Some Thoughts On Health Care Studies And Bankruptcy

Credit Slips recently had an addition to the discussion on medical debt in bankruptcy. Most of our readers are probably well familiar with the issue by now but following is an abbreviated description of it.

In a nutshell, medical debt is a factor in a substantial chunk of individual bankruptcy cases. Whether that portion is a quarter, a half, or three quarters apparently is debatable. With health care being the current hot topic on the political table, that health care costs cause such a large portion of individual bankruptcy cases becomes a justification for suggesting that we change our health care delivery system. And some folks who might have a strong pecuniary interest in that debate sometimes offer their sense of the data when compared to a country with what they believe is a particularly undesirable system.

In some ways, the role that bankruptcy statistics plays in this debate is misplaced. Reasonable minds can differ about how to reform the health care system in the United States. Few would suggest that even modest changes, such as reducing the percentage of people who lack health insurance altogether, would not be beneficial. We can debate endlessly which style of health care reform would do the greatest service and cause the least harm to particular interests. But it seems that even modest reform should increase coverage rates and reduce the negative effects of having so many people uninsured. Presumably as well, regardless of what percentage of bankruptcies medical debt causes, any effort to spread the costs of health care away from those most affected by it will reduce the number of bankruptcies that health care costs cause. Reducing bankruptcy rates is a worthy goal of course, but all the reasons for reforming heath care exist regardless of the incidence on the bankruptcy rates. And it is hard to imagine any health care reform that won't reduce bankruptcy rates at least to some degree.

There are at least three different policy reactions that can come from the association between health care costs and bankruptcy. The first, as shown above, is to debate the best delivery mechanism for health care. The second, which I almost never hear, is to suggest that the general social safety net in the United States is inadequate when people who are insured still face illness-imposed bankruptcy through loss of work. The third, which also seems to have fallen out of fashion, is to note that few benefits accrue from imposing additional burdens on people who file a bankruptcy case arising out of their illness.

The first I learned of the connection between health care in bankruptcy was during the debates over the 2005 BAPCPA Amendments. I discussed that some here. Perhaps now that we have lived with BAPCPA for a few years and health care seems to be a more pressing concern, the time for discussion on reforming bankruptcy laws is not quite upon us. Certainly reforming health care will remain in the political forefront for a while. Nevertheless at some point some adjustments to the Bankruptcy Code might be appropriate.

When considering this issue, it occurred to me that the Bankruptcy Code generally differentiates between debt based upon its security or priority, but does little to differentiate between the kinds of circumstances that can lead to individual bankruptcy. As an easy example, the means test in section 707 does not differentiate between "consumer debts" arising from a long and disabling illness or, alternatively, from excessive consumerism, gambling addiction, or any of the other less sympathetic causes of financial distress. Without suggesting that there is any apparent benefit to making obtaining relief under the bankruptcy laws any more difficult, at least with respect to people in financial difficulties arising largely from poor health, perhaps the Bankruptcy Code should make obtaining relief easier to obtain. Whatever reasons existed in 2005 to make bankruptcy relief less available probably applied less to people facing significant health concerns than to people seeking to abuse the financial system. The 2005 amendments, however, made no real attempt to differentiate between the various types of circumstances that can lead to financial distress.

And of course, none of this is to suggest that making bankruptcy relief more palatable for people in medically induced financial distress should be a substitute for appropriate health-care reform. The reasons for reforming the health care delivery system exist independent of the wisdom of reforming the Bankruptcy Code and vice versa. But perhaps when we have accomplished whatever version of health-care reform is in store for us, we can consider whether the people for whom such reforms are inadequate might deserve no less than exclusion from some of the most burdensome provisions of the Bankruptcy Code.

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Thoughts On Bar Exams From A Bankruptcy Attorney

I ended up taking the New Jersey Bar Exam last week. It is sort of a long story but this was my third bar exam. I took California back in 1996, New York in 2006 when I moved back east, and now New Jersey in 2009. Three bar exams in thirteen years definitely gives one a little perspective on the process. Other than losing some work and blogging time while trying to undertake minimal preparations and recovery, this last version was relatively painless for me. That said, I certainly would not mind if I never take another bar exam.

Ironically, of course, bankruptcy practice is almost exclusively federal and few of us ever go to state court. I went to state court a handful of times in California, have been to New York state court only to get admitted there, and have been to a state court in New Jersey only for jury duty. By contrast, I have lost count of the different bankruptcy courts in which I have appeared or filed pleadings.

I got to chatting a little with people waiting in line and with those sitting near me during breaks in the action. I was the only admitted attorney of the people I met so naturally I got to offer the odd opinion about bar exams and bar preparation. I thought about this article from Carolyn Elefant a few days ago. Carolyn notes that the bar exams in some way mirrors the practice of law because, for example, there is a lot of preparation involved and a lot of the rules you have to learn do not really make a whole lot of sense. I agree with much of Carolyn's piece and in particular made the point to people with whom I spoke that preparing for the bar is very much like practicing law. The time-management skills and concentration necessary to cover the bar prep materials is similar to what law practice requires.

The bar exam itself, however, doesn't remind me at all of law practice. We rarely are asked to anything "closed book," answer questions in anything resembling a multiple-choice format, or work from 9:00-12:00 and then 1:30-4:30. In fact, much of law practice is recognizing what we don't know and finding the answer in a book or calling a colleague to ask. When providing advice to clients, we don't have four options laid out in front of us from which to choose. Law practice regularly requires non-linear, creative thinking. The bar exam tests the opposite.

I also was struck on Wednesday during the multistate portion of the exam by how little of the material had arisen in any form in my dozen years of practice. That section of the exam, known generally as the MBE, consists of 200 multiple-choice questions from six standard subject areas: contracts, torts, criminal law, evidence, constitutional law, and real property. As a bankruptcy specialist, I have dealt with five of the six subjects in some form on a fairly regular basis over the years. Yet a relatively small fraction of the MBE questions tested anything that I would see in practice. I look at contracts quite often, but the MBE mostly tests matters such as offer and acceptance rather than drafting contract provisions. There are few chapter 11 cases without tort claims, but I never had to learn what sort of duty of care a land owner has to a trespasser. Adverse possession I have seen exactly once outside an exam.

In that sense, though, the MBE is a very fair test. If someone who has been practicing for more than a decade has no particular advantage over a person who just graduated law school, no one should complain that the test has any particular bias in it. In fact, because I spent all of June and July 1996 studying, I was significantly better prepared for that version of the test than I was either in 2006 or 2009. The last two times I had to juggle bar preparation with work.

But of course the public is not better served by having the competency test for lawyers be skewed in favor of recent graduates. Say what you want about the nice people I met this week at the bar exam. These mostly twenty-somethings were younger, trimmer and better-looking than I am but we would hope that a decade of law practice would make me at least a slightly more qualified attorney than someone right out of law school. Nevertheless, if anything, the current format of bar exams favors the recent graduate or anyone else who has time to devote to learning reams of material that will not necessarily benefit him or her in practice.

Of course, there is the usual argument when anyone complains about the bar exam that this process is just some combination of: (a) a barrier to entry imposed by the existing community of admitted attorneys to keep the supply of lawyers down; and (b) a rite of passage for newer attorneys. Frankly, imposing some sort of competency floor for professionals does not bother me at all. And many of my favorite stories from law practice come out of bar exam experiences. That we subject newer attorneys to having their intellectual and emotional eggs scrambled a bit is fair warning for what is likely to occur during the rest of their legal career.

I am less convinced, however, that we do this in the manner that best serves the public. Having taken three different versions of this exam, so much more law student ability is being tested than attorney ability that I can't help but wonder whether there is not a better a format somewhere.

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