4 ms·

NY woman clears $108M of other people's medical debt – after dying of cancer

58 points by leotravis10 3y ago

welfare 3y ago
If you can clear a medical debt with 0.7 cents on the dollar, how is this system nothing more than a big scam?
- xenospn 3y ago
  Always was. Always will be.
isthisreal12345 3y ago
Relevant john oliver link - https://www.youtube.com/watch?v=2wSarEVgjM0 https://www.youtube.com/watch?v=2wSarEVgjM0
Johnny555 3y ago
What I don’t understand is why hospitals will sell debt for pennies on the dollar to debt collectors, but won’t make the same offer to patients. If they give a patient with $100k of medical debt an offer to pay it off for $1500, I bet they’d clear a lot more debt.
- xenospn 3y ago
  Because then, everyone would wait until the hospital gives up and offers them to pay pennies on the dollar.
- deleted 3y ago
  [deleted]
- 082349872349872 3y ago
  When I was without health insurance in the US and broke a bone, I asked the hospital if they'd give me a discount for a cash payment. It turns out not having to hassle with insurance companies and/or debt collection was worth 50% to them, as they immediately dropped my bill by half.
  - Johnny555 3y ago
    A 50% discount still sounds like more than an insurance negotiated rate, my insurance paid about 20% of the list price for an MRI. They gave you a ”deal” that was likely more than they’d get from insurance if you had it. I’ve long believed that cash payers should be charged the lowest negotiated rate for services. It's a scam that insurance companies pay so much less than a cash payer.
xenospn 3y ago
I moved to the US more than 12 years ago, and while I have become almost completely “Americanized”, “medical debt” is still something I simply cannot wrap my head around. It makes absolutely no sense whatsoever.
Night_Thastus 3y ago
Before anyone jumps to it, I want to state that what she did was very kind. Yes, it's not her money directly. Yes, the situation with medical care in the US sucks and this shouldn't need to happen. But don't let those take away from the fact that the action did more good than many people will put the effort into doing. Anyone can point out that the system sucks. It's not clever nor is it hard.
meepmorp 3y ago
$108 million Canadaian, only 80 million in US dollars. There is something incredibly wrong with how we provide and pay for medical care in the US, and it’s seemingly impossible to do anything about it.
- weberer 3y ago
  The medical care is top notch. Its the billing and insurance racket that's the problem. >and it’s seemingly impossible to do anything about it Just in the past few years, we've had transparent pricing laws that drove down prices quite a bit. Something tells me that outlawing lobbyists would go a long way.
  - readthenotes1 3y ago
    Which notch? https://www.hopkinsmedicine.org/news/media/releases/study_suggests_medical_errors_now_third_leading_cause_of_death_in_the_us https://www.hopkinsmedicine.org/news/media/releases/study_su... This study doesn't include all the death caused by opioid over prescription, btw. It is great if you can afford to go to the Cleveland or Mayo Clinics, but if you're not able you be stuck with dangerous service
  - xenospn 3y ago
    It is absolutely not top notch.
LeifCarrotson 3y ago
> Debt is a commodity that can be bought and sold. A lot of debt never gets paid off so institutions sell it in bundles, at a discount, to third-party collectors. > Because they buy debt bundles at a steep discount, RIP says each donation relieves about 100 times its value in medical debt. I'm no economist, but am I correct in assuming that if this charity became large or well-funded enough to address any significant percentage of the problem, that the discount would disappear? For the people they help, it's great, and at their current scale it probably doesn't move the needle regarding the huge problem with medical insurance, billing, pricing and debt we have in America today. But if they get more donations and keep doing this on a larger scale will it move the needle? And if so, in which direction?
- addicted 3y ago
  No private entity is gonna solve the trillion dollar mess that is the US healthcare system. However, they can completely solve the problem that is people who are almost bankrupt because of medical debt and have that bankruptcy hanging over their heads. Their ceiling is essentially everyone that is extremely likely to declare bankruptcy because they’re unable to pay the debts. The actual owners of the debt are not gonna get any money back. Even a 3rd party is not likely to buy the debt because the only people who are gonna pay for this debt are charities like this and they aren’t required to do so, so they get to completely set the market rate. Essentially, you have a lender that’s lent out $100 in medical debt to people who are basically bankrupt and is likely to get no money back. A 3rd party might gamble that they will probably get $1 back so they may be willing to pay $0.75. However, this charity can offer the lender $1.25 and actually get $0 back because their purpose isn’t to make money (they can also “lose” money). Their purpose is to either prevent someone from going into bankruptcy or removes a huge burden on people who may already have declared bankruptcy. What actually makes this system work is a properly functioning bankruptcy court. If the bankruptcy court didn’t effectively protect borrowers, then there would be no incentive to sell the debt for so cheap since you could try and extract money out of the borrowers. Alternatively, if the bankruptcy court was easily abused to discharge debt by people who can afford it, then lenders would exit the medical debt industry altogether (or rather, all treatments would end up requiring upfront payment).
- 3y ago
lordnacho 3y ago
Is that really the recovery rate on medical debt? Seems like you should never pay it, since it wouldn't really be worth them collecting on it? Do hospital accountants recognize the value as basically zero? I would imagine there is a rating system so that whether your debt is worth 99%, 50%, or 1% actually depends on some personal information like what your job is, employer, age, and so on. Thus the very low value debt is basically valued correctly, the win is simply a kind of nominal/value confusion much like the nominal value of an option is not the same thing as what you pay to buy it.
- deleted 3y ago
  [deleted]
cosmotic 3y ago
This seems to benefit the for-profit healthcare companies as much, if not more than, the patients.

58 points by leotravis10 3y ago

welfare 3y ago

If you can clear a medical debt with 0.7 cents on the dollar, how is this system nothing more than a big scam?

xenospn 3y ago
Always was. Always will be.

isthisreal12345 3y ago

Relevant john oliver link - https://www.youtube.com/watch?v=2wSarEVgjM0 https://www.youtube.com/watch?v=2wSarEVgjM0

Johnny555 3y ago

What I don’t understand is why hospitals will sell debt for pennies on the dollar to debt collectors, but won’t make the same offer to patients. If they give a patient with $100k of medical debt an offer to pay it off for $1500, I bet they’d clear a lot more debt.

xenospn 3y ago
Because then, everyone would wait until the hospital gives up and offers them to pay pennies on the dollar.
deleted 3y ago
[deleted]
082349872349872 3y ago
When I was without health insurance in the US and broke a bone, I asked the hospital if they'd give me a discount for a cash payment. It turns out not having to hassle with insurance companies and/or debt collection was worth 50% to them, as they immediately dropped my bill by half.
- Johnny555 3y ago
  A 50% discount still sounds like more than an insurance negotiated rate, my insurance paid about 20% of the list price for an MRI. They gave you a ”deal” that was likely more than they’d get from insurance if you had it. I’ve long believed that cash payers should be charged the lowest negotiated rate for services. It's a scam that insurance companies pay so much less than a cash payer.

xenospn 3y ago

I moved to the US more than 12 years ago, and while I have become almost completely “Americanized”, “medical debt” is still something I simply cannot wrap my head around. It makes absolutely no sense whatsoever.

Night_Thastus 3y ago

Before anyone jumps to it, I want to state that what she did was very kind. Yes, it's not her money directly. Yes, the situation with medical care in the US sucks and this shouldn't need to happen. But don't let those take away from the fact that the action did more good than many people will put the effort into doing. Anyone can point out that the system sucks. It's not clever nor is it hard.

meepmorp 3y ago

$108 million Canadaian, only 80 million in US dollars. There is something incredibly wrong with how we provide and pay for medical care in the US, and it’s seemingly impossible to do anything about it.

weberer 3y ago
The medical care is top notch. Its the billing and insurance racket that's the problem. >and it’s seemingly impossible to do anything about it Just in the past few years, we've had transparent pricing laws that drove down prices quite a bit. Something tells me that outlawing lobbyists would go a long way.
- readthenotes1 3y ago
  Which notch? https://www.hopkinsmedicine.org/news/media/releases/study_suggests_medical_errors_now_third_leading_cause_of_death_in_the_us https://www.hopkinsmedicine.org/news/media/releases/study_su... This study doesn't include all the death caused by opioid over prescription, btw. It is great if you can afford to go to the Cleveland or Mayo Clinics, but if you're not able you be stuck with dangerous service
- xenospn 3y ago
  It is absolutely not top notch.

LeifCarrotson 3y ago

> Debt is a commodity that can be bought and sold. A lot of debt never gets paid off so institutions sell it in bundles, at a discount, to third-party collectors. > Because they buy debt bundles at a steep discount, RIP says each donation relieves about 100 times its value in medical debt. I'm no economist, but am I correct in assuming that if this charity became large or well-funded enough to address any significant percentage of the problem, that the discount would disappear? For the people they help, it's great, and at their current scale it probably doesn't move the needle regarding the huge problem with medical insurance, billing, pricing and debt we have in America today. But if they get more donations and keep doing this on a larger scale will it move the needle? And if so, in which direction?

addicted 3y ago
No private entity is gonna solve the trillion dollar mess that is the US healthcare system. However, they can completely solve the problem that is people who are almost bankrupt because of medical debt and have that bankruptcy hanging over their heads. Their ceiling is essentially everyone that is extremely likely to declare bankruptcy because they’re unable to pay the debts. The actual owners of the debt are not gonna get any money back. Even a 3rd party is not likely to buy the debt because the only people who are gonna pay for this debt are charities like this and they aren’t required to do so, so they get to completely set the market rate. Essentially, you have a lender that’s lent out $100 in medical debt to people who are basically bankrupt and is likely to get no money back. A 3rd party might gamble that they will probably get $1 back so they may be willing to pay $0.75. However, this charity can offer the lender $1.25 and actually get $0 back because their purpose isn’t to make money (they can also “lose” money). Their purpose is to either prevent someone from going into bankruptcy or removes a huge burden on people who may already have declared bankruptcy. What actually makes this system work is a properly functioning bankruptcy court. If the bankruptcy court didn’t effectively protect borrowers, then there would be no incentive to sell the debt for so cheap since you could try and extract money out of the borrowers. Alternatively, if the bankruptcy court was easily abused to discharge debt by people who can afford it, then lenders would exit the medical debt industry altogether (or rather, all treatments would end up requiring upfront payment).
3y ago

lordnacho 3y ago

Is that really the recovery rate on medical debt? Seems like you should never pay it, since it wouldn't really be worth them collecting on it? Do hospital accountants recognize the value as basically zero? I would imagine there is a rating system so that whether your debt is worth 99%, 50%, or 1% actually depends on some personal information like what your job is, employer, age, and so on. Thus the very low value debt is basically valued correctly, the win is simply a kind of nominal/value confusion much like the nominal value of an option is not the same thing as what you pay to buy it.

deleted 3y ago
[deleted]

cosmotic 3y ago

This seems to benefit the for-profit healthcare companies as much, if not more than, the patients.