Nearly 80 million Americans have medical debt, which contributes to 50% of American bankruptcies – or worse. Recently, an elderly Washington state man committed suicide along with his wife because they did not have enough money to pay off their medical debt, according to the Whatcom County Sheriff’s Office.
Almost half – 42% – of the nine and a half million people diagnosed with cancer between 2000 and 2012 have used up their assets within two years.
Sites like GoFundMe have given new promises to people struggling with medical debt. Medical costs represent a third of the financial assistance provided by the site, according to a recent article in The New Yorker.
But crowdsourcing can be hit and miss. Two former executives in the collection industry believe they have an alternative solution to help people with medical debt.
Craig Antico and Jerry Ashton, founders of RIP Medical Debt, decided to use their expertise to write off medical debt instead of collecting it. So far, their company has written off hundreds of millions of dollars in debt. They want to reach the billion by 2020.
It all started when Antico and Ashton were contacted by Occupy Wall Street, which was trying to raise $ 50,000 to buy people’s debt. When their website stopped accepting donations, Antico says they had a light bulb moment.
“We said, ‘Wow, it looked like they were doing a great job. It looked like they had written off over $ 30 million in debt, both medical and student loans, ”he says. “But that left us saying, ‘Hey, we’re the only ones who could really decide to go and write down the medical debt. Why are we not going to do it? We cannot let this die. “
Medical debt is debt transferred to creditors and sold to collection agencies, who attempt to make a profit by collecting this debt. Ashton says that rather than collect this debt, their company wants to write it off.
“Our only goal is to see that this debt is taken off the backs of our fellow Americans,” he said. “Our only goal is to see that if there is a credit score against them for this medical debt, it is taken off their credit report. Our only objective is to see this debt disappear.
On the lifecycle of a medical bill and where the RIP medical debt comes into play
Jerry Ashton: “If you’re unlucky enough to get sick or hurt and go to the hospital, you automatically start creating an invoice. If you don’t respond to this for whatever reason, then the hospital is compelled to consider bringing in collection agencies. Now the collection agencies are working on a contingency. This means that they are assigned the accounts and are guaranteed a percentage if they are able to recover it. Well, it can go on for two or three agencies for many hospitals until at some point the agencies come back and say, “These people are not responding. This is when the idea of buying debt first appeared in this world.
Craig Antico: “There is only about one collector for every 8,000 accounts in a hospital. There is $ 75 billion in medical debt being collected and on people’s credit reports. So think of a hospital: they have $ 100 million in debt that they can’t collect. They’ve been through their three to six collection agencies for, say, two years, and a company comes up to them and says, “I’m willing to pay you 5%. And you have to say, “Well, what are the chances that I collect this?” It’s an incredible boon for them to get money into accounts that have already gone through four, five, six collection agencies. This is where the debt buyer comes in and why they are so valuable.
“In the beginning, what we did was go to these debt buyers, and we said to them, ‘Instead of collecting on these accounts that are two years old, three years old when you get them, and you maybe have to collect them for five years, six, seven years to get your money’s worth, why don’t we pay them to you? And we only pay for the accounts that are really the ones that are in trouble. You know, spend- Do they over 5% of their gross income? We will abolish it, or if they earn less than twice the federal poverty line, they will be eligible. Among them, they are also technically insolvent, which means they have more debt than they have assets.These are the three main criteria we use to eliminate debt.
On the way they choose which accounts to forgive
Antico: “We choose by adding data. The systems of TransUnion Healthcare and the main TransUnion have supported us because they want to use the information for good, so we are like a predatory donor. And what they do is they let us know what this family’s simulated income is? How many people are in the family? What percentage of the federal poverty level are they? Because we want to make sure we get rid of debt for the people who really deserve it. And people don’t know that when you go to the hospital, there is usually a financial aid policy that will actually give you the cost of that care for free if you earn less than twice the poverty line, which is in effect. makes about 33% of all that population.
Ashton: “That’s the challenge Americans face is that they don’t understand how the hospital system works – and very few people do, not even the people in the hospital as far as we can. say so in some cases. Education is insufficient to meet the challenges that exist. And frankly, you might have a great job, perfect credit, a nice house, and eight months later you might qualify for charity.
The downside of crowdsourcing to write off medical debt
Ashton: “There are pointed fingers everywhere. The hospitals will indicate the insurance companies which will indicate the suppliers which will indicate the pharmacies. Everyone wants to see someone else foot the bill. So we sweep right after the parade. We know that. We know our job is very, very important, but it takes care of the injured and on the battlefield. We really need to stop wars, but right now that’s not where we’re positioned.
On what it means to forgive someone’s medical debt
Ashton: “So when we do the job that we are doing and we know that this yellow envelope will come by surprise to someone, we don’t expect to hear from them. Many times we know that when we hear from them that tears have come, unbelief has arisen. People called their neighbors. They would call the Better Business Bureau to find out if, indeed, we were real. So we know we affect people, and we’re happy to do it. And we are grateful to our donors because it makes this possible. But there is one thing that I love that Craig brings up and that is the fact that we are studying this issue very, very carefully and that there is a team of four universities working with us to do an economic impact study. on what it means to remove someone’s medical debt.
Antico: “The first results are encouraging and this is only the first step. They just received a million dollar grant to investigate the people whose debt was written off and the control group. At present, this is an economic impact study. This is going to talk more about the mental, spiritual, and emotional side of this horrible destructive thing called medical debt. “
Karyn Miller-Medzon produced and edited this interview for broadcast with Todd Mundt. Samantha Raphelson adapted it for the web.