The idea that more than half of all bankruptcies are caused by medical debt comes from a study by Harvard associate professors David Himmelstein and Steffie Woolhandler, published on the Web in February 2005 by the journal Health Affairs. Both Himmelstein and Woolhandler have long advocated creating a single-payer system of national health insurance in the United States. The purpose of their study was to convince middle-class voters that they need socialized medicine to truly be secure from health-related financial catastrophe.

When the article came out it generated much controversy because the authors used a very broad definition of medical-related bankruptcy. In response, Health Affairs published more than 30 letters to the editor – as well as a follow-up study by researchers critical of the Himmelstein-Woolhandler study's methodology.

Fortunately, a new study by Aparna Mathur surveys the literature and puts matters straight. Dr. Mathur, a research fellow at the American Enterprise Institute, found that only about one-quarter of bankruptcy filers have debts that are primarily medical in nature. Far more common are bankruptcies related to credit card debts.

Read the complete AEI Study.