said here before, had insurance. And that is important for 

us to know. This is a system that not only fails to work for the uninsured, it fails to work for those with coverage. 

In our study, more than three-quarters had coverage at least 

when they first got sick. Sixty percent had private insurance. But 

a third of those lost it in the course of their illness. 

Often illness caused job loss and with it, loss of coverage. It is 

like an umbrella that stops functioning once the rain begins. 

According to the Wall Street Journal, 27 percent of employers 

stop health benefits immediately when a worker is too sick to continue working. Twenty-four percent more stop benefits within a 

year. In many cases, debtors whom we interviewed maintained 

their insurance but were bankrupted by medical bills because their 

coverage had gaping holes, co-payments, and deductibles of the 

kind that Ms. Smith talked about. 

The third point I want to emphasize is that the quality of health 

insurance coverage is deteriorating leaving more and more Americans vulnerable to financial ruin. It has been said that we don’t 

have good trend data. In fact, we have some trend data on this. 

Back in 1981, a study asked debtors what caused their bankruptcy. And at that time, 8 percent of the 312,000 bankruptcy filers 

said that medical problems caused their bankruptcy filing. At the 

time of our study, somewhere between 46 and 63 percent of the 1.4 

million bankruptcy filers in the United States said medical problems or medical bills caused their bankruptcy filing. 

In that 20-year period, therefore, we had at least a 23-fold increase in the rate of medical bankruptcy in the United States. We 

have trend data. 

And recent moves by employers to raise co-payments and 

deductibles under the deceptive rubric of consumer-directed health 

care are putting many more working families at risk. Under such 

plans, many families must pay deductibles of $5,000, sometimes 

even more, before insurance kicks in at all. Personally, I have trouble fathoming calling such coverage consumer-driven, unless perhaps one uses it in the sense that one would say cattle are driven. 

Our findings on medical bankruptcy are apparently just the tip 

of the iceberg, as has been said here before. About 729,000 families 

are bankrupted by illness and medical bills each year. But many 

more are under severe financial duress. 

Commonwealth fund surveys that have been alluded to tell us 

that 18 percent of Americans are paying off medical debt over time. 

Eight percent of insured Americans received a collection call in the 

85 

past year. Thirty-nine percent increase in American families paying 

off medical bills over time, over the past 5 years. 

The situation is particularly dire for those with serious illnesses. 

Among those under 65 who have diabetes, heart disease, high blood 

pressure or arthritis, more than three out of 10 spend at least 10 

percent of their income on health care. Among insured cancer patients, 22 percent say that medical bills consumed virtually all of 

their savings. 

A study of terminally ill patients in ICUs found that the terminal 

illness caused a moderate or severe financial problem for at least 

39 percent of families. And virtually all of those families had coverage. 

In sum, our health financing system is failing. Tens of millions 

are uninsured. Tens of millions more pay for insurance only to find 

that what they bought in good faith was a defective product. 

Health insurance is not working. 

At doctors’ offices and hospitals around our Nation the first question patients face is how will you be paying for this. In Canada 

where medical bankruptcy is rare and in Sweden and in France 

and in the rest of the developed world, the first question is how can 

I help you. These differing questions reflect not only the inhumanity of our care, but also its inefficiency. 

We waste hundreds of billions annually on the paperwork required by our complex and redundant private insurance system. Diverting these dollars from bureaucracy to care would allow us to 

extend coverage to all Americans and to eliminate co-payments and 

deductibles without increasing health spending. Indeed, our government already spends more per capita on health care than any 

Nation with national health insurance. 

National health insurance such as that that you, Mr. Chairman, 

have proposed would wipe out medical debt. And nothing short of 

that will work. 

I thank you for your attention. 

[The prepared statement of Mr. Himmelstein follows:] 

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Chairman CONYERS. Thank you so much. 

I want to thank all of the witnesses. This has been very important. It has caused Chris Cannon and myself to begin to think 

about ways that we can come together to put some of the corrections that are so badly needed. 

And before I recognize him, I just wanted everyone to know that 

Tim Carpenter from Massachusetts is at this hearing. And the 

head of Healthcare-NOW, Marilyn Clement from New York, is at 

this hearing and, of course, Courtney Farr from the California 

Nurses Association. 

And Members of the Committee, all of those folks with the red 

jackets on are members of the Nurses Association, except Courtney 

Farr. She decided to wear white today. 

And so, I am pleased now to turn these proceedings over to Mr. 

Chris Cannon. 

Mr. CANNON. Thank you, Mr. Chairman. 

One of the pleasures of working on this Committee is that the 

Chairman is very clear in his views of the world and his principles, 

as am I. We differ on many of those, but being clear means you 

can actually work together. So he is not exaggerating when he says 

that there are things we would like to do. 

And, frankly, you know, I started out thinking about how Ms. 

Smith was really the only interesting witness. And, of course, we 

had people to her right who made that clear. And the people to the 

left actually were interesting. 

There was some humor in the process. The guys to the right— 

we actually appreciate your information because it will go in the 

report to some degree. 

But I am going to ask the Chair’s indulgence here to actually 

move away just a little bit and then talk about H.R. 676. 

And I think, if you wouldn’t mind, Ms. Smith—in fact, let me 

just quote Mr. Rukavina, who pointed out that much of what he 

and his organization has learned has been talking to people like 

you. I suspect that by talking about—I know this is very difficult 

for you. I apologize in advance. Let me just say many of us have 

had really rotten experiences with the medical system. So I realize 

it is a little bit difficult. 

But I would actually like to talk through with you some of the 

problems of what happened to you and why and try and inform the 

larger debate that we are going through here because while it is 

true that people take money from various different sources and certainly, pharmaceutical companies and others, the American Medical Association, give a lot of money, the fact is they don’t buy loyalty, by any means. 

And the concern that we haven’t done anything, I think, is unfortunate. I don’t see it as a matter of shame. I see it as a very complex problem. And I hope that by walking through some of the 

things that have happened to you we can help inform that debate. 

And so, going through your story, ‘‘Brewing in my husband’s 

body were bad arteries that also plagued his father.’’ So we start 

off with a genetic problem. 

This is not a problem of—I think, Dr. Himmelstein, you talked 

about diabetes several times. Actually, several people did. At least 

105 

Type II Diabetes is often self-inflicted by people who indulge themselves. 

And, in fact, Mr. Conyers, you said earlier that you believe that 

health care is a human right for everybody. And I have done a little poll of doctors. So this is not scientific, not something I should 

be criticized on. 

But their conclusion, generally speaking, when I talk to doctors— 

I have done numbers of these—is that 75 percent of our health care 

costs are self-inflicted. If people would take care of diabetes, if they 

wouldn’t smoke, if they wouldn’t drink to excess, if they would eat 

reasonably, if they would exercise, perhaps as much as 75 percent 

of our health care costs would disappear. If that happened, then we 

could afford not only to take care of everybody in America, but everybody in the world and help them have the kind of health care 

that I think human beings are entitled to, largely through their 

own responsibility. 

But in the case of your husband, he did not have—this is not a 

problem that he inflicted upon himself. This is a problem that was 

largely genetic, I take it. 

Ms. SMITH. That is correct. Even the doctors at Mayo Clinic 

talked about the genetic predisposition for his family to coronary 

and peripheral artery disease. Throughout his body his arteries are 

not great. 

He has, for whatever reason, the cholesterol-making capacities 

that are in high gear and deposit cholesterol throughout. And he 

is sitting right behind me, always been a tall—this is my husband, 

Larry, sitting right here—tall, slender man. 

And if you looked at the two of us and wanted to decide which 

one might be plagued by some problems with heart issues, it might 

be me who tends to overeat occasionally and have problems with 

things I shouldn’t do. He has always been a very active, tall, slender guy. 

Mr. CANNON. I am neither tall nor slender, but I am blessed with 

wonderful cholesterol. 

Ms. SMITH. That is all—— 

Mr. CANNON. With the other burdens I carry through life, that 

is just—it happens genetically. And you, on the other hand, had 

uterine cancer. 

Ms. SMITH. That is correct. 

Mr. CANNON. Geez, the time is just not long enough to deal with 

these issues. I am frustrated because the time is almost gone. 

But your disease was not something you inflicted upon yourself 

through lifestyle. It is either genetic or something in the environment that affected you. So there is really nothing you—you are not 

like an overeating person that brings on diabetes and smokes and 

drinks and causes huge costs in our health care system. You really 

are a typical, normal middle-class American who was smashed in 

a system. 

Ms. SMITH. Yes. I would like to just—I know this is really an 

aside. But one of the other things for me because Larry was having 

so many significant health problems and I was so worried about 

the $60 it would cost me to go to the doctor, I put off going, even 

though I knew there probably was something going on with me. I 

106 

wrote it off to this must be pre-menopausal system—it must be 

something else and waited. 

And then I had a cancer diagnosis. And I would like to urge 

every woman, whether she is here or listening somehow, even if it 

is $60, go get checked. 

Mr. CANNON. You know, we held a hearing in Government Reform on that topic. And I think we actually passed that bill that 

encourages public awareness of uterine and other female cancers 

for that very reason. 

Ms. SMITH. Absolutely. 

Mr. CANNON. And, in fact, your point—I am just going to follow 

up. You point out that Larry’s surgery was botched. And on the 

other hand, you refer to, I think, the intuition, I think you refer 

to, of your doctor who sent you to an OBGYN. 

Ms. SMITH. Absolutely. It was a dichotomy for us. His surgery—— 

Mr. CANNON. You sort of got blessed. 

Ms. SMITH. I was blessed with a nurse practitioner who was—— 

Mr. CANNON. Yes. 

Ms. SMITH [continuing]. Who was ready to write me a script for 

hormonal therapy thinking that I was having pre-menopausal 

symptoms at the age of 45 or 46. And she was ready to write that 

script. And she stopped and turned around and said, ‘‘I just don’t 

like the sound of this.’’ 

And I said, ‘‘What would you do if it was you.’’ She said, ‘‘I would 

go have a D&C done.’’ I said, ‘‘Well then, that is what we have to 

do, if I can get it paid for.’’ And fortunately, my insurance company 

said yes. And thank God, or I might not be sitting here today to 

testify. 

Mr. CANNON. Mr. Chairman, my time is expired. Can I make one 

short comment? And then if we have a second round, I would like 

to pursue this topic. 

That is we have a doctor in the InterMountain Health Care System named Brent James who has done some really interesting 

things in particular that go to helping avoid botched operations and 

intuition, which is helpful on occasion. But if somebody is only 

riding on intuition, we are likely to see serious other kinds of problems. And that, I think, is one of the areas where we will agree 

that there is terrific opportunity for progress. 

And with that, I yield back hoping that we will have a second 

round. 

Chairman CONYERS. Thanks, Chris Cannon. 

Let me review my notes here. 

A 2-year wait for Medicare—who made that statement? 

Ms. SMITH. That was my husband. When he applied—that is 

what the law is right now. 

Chairman CONYERS. Now, that is something the Congress can do 

between your Committee, other Committee, and this Committee, 

and Ways and Means Committee, we want to take care of that. 

Then somebody talked about a long wait to even get to bankruptcy after you file. Was that Attorney Warren? 

Ms. WARREN. I was the one who mentioned that one of the important changes in the recent bankruptcy amendment was to 

lengthen the time between bankruptcies, how soon a family could 

107 

file again. And that for families with medical problems, we have to 

remember one of the reasons that bankruptcy is not a solution is 

that the medical bills continue. 

You know, I hate to say this. But the advice that I am often 

called on to give for families facing serious medical problems is 

wait until you are sure that the medical problem is entirely over. 

And frankly, that may mean the death of whoever is seriously ill 

before it is that you file for bankruptcy because once you file, there 

is a minimum of 6 years before you will be able to come back again, 

no matter how serious your problem and no matter what the reason is. 

Mr. CANNON. And, Mr. Chairman, would you yield just for the 

clarification of that? In the BAPCPA—really, we should have put 

another noun in there. Did we lengthen the time between the filings for insurance, do you recall? 

Ms. WARREN. I thought you had. Although I am willing to yield 

in the—Professor Zywicki, have I got this wrong? 

Mr. WHITE. There is a time between discharge that goes from six 

to eight, if I may, Mr. Cannon. 

Ms. WARREN. Yes, we added 2 years. 

Mr. WHITE. But the basic issue with regard to if one has an ongoing substantial debt situation that was something pre-BAPCPA or 

post-BAPCPA that would have existed in the bankruptcy system 

going back from decades. 

Ms. WARREN. Right. But basically—— 

Chairman CONYERS. Yes, that is 6 to 8 years—— 

Ms. WARREN. That is right. 

Chairman CONYERS [continuing]. Before the date of the filing of 

the petition. 

Ms. WARREN. That is right. An increase of 2 additional years for 

families who are hard-pressed and regardless of the reason. 

Chairman CONYERS. Two years. 

Mr. Rukavina, you made suggestions about what insurance companies might be able to do to make this system a little bit more 

palatable. And we want to put that into the record that you can 

elaborate on it whenever you want. But just note that this Committee wants to get some specifics from you on that. 

Now, it just occurred to me I was thinking that a lot of people 

are too embarrassed, they are too proud to go into bankruptcy. 

Bankruptcy used to be something that you don’t tell the neighbors 

about. I am beginning to think it has become so common now that 

that stigma is wearing off. 

But one thing isn’t wearing and accounts for why people don’t 

file is that they might lose their jobs when their employers find out 

that you have gone into bankruptcy. Is that correct? Some people 

say yes. 

Professor Zywicki says no. I yield. 

Mr. ZYWICKI. Under Section 525 of the Code, you don’t lose your 

job if you file bankruptcy. 

Chairman CONYERS. Well, what if you get fired and then you tell 

your employer that under Section 525 of the Code that you don’t 

lose your job? 

Ms. SMITH. Representative Conyers, I would like to mention, too, 

from someone who had to move from South Dakota to Denver, 

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many employers now do a credit check to find out whether or not 

they want to hire you as an employee. So they now make a decision 

on me whether or not they want to employ a woman who would 

work very hard for them and do a lot of good for their company or 

their organization based on the fact that I got sick and my husband 

got sick and we declared bankruptcy. 

Chairman CONYERS. I hold in my hand 21 forms that are required to be filled out now. The very first one contains 57 questions 

dealing with means test calculation. The other is a voluntary petition. The next one, list of creditors holding the 20 largest unsecured claims, a summary of schedules for the bankruptcy court 

itself, statistical summary of certain liabilities and related data referencing 28 United States Code Section 159, real property. 

This is just to get into the bankruptcy door. Now, we have to examine one very important thing before we leave here today. Is it 

convenient, or is it as smooth as some of my friends here at the 

witness table have alluded? Or is this a burdensome administrative 

chore, daunting, maybe stress-inducing? 

I mean, you have to really want to do something real bad to fill 

out all of this stuff. Even though you don’t want to go into bankruptcy, but this is what you have got to do. 

What do you say, Professor Warren? 

Ms. WARREN. Congressman, what has happened is that with the 

2005 amendment we have simply driven up the cost of filing for 

bankruptcy. The attorneys fees have gone up. 

Chairman CONYERS. That is right. 

Ms. WARREN. The length of time, the schedules, the information 

that a debtor has to bring. You generously do not read some of the 

questions that are there. They are not only impossible for most ordinary families to understand, frankly, they are impossible for 

many lawyers to understand, even though specializing in the field. 

When we drive up the cost of filing for bankruptcy, we don’t 

drive them up just for those who abuse the system. We drive them 

up for every single family. We drive them up for Ms. Smith and 

her husband, everyone has got a medical problem, everyone who 

has lost a job, every single mother who has had somebody walk out 

and leave her with $50,000 worth of debt. 

We have taken a system that was inadequate to deal with the 

fallout from our health care system and we have taken that bankruptcy system and we have made it more expensive, narrowed the 

doors and made it an even less useful remedy for families that are 

in serious financial trouble. 

Chairman CONYERS. Dr. Himmelstein, there is this concept in 

the civil rights movement that civil rights organizations are now 

looking at human rights. They kind of expanded from what the 

NAACP when it started in 1909. 

But is health care now being re-examined by doctors and the 

AMA and health care providers and nurses and professional people 

in the industry and teachers? Is health care being examined as a 

basic human right that ought to be available, certainly to everybody in this country? And if so, is that concept growing, or are 

things getting worse? 

Mr. HIMMELSTEIN. I will address that in two ways. One is to say 

that, of course, the U.N. declaration of human rights includes 

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health care as one of the fundamental human rights. And the rest 

of the developed world has already recognized that as one of the 

fundamental human rights that is an entitlement of everybody in 

those other Nations. 

If you ask Americans that question—and it has been asked by 

many polling organizations over the years—the American people 

are overwhelmingly in accord with that concept as well. I ask this 

of my medical students in a very specific way. 

I say to them our bank that was robbed in Harvard Square some 

few years ago—one of the bank robbers was accosted shortly after 

leaving the bank and shot. And I asked them do you believe that 

he should have been cared for for his wounds. And I have yet to 

find a student who says that we should have left that bank robber 

to die on the streets of Cambridge. 

And what I then ask them is if a bank robber who has just 

robbed $50,000 from our local bank should be entitled to medical 

care, should we then deny that to a child with leukemia in our city. 

Should we deny it to an elderly person with high blood pressure? 

So I think by every standard in the civilized world today we 

should, and most of the world does, recognize this as a fundamental human right. 

Chairman CONYERS. But does that mean we have more work to 

do in this country to get more people to recognize it? 

Mr. HIMMELSTEIN. Well, the Institute of Medicine of the National 

Academy of Sciences tells us that at least 18,000 adults die each 

year because they cannot access medical care because they have no 

health insurance. So we are a long way from recognizing this as 

a human right. In fact, we have the number of deaths of 9/11 every 

2 months in this country from lack of health insurance. And yet, 

we take that as a commonplace and have done nothing about it for 

a generation. 

Chairman CONYERS. The gentleman from Arizona, Trent Franks? 

Mr. FRANKS. Well, thank you, Mr. Chairman. 

And thank all of you for coming to testify today. 

Mr. Chairman, I might start out by just saying how deeply I 

sympathize with people who have medical challenges. I have the 

memory of being a child born with some significant—I don’t remember when I was born, but dealing with some of the significant 

issues of being born with full cleft. And this was devastating to my 

family as far as the costs and things associated with that. 

And so, I want you to know that my sympathies are there and 

very sincere and very real. 

That said, I was reading the other day, Mr. Chairman, about a 

new process by which they inject a substance into a cancer patient. 

And this substance goes into every cell in the body within about 

48 hours, even passes the blood/brain barrier, goes into the spinal 

areas. And essentially it is present in some form of some concentration in every cell in the body. 

And then they leave it for another 48 hours or so, and it dissipates in all of those cells, completely leaves, except in cancer cells 

where it is retained. And then they subject the patient to a certain 

bright light. Now, this is certainly experimental. It is just hopeful 

that this is going to occur. 

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And that light turns that substance poison and kills only, only 

the cancer cells in a person’s body. In other words, it would be a 

fundamental cure for almost all types of cancer. And the hard cost 

would be $2,000 or $3,000 once it is done in the long run. 

That kind of innovation is a byproduct of a competitive system 

in America that has given us the most effective health care system, 

I believe, in the world. And today there has been a lot of discussion 

on national health care with very little on bankruptcy reform. And 

I am afraid that we are trying to make bankruptcy reform deal 

with a fundamental issue that is not really bankruptcy-related. 

And I think the challenge here, what we all want to do is to 

make health care and all of these innovations and all of these 

things that can give people the qualify of life that we so desperately want to give to all of God’s children available and accessible in as cost-effective way as possible. And if one just glances at 

history in the background a little bit, the highway of history is littered with the wreckages of Nations who thought that they could 

manage productivity and innovation, the governments that thought 

that they could do that better than the market and the private sector and the free enterprise mechanism. 

And I hope that we don’t make this problem far worse by nationalizing health care. I can’t think of a worse thing that we could do 

to patients that are in a crisis situation than taking away the innovation that has the potential someday to deal with all these things. 

Much of the advantages that we have today are because our free 

enterprise mechanism has given us such innovations. And I think 

that nationalized health care would be the ultimate destruction of 

innovation in America in terms of health care innovations. And 

without those innovations, with the growing health care crisis and 

the growing issues that are related to it, it occurs to me that it is 

going to be hard to meet that circumstance in any frame unless we 

come up with some major innovations, especially with the top five 

killers. 

And those are, you know, like cancer and heart disease and diabetes and such. I think we need major innovations in those areas 

or we are going to have a very difficult time as an American family 

and certainly as even a human family in dealing with these in the 

long run. 

With that said, it kind of gives you the direction I am going in. 

I just think that nationalized health care is a terrible way to handle this issue. I think it will make the—if you think health care 

is expensive now, wait until it is free. 

With that, Professor—I am going to have a hard time—Zywicki, 

could you give me some idea of your own opinion that what negative or perverse economic consequences for health care in bankruptcy systems are of trying to solve a medical debt bankruptcy crisis through the institution of national health care? Do you think 

national health care is the way to solve a bankruptcy issue? 

Mr. ZYWICKI. Congressman, I share your concern and all those 

here about the percentage, you know, the people who are hurt, who 

are unable to pay their substantial health care bills today. I can’t 

imagine how you could hook those two up. 

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ber of people who have very serious problems. The bankruptcy system today deals with those situations quite adequately, not perfectly. But no system is perfect. 

I think that to try to solve that particular problem through the 

bankruptcy system would not only interfere with the smooth functioning of the bankruptcy system, but, as you just suggested, might 

have very serious unintended consequences for health care affordability and availability as well. 

Mr. FRANKS. Mr. Chairman, my time is expired. Might I just add 

the comment that I am afraid that national health care would have 

the compassion of the IRS, the efficiency of the post office before 

we increased its competition, and the cost of the Pentagon. 

So thank you very much. 

Chairman CONYERS. Thank you. 

Would the gentleman allow me to grant him an additional couple 

of minutes so that Dr. David Himmelstein can comment on one his 

comments? 

Mr. FRANKS. Certainly. I am sure he has a perspective. 

Mr. HIMMELSTEIN. Well, the issue of medical innovation and the 

national health insurance system is one particularly close to my 

heart. My father was the surgeon on the team that developed cardiac catheterization that won the Nobel Prize for that innovation 

in 1956. It was a team funded by the National Institutes of Health. 

And virtually every major medical advance of the last 50 years 

has been, in fact, funded by the National Institutes of Health. And 

we are now facing a crisis in medical innovation in our country 

with the drug companies having adopted a commercialized drug development process, which is now yielding a distressing paucity of 

innovation in that field. We are told, in fact, there is even a commercial crisis of the drug industry because they are not developing 

important new drugs at a reasonable rate for their investors and 

concern that drug stocks may be falling because of it. 

So we, in fact, have very substantial evidence that innovation in 

medical science the public sector is an extraordinary leader. And 

we also have that from real world experience. I mean, insulin is, 

of course, a development from Canada. The C.T. scanner comes 

from the United Kingdom, the angioplasty, which is the product of 

a German physician, all of those places with national health insurance. 

And while we have a superb cadre of scientists in this country— 

and I certainly would defend my colleagues medical and scientific 

excellence—the process that we now have in place is clearly beginning to stunt the development of medical science, not further it. 

And in terms of cost, it is very clear that our privatized health 

care system is by far the most costly and least efficient in the 

world. We spend nearly twice per person what Canada does, and 

a good deal of that excess spending is on the bureaucracy needed 

to keep our private health insurance in place. 

Just to give you one example, more people work for Blue Cross 

Blue Shield in my home State that insures 2.5 million people than 

work for the entire Canadian national health insurance system 

that insures 30 million people. 

So with due respect, Mr. Franks, I do think that we would be 

both furthering innovation and efficiency in moving to national 

112 

health insurance. And I would respond to your concerns about the 

IRS and the post office, that if we had a post office that was like 

our health insurance company, they would be saying to us things 

like we are not going to deliver you the mail. You are too far from 

the post office or get too many packages. 

Mr. FRANKS. They do that in my district sometimes. 

Mr. Chairman, the only thing I could add to that, in all sincerity 

to the gentleman, I appreciate his comments. But I do think that 

the case is very strong that those areas and those nations who 

have at least a modicum of enterprise and free market system 

clearly outpace those in innovation that do not. Otherwise, I just 

don’t think Canadians would come here for heart operations. They 

would stay there. 

Chairman CONYERS. Well, I can tell you, sir, that I met Americans in Canada when I was holding hearings who were told by 

their doctors to go to Canada because there was no way that they 

could be accommodated under our health care system. 

Mr. HIMMELSTEIN. Indeed, a few years back a Member of Congress went to Canada for his medical care because the leading specialist in that unusual lung disease were, in fact, in Toronto. And 

when Paul Tsongas was running for president some years ago, he 

expressed his concern that he wouldn’t have gotten the bone marrow transplant that he believed lengthened his life, which was a 

surprise to the doctors in Toronto who developed that procedure 

and who do it in larger numbers per capita than we do in Boston. 

Chairman CONYERS. The distinguished gentleman from Georgia, 

Hank Johnson? 

Mr. JOHNSON. Thank you, Mr. Chairman. 

The Bankruptcy Abuse Prevention and Consumer Protection Act 

of 2005 was indeed a misnomer. It probably should have been 

named the Creditor Relief Act of 2005. 

And I say that because it made it more difficult for consumers 

to obtain bankruptcy relief, either Chapter 7 or Chapter 13. And 

it acted to protect the creditors who many times were credit card 

issuers. And those were the primary lobbyists seeking a change in 

the bankruptcy laws at the time. 

There were not consumers down here in hoards saying that we 

need consumer protection and abuse protection under the Bankruptcy Act. It was the creditor, i.e., the credit card issuing companies. 

And with that in mind, Mr. Zywicki, I would like to find out 

whether or not you know that in the schedules that people file for 

bankruptcy relief that the Chairman displayed the voluminous 

copy of that lists so many details of the person’s life—but one of 

the things that is listed is the creditors, information about creditors. And so, you list the types of creditors. It could be a second 

mortgage on the home. Or it could be voluminous or an outrageous 

amount for credit cards. 

When you did your study in determining that medical debt was 

not really a major causal factor in bankruptcy filings, did you take 

into consideration that sometimes people borrowed money on their 

houses and on credit cards and paid the medical debts with those 

and then declared bankruptcy on the debt that was owed on the 

credit card or on the second mortgage? 

113 

Mr. ZYWICKI. Thank you, Congressman. That is a very good question that goes to the difficulties of trying to untangle what exactly 

the medical bankruptcy—— 

Mr. JOHNSON. Now, when you start dancing on me instead of answering the question it makes me think that perhaps the answer 

is no. 

Mr. ZYWICKI. Well, the reason why it is difficult is because different variables cut different ways. So, for instance, you are exactly 

right. Some of the debt that people incur with respect to medical 

expenses are for credit cards, or home equity loans, that sort of 

thing. 

On the other hand—— 

Mr. JOHNSON. Well, there was no way of in your study of differentiating between what portion of the credit card debt and second mortgage—— 

Mr. ZYWICKI. That is correct. What I have been trying to say 

is—— 

Mr. JOHNSON. It is either medical or—— 

Mr. ZYWICKI [continuing]. A summary of other people’s studies. 

I have not done an independent study. I have looked at the United 

States trustee study, which I commend is a very good study. I have 

looked at other studies that have been done through the years. All 

of them note this particular problem. 

On the other hand, you have got other difficulties. So, for instance, medical debt is typically unsecured debt, which is dischargeable in bankruptcies. So what we also know—and if you talk 

to any lawyers, what you know is that in the period preceding 

bankruptcy, people will pay down non-dischargeable debt or secured debt like their mortgage and choose not to pay debt that is 

dischargeable in bankruptcies. 

So that is—— 

Mr. JOHNSON. But you have caught them both ways on—— 

Mr. ZYWICKI [continuing]. Cuts both ways. 

Mr. JOHNSON [continuing]. The bankruptcy, though. Chapter 7 

made it more difficult for the straight discharge. And Chapter 13 

made it more expensive, you have got more paperwork to fill out. 

The filing fees are higher, just a more onerous burden on people 

to file Chapter 13s as well, so hitting them both ways. 

And is there any way that you can point to a cost reduction for 

the creditors because of the burdens, the increased burdens that 

were put on the consumers in filing Chapter 7 and Chapter 13? In 

other words, has it saved or made money for the creditors? 

Mr. ZYWICKI. Sure. What we know—— 

Mr. JOHNSON. Is that yes or a no? 

Mr. ZYWICKI. Empirical studies support exactly what economic 

theory suggests. 

Mr. JOHNSON. Well, is that yes or no? 

Mr. ZYWICKI. Which is that the more risky lending is, the more— 

all consumers have to pay for credit. 

Mr. JOHNSON. So is your answer that the creditors have made off 

like bandits while the consumers have been left with the surgical 

robe that Dr. Himmelstein pointed to and the Vaseline on the table 

next door? I mean, that is—I mean, your backside is definitely 

showing, I think, throughout all of this. 

114 

Mr. ZYWICKI. I have not seen any evidence that indicates that at 

this time. 

Mr. JOHNSON. That indicates the use of Vaseline. Thank you. 

Chairman CONYERS. The Committee will stand in recess until we 

have disposed of the votes that summon us to the floor. 

[Recess.] 

Chairman CONYERS. Will the witnesses take their seats so that 

we can conclude this hearing? 

The Chair sees no other Members present in the chambers. And 

he would like—wait a minute. We do have Jim Jordan of Florida, 

who said he would be back. And he is back. And he will be our 

final witness interrogating—distinguished Member of the Judiciary 

Committee is recognized. 

Ohio—I stand corrected. 

Mr. JORDAN. That is right. 

And let me just ask a question. Let me get your response, too. 

Does the United States of America have the best health care in the 

world, not health care financing, but health care? 

We will start at this end and maybe just—I am just kind of curious. And I apologize. I was not here for your testimony. I apologize—the meeting. But go ahead and respond. 

And we can start with the professor. 

Mr. ZYWICKI. It seems that way to me. 

Ms. SMITH. I do not know the answer to that 100 percent. I know 

that I received some fine care when I went to Cuba with Michael 

Moore’s staff. I know that I have received some wonderful care 

here, as has my husband received some wonderful care here in the 

United States. But because I am just an average American, I 

haven’t traveled everywhere to compare every system. 

Mr. JORDAN. Well, I understand. But as an average American— 

I mean, frankly, we politicians should listen to average Americans 

a little more often, I think, than other folks. 

Ms. SMITH. I would agree. 

Mr. JORDAN. But just if you just had to like just hazard a guess. 

Ms. SMITH. I would say—I have chatted with Senator Tom 

Daschle about this not long ago. And he said he would describe our 

system as islands of excellence in a sea of mediocrity. 

And I think that I have been—I think that my husband has been 

blessed, I will say that, in seeing some of those islands of excellence in his care, or he would not be alive today. So I believe we 

have some outstanding doctors and facilities and care providers in 

this Nation. 

Do we have the best in the world? I think we could. I think we 

have a great start on that. But I think we have some trouble with 

infant mortality rates and some other things that we really need 

to work on. 

Mr. JORDAN. Professor Warren? 

Ms. WARREN. I would say it is excellent for those who receive it. 

But it is certainly not excellent for those who are closed out of the 

system. 

Mr. JORDAN. Let me just ask a quick follow-up then of you. 

Ms. WARREN. Sure. 

Mr. JORDAN. Who is closed out of the system? 

Ms. WARREN. Well—— 

115 

Mr. JORDAN. I mean—and I don’t mean that to sound, you 

know,—— 

Ms. WARREN. No. 

Mr. JORDAN [continuing]. Trite or anything. I am just—you 

know, because I don’t know of anyone who ultimately is denied 

care. It could be a hassle. And we have heard the compelling story 

from the lady beside you. 

But who ultimately is denied care in the—— 

Ms. WARREN. Well, it is basically two groups that are denied 

care. It is those who have no health insurance and cannot pay and 

actually are denied care. It is also those who are so deeply 

ashamed that they cannot pay for their health care who are in debt 

and who won’t go back to the doctors. 

Mr. JORDAN. Okay. 

Ms. WARREN. And I should add remember the details of Ms. 

Smith’s story. Part of it was that her husband could not receive follow-up care because although the Mayo Clinic—we can name one 

of the finest health care institutions in this country—said we will 

give the care, we have forgiven the debt. But if you ever plan to 

come back and get any follow-up, come with—was it $6,000 cash— 

in your pocket. 

Mr. JORDAN. Okay. 

Ms. SMITH. They told us whatever our portion would be we needed to bring cash first. 

Ms. WARREN. I call that denial of health care. 

Mr. JORDAN. Let me move to the next—next to you. 

Go ahead. 

Mr. RUKAVINA. I live in Boston. And we have some of the finest 

medical institutions in the world. I am happy to live there. And I 

agree with Professor Warren. I think there is uneven access to care 

in the United States. 

Mr. JORDAN. Okay. 

Mr. RUKAVINA. And we have done studies. Others have done 

studies. 

Mr. JORDAN. Okay. 

Mr. RUKAVINA. Individuals with medical debt, a significant number of them have been asked to pay before they are able to schedule a follow-up visit with a provider. 

Mr. JORDAN. Doctor? 

Mr. HIMMELSTEIN. It is a topic that has concerned me for many 

years from the time that I was an intern and did the first study 

of so-called patient dumping in this country in 1981 and found that 

about 300,000 Americans are denied care in emergency rooms in 

hospitals each year because they can’t pay for it, clearly, sub-standard care. We also have a substantial population that financial incentives in our system—excuse me—give doctors and hospitals incentives for excessive and often even assaultive care so we know 

that something like 70 percent of the stints put in in this country 

do our patients no good and may actually harm them. 

The systematic answer I would give you is my colleagues and I 

published this spring a study looking at every study ever published 

comparing quality of care in U.S. and in Canada. And what we did 

was we searched the world’s literature, queried not only computer 

databases, but colleagues to come up with every study ever pubVerDate Aug 31 2005 16:38 Jul 22, 2008 Jkt 000000 PO 00000 Frm 00119 Fmt 6633 Sfmt 6601 H:\WORK\COMM\071707\36783.000 HJUD1 PsN: 36783
116 

lished. We then had a librarian go through and blackout the results of each study so that we could not tell which had favored U.S. 

or Canada before deciding whether the study should be included in 

our systematic analysis. 

We then summarized all of the evidence. And the best evidence 

comparing insured Americans with the average Canadian is the 

death rates are about 5 percent lower. Mortality rates are about 5 

percent lower in Canada than in the U.S. for patients with comparable illnesses treated in Canadian as compared to U.S. care. 

Statistically that is not a significant difference, we thought. So 

we said indistinguishable though the trend favors Canada. And I 

think that that probably comes from what was referred to as islands of excellence in a sea of mediocrity in the U.S. But I hasten 

to add that virtually all of those studies in the U.S. situation were 

of insured patients and excluded those who were receiving the most 

sub-standard care. 

So I would say the fairest answer to your question is if you are 

insured in the U.S., you get care about comparable to that of the 

average Canadian. If you are uninsured, the quality of your care 

is substantially worse in the U.S. 

Mr. JORDAN. Mr. Chairman, it took a little longer to get through 

that with six panelists than I anticipated. But I see my time is expired. 

Chairman CONYERS. Thank you, Jim Jordan of Ohio. 

Mr. JORDAN. Yes, there we go. 

Chairman CONYERS. We appreciate it. 

Ladies and gentlemen, this has been very instructive. I would 

like to leave the panel—well, let me ask Professor Zywicki: What 

have you learned? What do you recommend? Where do we go from 

here, the Committee, if you wanted to give us some free advice? 

Mr. ZYWICKI. With respect to bankruptcy? 

Chairman CONYERS. Yes. 

Mr. ZYWICKI. With respect to bankruptcy, as I said, the fundamental challenge is balancing the needs of innocent individual 

debtors with the needs of those doctors and hospitals that provide 

health care service. And they are innocent, too. And I believe that 

the current system balances those interests appropriately based on 

what we know today. 

BAPCPA has only been in effect for less than 2 years. It may be 

that future real data comes up that tells us that this is a serious 

problem. For the time being, though, it seems to me that it is a 

complicated balance, but it seems to me, it strikes the balance between those two innocent groups of people with respect to bankruptcy. So I don’t see any need to change the bankruptcy system 

right now. 

Chairman CONYERS. Thank you. And you do not feel that the 21 

different forms that I am putting into the record, which total into 

hundreds of questions of some detail, don’t need some scrutiny and 

review and reduction? 

Mr. ZYWICKI. Well, Congressman, I think that we need to continue studying how BAPCPA is actually working. This body looked 

at BAPCPA for 7, 8 years before it went into effect. There was one 

clear lesson we learned from that, which is that we tried the honor 

system with respect to bankruptcy. 

117 

We tried a system with few safeguards, few tools for studying 

fraud, looking for fraud and abuse and that sort of thing. And it 

turns out, human nature being what it is, that the honor system 

didn’t work, just like it wouldn’t work if we had a tax system without an IRS. We could say pay as much tax as you want, and we 

know that wouldn’t work. 

We found that that was going on with bankruptcy. So we tried 

to—this body tried to put in safeguards, tried to put in mechanisms 

to increase the accountability and the protections against fraud and 

abuse. And I think that it is absolutely imperative that this body 

continue to look at whether or not we have struck the right balance, whether or not the system is working as intended to try to 

ferret out fraud and abuse while preserving the fresh start for 

those who need it. 

So far from what I can tell, the system seems to have struck 

the—BAPCPA seems to have struck the right balance. Although 

around the margins, obviously, with respect to things like credit 

counseling, for instance, we may want to look and see whether or 

not it has been a cost effective reform from a cost-benefit analysis. 

Chairman CONYERS. Does your memory go back far enough to recall how long the credit card companies had campaigned for bankruptcy reform? I have been here several decades, so I remember. 

Do you? 

Mr. ZYWICKI. I don’t. I didn’t really pay that much attention to 

the lobbyists. I mean, I haven’t received—my research is not sponsored by any consumer creditors. 

Chairman CONYERS. I see. 

Mr. ZYWICKI. I haven’t received a dime from any bankruptcy 

groups like bankruptcy judges or any of those sorts of people who 

think that—who want more bankruptcies. I am just, you know, an 

independent professor who thought that the bankruptcy system 

could use some reform. And so, I didn’t really pay attention to—— 

Chairman CONYERS. But it didn’t come to your attention as a 

professor or as a citizen? 

Mr. ZYWICKI. Sure, absolutely. Yes, Congressman. I mean, when 

I said there were—— 

Chairman CONYERS. I mean, you know what I know about how 

we got to the law. 

Mr. ZYWICKI. Absolutely. What I saw was there were a lot of— 

there were consumer creditors who wanted reform. There were a 

lot of bankruptcy lawyers and members of the bankruptcy industry 

who spent a lot of money and flying around here all the time trying 

to lobby against them. 

Chairman CONYERS. Year after year. 

Mr. ZYWICKI. So—— 

Chairman CONYERS. Exactly. Okay. Now your memory is coming 

back. 

Mr. ZYWICKI. Right. So special interests lobbying on both sides. 

And, you know, I don’t know—the final result, according to at least 

the empirical studies I have seen suggested that congressmen and 

senators voted for or against bankruptcy reform based on whether 

or not they thought it was good or bad policy, not based on special 

interest influence. 

118 

And that was my impression, that those who voted against it did 

so sincerely. Those who supported it in this House did so sincerely. 

And I see no reason to doubt that. 

Chairman CONYERS. Mr. Jordan? I yield to the gentleman. 

Mr. JORDAN. Thank you. If I could, Mr. Chairman. I appreciate 

you yielding. 

Just one question for Professor. You know, last week I met with 

a group of doctors in our district. And, you know, they would all 

agree with, I think, your assessment, which they believe we have 

the finest health care system in the world. And I know the panel 

was mixed on that. 

But they would agree with that. But they are very frustrated 

with the financing system. I mean, so much so that a few of them— 

the majority said no. But a few of them were saying single payer, 

government-run system can’t be worse than dealing with the insurance companies like we are dealing with today. 

I mean, I am very nervous about going in that direction. I think 

Congressman Franks when he talked about the government running and making decisions about health care—I think it is a scary 

thought. And I am certainly not for it. 

But I was somewhat surprised at the frustration from providers. 

I mean, great doctor, surgeon, everything. And I related to them 

it seems to me every single health care decision you have got so 

many players in the game: the doctor, the patient, the insurance 

company, the employer, the government, the pharmacist, the pharmacy benefit manager, and the band plays on. 

And the complication of the whole—and I know this is a longer 

thing. But just real quick, what is it, in a general thing? And I 

know this is off the bankruptcy topic. But I am searching for where 

we have to go to make it work better, the best system. And, you 

know, that is a huge question at the end of a Committee hearing, 

I understand. But it is what I wanted to try to get to. And I appreciate the—— 

Chairman CONYERS. But a very appropriate one, sir. 

Mr. ZYWICKI. I agree. I mean, I don’t have any particular answers, other than that I can restate the question as a bankruptcy 

question, which is one that I am more familiar with. And this isn’t 

directly on health care. 

But when I was working on the bankruptcy reform legislation 

and being involved in that process, at one meeting I sat down next 

to a fellow who ran a—a father and a son who ran a small, familyowned lumber store in Southern New Jersey. And I said, ‘‘I don’t 

understand. Why are you here? Why do you want bankruptcy reform?′′ 

And he said, ‘‘Well, listen, Professor, it is this simple. Two years 

ago, a Home Depot opened up in the next town over, and we are 

already having trouble making ends meet. So let me tell you, somebody comes in, and, you know, we give them a credit to borrow 

$1,000 to build a deck or something. The next thing you know, they 

file bankruptcy, and we don’t see any of that money.’’ 

‘‘And let me tell you it is hard enough to make ends meet competing against a store like Home Depot to not have to deal with 

$1,000 or $5,000 or $10,000 or $20,000 or $30,000 of bankruptcy 

119 

losses every year. And that is why we want bankruptcy reform.’’ 

That is a small-business man. 

I suspect and, you know, my observation is that a lot of doctors, 

for instance, are fundamentally small-business people. And we 

have heard today that for one reason or another, a lot of medical 

bills are not paid either because they can’t be paid or they aren’t 

paid. And I can understand why a health care provider, for instance, may want to get rid of the complexity of trying to collect 

on bills, may want to get rid of the risk of not being able to collect 

on bills. 

You know, if somebody discharges $50,000 of bills, you know, 

that could be your bonuses for your salary. I mean, you could imagine sort of where that money goes. 

Chairman CONYERS. Right, right. 

Mr. ZYWICKI. So one could imagine why health care providers 

may seek a more secure and a more systematic way of being paid. 

How to bring that about is not my area of expertise. I can just sort 

of identify that I understand the problem that he has in mind. 

Chairman CONYERS. Could I just ask the witness, who is very articulate, do you believe health care is a human right? 

Mr. ZYWICKI. Congressman, I—— 

Chairman CONYERS. And you can say no if you really don’t believe it. 

Mr. ZYWICKI. Well, I am trained as an economist. 

Chairman CONYERS. Sure. 

Mr. ZYWICKI. And I am trained to look at the world through a 

lens of scarcity. And so—— 

Chairman CONYERS. Of dollars and cents, cost-benefit. 

Mr. ZYWICKI. That there are tradeoffs. And obviously, ideally I 

would like to have great health care for everyone. I would like to 

have great education for everyone. I would like to have the safest 

cars and the safest houses for everyone. 

Chairman CONYERS. Right. 

Mr. ZYWICKI. Now, there is a lot—— 

Chairman CONYERS. There is a lot of things that you would like. 

Mr. ZYWICKI [continuing]. Of things I would like. 

Chairman CONYERS. But the 18,000 people that I have never 

heard disputed that die because they don’t get health care—what 

do we give them, a cost-benefit analysis? Or—— 

Mr. ZYWICKI. Well, thank you for allowing me to clarify my observation. 

Chairman CONYERS. Sure. 

Mr. ZYWICKI. I mean, obviously the tradeoff—I am not an expert 

in this field, but just as somebody who has followed it loosely as 

a citizen, the tradeoff seems clear, which is to say that trying to 

increase access to everybody, it has been argued, leads to rationing, 

leads to wait lists for people having to wait to see a doctor and that 

sort of thing. 

I personally don’t have the expertise to say how we should trade 

off questions like choice, whether somebody should be able to 

choose their doctor rather than be assigned a doctor, how long 

somebody should have to wait to see a doctor for different types 

of—— 

120 

Chairman CONYERS. So you assume a universal health care proposal would assign doctors? It would take the private right? And 

that is one of the things I wanted to get in the record, that universal health care, as is proposed in the Congress, is not government-run. It is privately run, but government financed, which it is 

a great deal right now. It is just that the systems are not working 

very well. 

Mr. ZYWICKI. Congressman, I present some data in my testimony 

which is very surprising to me, which is, for instance, the observation that the decline in insured rates seems to be primarily among 

immigrants. Over the past 13 or 15 years, the insurance rate for 

natural born Americans has actually risen. 

Now, why do I say that now? Well, mainly just because this is 

obviously, as every congressman who has spoken today has observed, this is a very, very complicated, complex question of how 

to deliver to people the right combination of choice, quality, cost, 

and that sort of thing. Obviously, there are a lot of other big social 

issues wrapped up in there, which may be issues of immigration, 

for instance. 

What the best way to bring that about I will leave to other people to try to decide. 

Chairman CONYERS. Thank you so much. 

Mr. Clifford White, do you have any parting comment? 

Mr. WHITE. Well, the only observation I would make, Mr. Chairman, is that there is no information or data that we have identified 

that would show that the bankruptcy reform law has had an adverse impact on those who have filed bankruptcy because of high 

medical debt. So just a couple of factual observations that some of 

which were in the testimony. 

The major change in the bankruptcy law and the consumer law 

that would potentially affect such filers would be the means test. 

More than 90 percent of filers are not affected largely by the means 

test. And of the stack of forms that you pointed to, the large stack 

of forms, almost all of those forms were required pre-BAPCPA, one 

major exception being the means test form, which more than 90 

percent of the filers just fill out the income portion, the first 15 

lines. 

So in our observation, the means test is not having an adverse 

impact. And we understand both in applying the formula to make 

sure it takes into account health care costs and also in exercising 

discretion where the form may not take into account job loss, for 

example, that we exercise discretion in taking into account special 

circumstances which the law allows us to do so that we do not in 

our enforcement activities take any steps that are unnecessarily 

adverse to debtors. 

That is a responsibility, a discretion we are given by the Congress. And we have been very energetically trying to carry that out. 

Chairman CONYERS. Thank you so very much. 

Ms. Smith? 

Ms. SMITH. One thing I wanted to—I wanted to thank you first 

of all, Congressman, for letting me speak as I don’t think very 

many Americans get the opportunity to do what I did here today. 

And I deeply appreciate that. 

121 

I do want to correct just one thing that you said. I don’t think 

that the stigma of bankruptcy is gone at all. I think there is still 

a huge stigma to bankruptcy, certainly, for any of us who were 

raised with middle-class values, those of us who were raised to 

work hard and do the right thing and go to church and be good, 

faithful members of our communities. 

Bankruptcy is failure. Bankruptcy is horrible. And anything that 

makes that more difficult is hard to imagine that we wouldn’t want 

to remove medical debt from that process. 

And the other thing I hope I can say to all of you because I appreciate an economist’s point of view, I appreciate a trustee’s point 

of view and all the other people. But I know that if we had to go 

strictly by the numbers, way back when when we formed this Nation, we never would have fought the War of Independence. 

We never would have fought to be in this room today if we went 

strictly by the numbers and said this is the way it should play out. 

But we didn’t do that because we believed there could be a better 

way to run government. And I am still going to implore all of you 

to please listen to the people who elected you and make this a better system for us. Thank you. 

Chairman CONYERS. Thank you very much. 

Professor Warren? 

Ms. WARREN. I will just be very brief and say that I agree that 

the old system didn’t work before the 2005 amendment, not because there was evidence of fraud and abuse. There was never evidence of fraud and abuse. These were stories, frankly, that people 

just kept repeating. 

But the only hard data we had was that there was not substantial fraud and abuse in this system. The reason it didn’t work, 

bankruptcy never was a good substitute for having health care insurance that really worked. It is a poor mismatch. 

The reason we see families in bankruptcy in the aftermath of 

health care problems is because there is no place else for them to 

go. They didn’t turn to bankruptcy because they said, ‘‘Man, lucky 

me, I have got $25,000 in medical debt and so this must be my 

lucky day. I can file for bankruptcy.’’ It is that they scramble and 

look. 

It is not option two or option 10. It is option 500 on the list of 

selling your goods and having garage sales and put second mortgages against your house and put a second lien against your car 

and every other thing you can do to try to scratch to make it to 

the next pay day without having to go see a lawyer and declare 

bankruptcy. So we had a system that was broken. Yes, sir, we did. 

And, frankly, Congress just broke it worse. 

They drove up the costs of filing for bankruptcy. They didn’t separate out and say we are going to drive up the costs just for families that abuse it. We are going to drive up the costs for everybody. 

And they made access-tougher, tougher for everyone. We used the 

8-year example as just one of those. 

So if you ask the question around health care and bankruptcy, 

I have to say you took a bad system and you made it worse. But 

I will say one more thing about why it is relevant for this Committee. You are the voice of families like Ms. Smith’s, families who 

122 

have been forced into this bankruptcy system. You are the voice for 

the rest of the Congress. 

If you will not tell the story of the bankruptcy families to the rest 

of Congress, then their story is lost. It stops here, and it stops 

today. 

So if you ask for those last two pieces of advice, as you did, one 

is please don’t make this bankruptcy system even worse. Please 

consider making it better. But secondly, please take these stories 

into the larger debate about what we are going to do with health 

care in the United States. 

Chairman CONYERS. Do you think reviewing the sub-prime consideration in the bill or the means tests would be good starting 

places? 

Ms. WARREN. Congressman, I think there are so many good 

starting places in that bill it is almost hard for me to answer. I 

think those would be fine points of entry, sir. 

Chairman CONYERS. Director Rukavina? 

Mr. RUKAVINA. Chairman Conyers and distinguished Members of 

the Committee, I would like to thank you for the opportunity to 

speak before you today. I am not an expert on personal bankruptcy. 

I have far too much experience working directly with individuals 

who have medical debt, however. And I know what happens with 

those individuals. 

That debt is contagious. It is passed on to other family members. 

That debt is converted to other forms of debt. People take medical 

debt, medical bills, put it on credit cards. They take out loans. They 

do take out second mortgages. 

As a result of having medical debt, liens are put on accounts that 

they have on homes. Wages are garnished. All of these are things 

that are terrifying for someone who is trying to get access to health 

care. 

I don’t know that I have much to suggest in terms of the bankruptcy law and what should be done. It doesn’t seem, from my anecdotal information and the research I have read, that much has 

improved for people with medical debt since the reforms. 

However, I am wondering if there is some information that can 

be mined. One of the previous speakers mentioned credit counseling. We worked with a credit counseling service looking at reasons for people seeking those services. And when we did a survey 

several years ago, the counselors themselves were surprised to 

learn that two out of every five people seeking their services were 

there because of a medical incident. 

And I am wondering if this Committee can mine the information 

that exists in the credit counseling services. These are services that 

is the new requirement under the Bankruptcy Reform Act. And I 

am wondering if it is possible to look to see whether there is information there that might inform future decisions that this Committee will be making. 

Chairman CONYERS. Thank you so much. 

Dr. David Himmelstein? 

Mr. HIMMELSTEIN. I am no expert in bankruptcy and cannot advise the Committee on the bankruptcy laws at a general level. On 

medical bankruptcy we are in the process of going into the field for 

a second round of our study and seeing what the recent changes 

123 

have wrought in the population. But we don’t yet have those results. So what whereof one does not know, thereof one should not 

speak. And I will not speak further of that. 

But what I will address briefly is a health care system which has 

cost without benefit at this point so that when we say we weigh 

the costs and the benefits, the business structure of our health care 

system is a cost without a benefit. Where we take wonderful colleagues of mine like Jack Rowe, who is a superb geriatrician making $250,000 a year at Harvard and instead we say go to AETNA 

and there, Dr. Rowe, you can make $250,000 a day each day, including weekends and holidays if you turn from being a doctor to 

being a businessman. 

Chairman CONYERS. How is that done? 

Mr. HIMMELSTEIN. Jack Rowe was the CEO of AETNA after leaving Harvard where he was chief of geriatrics. And as CEO of 

AETNA, his payment amounted to $250,000 each day. That was 

money drained from our health care system. 

We have a debt collection system and a billing system which 

drains enormous resources from our health care system and which 

turns doctors into businesspeople. And I guess what I would ask 

of this Committee and of the Congress is to return us to the calling 

of our profession and allow us to take care of patients and not 

worry about the enormous profits to be made off the health care 

system and not to be burdened by paperwork. 

When the honorable gentleman from Ohio spoke of the physicians whom he met with in his district and his surprise at seeing 

the relative support there. It is not just that they were small-business men who were struggling. We have actually surveyed colleagues on this. 

Most doctors are prepared to give up income, give up income if 

we relieve them of the paperwork burden. More than half of doctors 

in this country say they would give up 10 percent of their gross income if we would relieve them of the paperwork burden that our 

insurance system inflicts on them. 

So what the Congress can do is stop us from being 

businesspeople. And, in fact, most of us would be perfectly happy 

to make a little less if we could just take care of our patients. We 

make good livings. But let us take care of our patients, and let us 

not be part of inflicting further suffering on our patients, which all 

too often we do today. 

So I guess the poet laureate of Kentucky said years ago that rats 

and roaches live under the laws of the jungle and supply and demand and it is the privilege of human beings to live according to 

the laws of justice and mercy. And that is what most of us went 

into medicine hoping to be part of. And help us to return to that. 

Thank you. 

Chairman CONYERS. Thank you so much. 

Chris Cannon, the last word? 

Mr. CANNON. Thank you, Mr. Chairman. I actually have some 

questions. Do I have enough time to ask? 

Chairman CONYERS. Yes, of course. 

Mr. CANNON. You know, this is a fascinating hearing. It goes beyond bankruptcy. I appreciate some of the comments that may be 

helpful as we look at bankruptcy again. 

124 

But as we look as a country at what we do with our health care 

system, it seems to me that you guys, at least a couple of you, are 

peculiarly postured to help us understand a couple of things that 

I am thinking, particularly Ms. Smith because you have been 

through some of these things. 

And, Dr. Himmelstein, I think you are the only medical doctor 

on the panel. Right? 

And this is our last panel. So thank you. 

And tap me or something if I bore you. But—— 

Chairman CONYERS. You are never boring. I don’t always agree 

with you, but we certainly listen carefully to each other. 

Mr. CANNON. Thank you. And with some facts on the table, I 

think there are some places we can go. 

Chairman CONYERS. Absolutely. 

Mr. CANNON. In the first place, though, the world has radically 

changed about medicine. 

I would like, Dr. Himmelstein, for you to respond to a couple of 

things. In the first place, the current X prize. The last X prize was 

for Burt Rutan who won the prize by going into sub-orbital space 

twice. And the X stands for 10 as in $10 million. 

The next X prize is for the company that can decode an individual’s DNA for $1,000. Are you familiar with that? And we are actually getting close. We are not there. I mean, it is a long way. But 

we are a lot closer to $1,000 than we were from the amount of 

money we started at when we did the original decoding of the 

DNA. 

That seems to me to be profound for how we look at the future 

of health care. Is that not the case, do you think? In other words, 

the fact that we can get your DNA—suppose we could do it for 

$1,000 today. You could have your DNA decoded. I could have mine 

decoded. 

If we both have a problem, we treat the problem with the same 

medicine. You get better. I get worse. We look at our DNA to find 

out what the difference may be. 

Mr. HIMMELSTEIN. Yes, we are a ways from doing that and from 

the practical implications that one would dream about from that. 

But at some point that will clearly have a profound impact on our 

health care system. 

Mr. CANNON. But we are down to the point where, you know, if 

you take the HapMap that was recently completed—and the University of Utah played a big part of that—that, at least a HapMap 

can be done for less than $30,000, I think, now for an individual. 

So—— 

Mr. HIMMELSTEIN. Right. And what it is doing essentially is 

breeding very important research leads. And we are still quite a 

ways from being able to take advantage of results from those research leads. 

Mr. CANNON. Let us pursue that, what it means to be quite a 

ways away. And, you know, we now have these computers that 

have massive multiple processors that do trillions and trillions of 

transactions a second. 

When you combine DNA with lifestyle choices and personal information and start looking at the effects of different protocols, that 

is a complex system of statistics rather than a double blind study, 

125 

doesn’t that have a tendency to open up radical new ways to look 

at results and back from that, into causation? 

Mr. HIMMELSTEIN. We hope so. We don’t have proof of that, certainly, at this point. And we are, I would suspect, quite a ways 

from that. 

On the other hand, we have enormous untapped known potential 

for improving health. So we know—— 

Mr. CANNON. I am going to get to that point as well. But I just 

want to create kind of—I don’t know why you are—it is going to 

take the time it takes. But what we have today is a relative cheap 

process of decoding DNA, which allows us to do radically more than 

we could do 2 years ago. 

Mr. HIMMELSTEIN. Absolutely. 

Mr. CANNON. And we have computers which are radically more 

powerful than they were 2 or 3 years ago. 

Mr. HIMMELSTEIN. Absolutely. But I would tell you when I was 

a resident in 1978 I wrote a paper about how computers were going 

to revolutionize medicine in the next 5 years. 

Mr. CANNON. But they did to some degree. Now, the profession 

didn’t adopt them in the ways that I think you were talking about 

a moment ago that would help us implement—— 

Mr. HIMMELSTEIN. I would invite you to most clinics around this 

country—and what was said by the Committees in 1978 about 

what computers were going to do are still being said by the Committees today. And the timeframe they are predicting is the same 

5 years from now. 

Mr. CANNON. But it is a dramatically different—it is a different 

environment, you would grant that, would you not? 

Mr. HIMMELSTEIN. Absolutely. 

Mr. CANNON. That is important as we look at what our policy is 

going to be because I personally believe, after having consulted 

with some of the really brilliant people in America on this issue, 

that we could increase our understanding of disease and causation 

50-fold with the money we are investing right now just based upon 

changing a few things. 

Let me get to what I think is a final point because there is a lot 

we could talk about here. But are you familiar with—I think you 

smiled earlier when I mentioned Brent James’ name at IHC. Are 

you familiar with Brent? 

Mr. HIMMELSTEIN. Yes. 

Mr. CANNON. He is—— 

Mr. HIMMELSTEIN. We are speaking at a conference together in 

August. 

Mr. CANNON. Interesting. He is one of the more interesting people I have met because he points out that a doctor can only understand seven or eight or nine variables at any given time. And so, 

you may get radically different instructions from a doctor from 

morning to night in caring for the same patient with little change 

in the condition. 

And so, he has come up with a system in the case of—well, various systems—but in the case of diabetics, he has taken the average diabetic that is being served and by taking a complex system 

and tracking complex data, he has been able to reduce the average 

126 

blood sugar with the AC1 or whatever you call it, whatever that 

test is. 

Mr. HIMMELSTEIN. A1C. 

Mr. CANNON. A1C, right—from nine to under seven. And if you 

are under seven, you don’t have the complications with diseases 

with feet. And this really gets back to the problem that your husband had, was a botched job or the intuitive nurse that gets you 

the right kind of treatment. And there is a great deal of intuition 

which can be helpful or fail in the system. 

And what Dr. James is doing is helping create an environment 

where we use systems to control the variables so that we can enhance the likelihood of having good outcomes. That seems to me to 

have a terrific potential for how we—and this, I think, was the 

point you were making about how there are a lot of things we can 

do now. Do you want to elaborate on those kinds of things we can 

do today that allow us to improve health care? 

Mr. HIMMELSTEIN. Well, I mean, at many levels I think from 

quality improvement efforts in hospitals and out-patient practices 

around the country, which Don Berwick and Brent James and others have really been leaders and I am follower of theirs in this 

field. We could probably save tens of thousands of lives each year 

by upgrading quality. 

I think it is also clear that a more consistent and rational funding system would give us a better base for doing that quality improvement work. And that is why Don Berwick, who was actually 

knighted by the queen for his work on this and is generally recognized as the quality improvement leader, is one of the supporters 

of single payer national health insurance in this country. 

But clearly, there is that kind of improvement we could make. 

There is also improvement in prevention that we could clearly 

make. And I would say this is not just individual choice. 

It is not that tens of millions of Americans have decided all of 

a sudden to start making irrational decisions about eating hamburgers and smoking cigarettes and killing themselves. It is that 

we have developed a toxic food environment and a toxic non-exercise environment in our country. 

And we need to reverse those with some of the things the Chairman talked about at the outset, really changing the water in which 

we swim to change tens of millions of Americans. It is not just that 

I like hamburgers that is the problem. 

Mr. CANNON. Right. 

Mr. HIMMELSTEIN. It is that hamburgers are available cheaply at 

every street corner and delicious fruits and vegetables are not in 

many communities and that we have eliminated—— 

Mr. CANNON. In any community, with all due respect. In this 

community you can’t get—you can get an apple, one of those green 

ones that don’t taste very good down in the cafeteria. 

Mr. HIMMELSTEIN. I mean, I think we absolutely know there are 

many things we can do in our society to improve health and ranging from public health activities to more consistent application of 

science and system science and delivery of care, and many of them 

facilitated by national health insurance as well. 

Chairman CONYERS. But could I merely interject that—and turn 

it back to you, Chris Cannon, that we have been joined by Hilda 

127 

Solis, the gentlelady from California, who is a supporter of a universal health concept. But more immediately, she is bringing a 

group of Members of Congress plus people who work in the field 

to San Diego, California this weekend. And I think it was out of 

that interest of the distinguished panel of witnesses that she came 

by. And we are so happy to have her here. 

I yield back. 

Mr. CANNON. Thank you. 

In talking about prevention, we were talking earlier about the 

difficulty in predicting the timeframe for the benefits from massive 

computers and DNA. But if we just made more information available to individuals in a way that they could rely on it—is that not 

one way that we could actually enhance people’s ability to do prevention on their own? 

Mr. HIMMELSTEIN. It is an attractive hypothesis as yet unproven. 

I mean, we just had a paper published this past week looking at 

the quality of care in practices using electronic health records 

versus those not using electronic health records. And we all 

thought that that was going to show a markedly positive benefit 

and, in fact, showed no benefit whatsoever. So I would say it is as 

yet an unproven but attractive hypothesis. 

Mr. CANNON. My point doesn’t go to electronic health records so 

much as an individual having access to information to understand 

what is good for him so he could make better choices. 

Mr. HIMMELSTEIN. Right. We would certainly like to think that 

is true. 

Mr. CANNON. And to the degree that he can have personalized 

understanding of what would help him or her, you would expect—— 

Mr. HIMMELSTEIN. But if you can’t buy fruits and vegetables, you 

still can’t eat them. 

Mr. CANNON. That is exactly right. But if people understand 

what that will do to their health, it will increase. The market will 

respond to that. 

Mr. HIMMELSTEIN. I hope so. 

Mr. CANNON. I am not sure the congressional market will respond to that, or at least not at the cutting edge. 

But let me just touch on one other topic, if the Chair will indulge 

me. Today the FDA bases its review of drugs on toxicity and efficacy. You have to understand toxicity is a very complex subject. 

And I don’t want to move into that very much. But efficacy is how 

it works. And couldn’t the market decide that? 

In other words, one of the things that I think should free up doctors—and I have talked to many about this—is if they had the— 

and doctors do have the ability to prescribe any drug that they 

want for any problem. Their problem is that if somebody gets cured 

on what is not a standard protocol and others come to him, he 

could end up being called a quack. Or on the other hand, you could 

end up with a prosecution like happened with Merck here 6 or 8 

months ago where they pled guilty to promoting an off-label use. 

Couldn’t we do something with efficacy in the FDA? Say a doctor 

comes up with a protocol and says to the FDA, ‘‘I would like to do 

this. I would like other people to do it as well. Would you call it 

not dangerous so we could proceed with that protocol?′′ 

128 

And then doctors would be encouraged to do different protocols. 

They preempt being called quacks, on the one hand. On the other 

hand, if things worked and doctors now used their genius to figure 

out what might work, or drug companies or others, you end up 

with information about drugs that is not available currently, given 

the protocol or the process that we use at the FDA. Does that make 

sense to you, Dr. Himmelstein? 

Mr. HIMMELSTEIN. Well, if we add information of high quality, 

then it makes sense. I fear that much of the information that we 

are actually adding in the drug review process at this point is of 

such low quality as to be virtually useless, other than its propaganda for the drugs. 

Mr. CANNON. Right. Exactly, which, by the way—I mean, the difficulty with what is useful information really then devolves to the 

physician who has got the training to make decisions and to advise 

and counsel his patients, which is something I would dearly love 

to see. That is physicians driven by an interest in the health of 

their patients instead of seeing their patients as money machines 

that they pull the lever on and pay. 

Mr. HIMMELSTEIN. Well, and we should recognize that at this 

point the vast majority of drug education in this country of physicians is carried out by the drug companies. 

Mr. CANNON. Right. 

Mr. HIMMELSTEIN. The drug companies’ budget for mis-educating 

physicians is larger than the teaching budgets of all the medical 

schools in the United States combined. 

Mr. CANNON. Yes. 

There are many, many more things to talk about, Mr. Chairman. 

I appreciate your indulgence. Let me say this is an issue of enormous importance to me. As I said earlier, virtually every family in 

America has had a tragedy. We certainly have had tragedies 

around my family. That is a personal issue. And I would love to 

see an environment where we shift from—I think, Dr. Himmelstein, you talked about this—toxic environment of drugs. 

Perhaps that was you, Mr. Chairman—this toxic environment 

where all the incentives are distorted and the result is these kind 

of horrible tragedies that compound within a family, destroy a family. 

Well, you haven’t been destroyed, with all due respect, Ms. 

Smith. I appreciate the fact that you are here. But much of your 

life, much of what you anticipated for your life to become—because 

of a series of issues, some of which may not have been controlled. 

But with all due respect, I am more optimistic than Dr. Himmelstein. And I have been around some of the downside of this for a 

very long time. 

I believe that if we are thoughtful in Congress we can create an 

environment where people can make healthier choices, where the 

market will respond to those choices by providing better services 

and where doctors can get away from a system—I will just tell you 

that in many cases, in my experience, you go to a doctor. He looks 

at you like a lever, a monkey in a cage, has the lever. He pulls the 

lever, a banana comes out. 

You walk into the doctor’s office, the monkey pulls the lever, and 

he gets the payment. That is toxic. It is only a small portion of the 

129 

whole system, but it is destructive to the doctor as much so as it 

is to the patients. 

So the most educated people in America, the people that spent 

the most time as a group on education, end up being monkeys pulling levers instead of people who help us be healthier. I think there 

is something profoundly wrong. The way we have done this historically or the way we have let the system evolve is profoundly wrong. 

And bankruptcy is a minor problem in this much larger problem. 

And so, I appreciate, Mr. Chairman, you having this hearing and 

going beyond, I think, the simple bankruptcy issues to those issues 

that are behind that. And with that, I yield back the balance of my 

time and thank the panel for your being here. 

Chairman CONYERS. Thank you so much. 

We usually give 5 days for Members to get any questions to you 

and to get them back to us. And then we have 5 days for us to submit any additional materials into the record that we want. 

This has been an extraordinarily long but meaningful, might 

even become historic because there is so much to study and examine. The witnesses have been tremendous. 

And we are delighted that so many of our Subcommittee Members and other Members were here to share this afternoon with us. 

With that, the Subcommittee on Commercial and Administrative 

Law hearing is concluded. Thank you so much. 

[Whereupon, at 4:44 p.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

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ADDITIONAL INFORMATION SUBMITTED BY MARK RUKAVINA, DIRECTOR, 

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BANKRUPTCY FORMS SUBMITTED BY THE HONORABLE JOHN CONYERS, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN, CHAIRMAN, COMMITTEE

ON THE JUDICIARY, AND MEMBER, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE PROPERTY


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ANSWERS TO POST-HEARING QUESTIONS FROM TODD J. ZYWICKI, 

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ANSWERS TO POST-HEARING QUESTIONS FROM CLIFFORD J. WHITE, III, DIRECTOR, 

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ANSWERS TO POST-HEARING QUESTIONS FROM ELIZABETH WARREN, 

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E-3.eps
268 


E-4.eps
269 


E-5.eps
270 


E-6.eps
271 


E-7.eps
272 


E-8.eps
273 


E-9.eps
274 

f 


E-10.eps
275 

ANSWERS TO POST-HEARING QUESTIONS FROM DAVID U. HIMMELSTEIN, 

HARVARD MEDICAL SCHOOL, CAMBRIDGE, MA 


B-1.eps
276 


B-2.eps
277 

Æ 


B-3.eps