Nothing to See Here

by wjw on June 7, 2016

“There would be absolutely nothing wrong with that except for the fact that absolutely everything is wrong with that.”

You may have seen this already, but I thought it deserves as wide an audience as it can get, so here it is.

There are all sorts of ways to buy debt in our country, and much of the debt an enterprising young capitalist can purchase is medical debt.  Which is to say, the debt that people run up through getting sick, and being hospitalized, and undergoing surgery and having tests, and being prescribed drugs.

Assuming you have a plausible-sounding company, you too can buy this debt, and at a whacking great discount, too.  Which means that you can start making threatening telephone calls, and putting liens on people’s homes, and taking their property and dunning their wages and blackguarding their credit ratings, and all that makes our credit system great.

One thing that you don’t actually know is whether any of this debt is legitimate.  Because of the complexity of medical practice and debt laws— which were not written by, say, patients or debtors—  a great many people don’t understand their legal rights, and can have their lives ruined, their savings taken, and their homes foreclosed on, to pay a debt that they don’t actually owe.

So what HBO’s own John Oliver did was to form a plausible-sounding company, and bought $14.7 million in medical debt for $60,000.

And then he did something with it.  For which, see the video.

Here’s the article.

Glen Engel-Cox June 7, 2016 at 9:37 am

Walter, what I didn’t understand from his explanation (and I love the video, and what he has done to raise this issue to people’s attention), was how a hospital or medical office that owns the debt can both (a) take it off on their taxes and (b) sell it *for its full value*, even if they are selling it for pennies on the dollar. It seems to me that once you’ve taken a write-off on your taxes, it should be discharged and no longer in play.

Phil Koop June 7, 2016 at 11:26 am

@Glen, without in any way defending the sordid practices that Oliver describes, there’s nothing fishy about the tax accounting here.

Suppose that the US government wants to borrow money, and I lend them $100. I do this by buying a bond they issue, for which I pay $100 because I am completely confident that the government will repay this debt. But before the debt is due, something I didn’t expect happens – a comet strikes the earth, Donald Trump is elected president, whatever – and I lose confidence in this. I panic and sell you the debt for 5 dollars. Suppose that you, with your cooler head, hold the bond to maturity and are rewarded with full repayment. There is nothing wrong with the government paying you the full amount – as Oliver remarks at the beginning, people should repay money that they really chose to borrow, if they can. The tax accounting would be that I would declare a $95 capital loss and you would declare a $95 capital gain – everything balances.

TRX June 8, 2016 at 12:17 pm

Back in ancient times the insurance companies (at least in my state) paid the policyholder directly; you got a check from them, then you settled your debt with the hospital.

My wife went in for surgery once. We had to get nasty with the hospital to get an itemized statement. And then, even at a casual glance, there were problems… the tip-off was we were billed for a three-day stay instead of two.

So we paid our MD to go through the bill and check off the items he had not ordered or authorized. And it came out to a bunch.

We made a call to the insurance carrier, out of state. That call cost us a full day’s wages, long distance being expensive in those days. We reported it as insurance fraud, offered to send copies of all the relevant documents, and asked if they wanted their check back.

The clerk acted like we were some kind of retards. We got our check, didn’t we? It was enough to cover everything, wasn’t it? What were we complaining about?

Well, that crap like that was driving our insurance rates through the roof, but the insurance company certainly wasn’t concerned about *that*…

In the end, down a substantial amount for the doctor’s consult and long distance charges, we said “screw it” and cashed the check, paid off the hospital, and a few days later my wife bought a minty two-year-old Mazda RX-7 with that was left over. She drove it for fifteen years, so I figure we got a pretty good deal for a free car…

Nowadays the big scam is for one big bill to come in from the hospital, which we settle after due diligence looking for billing errors. And then, starting months later, we’ll start getting bills for lab work, consults, and all sorts of stuff that the senders claim is “billed separately” from the hospital visit. Stuff nobody authorized, that they can’t give us copies of the results. These are the same kind of lowlifes that watch obituaries, then send fake invoices to the families of the deceased.

wjw June 8, 2016 at 11:24 pm

I’m still waiting for my health insurance payment from 1992. And it wasn’t as if my health problem was debatable, or somehow obscure— it was a broken hand!

They never said they wouldn’t pay it. They just never wrote a check.

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