Charity Question--RIP Medical Debt

Supposedly a charity that buys up uncollected medical debt, & then writes it off free.

Is this legit?

If so, I’ve found this year’s Xmas Charity.

John Oliver bought up and wrote off 15 million dollars in medical debt.

Nice start, anybody else chime in?

My guess based on their FAQ, is they do the same thing other debt consolidators do (some of which are non-profit). They negotiate and buy otherwise uncollectible medical debts for pennies on the dollar and add a percentage to what you pay. It may be tax-deductible for the organization and you because most medical debt is involuntary. If you had elective plastic surgery and failed to pay your bill, you’d likely be quickly sued.

I just read the articled Bill Door linked to and while most of it goes completely over my head, I think my statement above is supported somewhere in there.

Most doctors and facilities that do purely cosmetic surgery require payment up front. Anyway, hospitals usually also have a fund for people who are un(der)insured and can’t pay their bill, and unless donations are earmarked for something else, this is usually what’s done with them.

Ahhh…here it is:

“On last night’s episode, Oliver pulled back the curtain on the debt-buying industry, revealing how banks holding the reported $12 trillion in outstanding consumer debt will often write off the debt (for tax purposes!), before selling the obligation for pennies on the dollar to a collection agency, who will then do their best to collect the full face value of the debt from the owing party. Should the collection agency fail to collect the debt, it will in turn write off its purchase price of the debt for tax purposes, before selling it again for even fewer pennies to another collection agency. Inevitably, the debt ends up in the hands of the lowest common denominator of collection agencies, who will assign the process to often-unscrupulous independent debt collectors, who will then harass the debtor into paying up, even threatening to eat their dog.”

The practice isn’t as slimy and never ending as the article makes it out to be. When I went to a debt consolidation company, I missed a couple of months of payments and was told it would extend the length of my payment schedule. In the end, my payments stopped as scheduled and my entire debt marked as paid in full.

The catch is that sometimes the fund isn’t enough and the hospital/doctors go bankrupt, sometimes being rescued by another hospital and sadly sometimes forced to severely reduce their services or close completely. SIGH

Many hospitals are a business like any other, underestimation of costs or mismanagement of funds, or over estimation of income from services/clients (patients) can lead to failure.

That’s so true.

Sometimes, ya gotta wonder what’s REALLY going on. Here’s an excellent example: Earlier this evening, I was at a meetup and another woman there said that her late husband spent some time at a nursing home for post-surgical rehab, and NINE MONTHS LATER, they got a bill for the full amount - $13,000. Since she didn’t have $13,000 lying around, she took that bill and some other paperwork to that facility after she called them and they said they wanted to see it, and to her surprise, a regional administrator was there. Because Medicare and their private insurance requires that claims be filed within 6 months, that facility had to eat that bill, and she walked out the door with paid-in-full paperwork. :eek:

To the question, yes it’s legit. Does it really help people? Maybe. The debt they buy is essentially ‘junk debt.’ It’s debt that has very little realistic chance of being collected. Almost all of it has ‘aged out’ in the sense that it is no longer legally collectible due to time limitations. It has already tanked their credit scores and there is no legal recourse for collectors to pursue. Junk debt collectors buy that debt for a song and then threaten and harass people and the one out of 1000 that they do get to pay up covers the cost of the 999 that don’t (When John Oliver did this, he paid 60 grand for 15 mill worth of debt. That tells you that junk debt collectors think that only about 1 out of every 250 dollars is collectible-maybe less if John overpaid.) What the charity does is zero out that debt which basically just means that debt collectors won’t harass those people any more. So the real benefit of the charity isn’t that the debt is forgiven - essentially the debt is noncollectable already and the damage has been done. It’s that people who owe it won’t have to endure incessant phone calls and threats, which is itself an admirable thing to prevent.

Trust me, the debt collection business is every bit as slimy and immortal as it sounds, if not more so.

So–good to donate to?

It does seem immortal, doesn’t it?

We keep getting calls from debt collectors looking for someone we’ve never heard of. Some calls start off quite threatening.

We can tell when the debt gets sold because there’s another surge in calls.

Such nice people.

After reading about it over the last couple of years, I believe it is. But see what Charity Navigator has to say, they do great analyses.

Article from a couple of days ago about two retired women from Ithaca who raised $12,500 and used it to retire $1.5 million in medical debt. So there is a high impact for little money but there’s something like $750 billion in medical debt so this isn’t a solution to the overall problem.

I’m hoping i’m missing something in my logic, but I’m torn on donating to the cause. I’m all for the concept of it and the way it’s helping people, but donating to encourage it is a bit tougher. If I donate to reduce uncollectible debt, that may cause medical costs to rise, which creates more collectible debt*. SIGH

I don’t know how this would work, but I’d rather see the health care centers get the tax deductions themselves, ideally tied to how much profit the center makes (the higher their profit margin, the lower the allowed deduction). Full of potential for abuse though.

*My logic being, the health care center may be more willing to extend or offer care at their facility (rather than passing the patient on to a lower cost facility) because they know they’ll receive a least a portion of the additional fees/costss. However, they may now adjust their fees upward to compensate for the additional expected losses, which in turn creates a higher uncollectible debt.

It is unrated at this time.