Episode 27: Curbing Medical Debt, Restoring Lives

Thanks to people like Craig Antico, the crushing blow of medical debt is having less effect. Craig’s nonprofit organization, RIP Medical Debt, buys medical debt portfolios from hospitals and physician groups with donated money to alleviate the debt of those who simply can’t pay. You might not be shocked that nearly half of all GoFundMe campaigns have been related to medical bills, but you might be pleasantly surprised how far $1 can do toward abolishing medical debt when organizations like RIP Medical Debt become involved. And don’t miss Craig’s surprise gift to the patient community near the end of the episode!

Episode Resources

How to listen: shows.pippa.io/paradigm-shift-of-healthcare/howto

RIP Medical Debt: https://ripmedicaldebt.org/

John Oliver forgives $15M of medical debt on the air during the John Oliver Show: https://www.theguardian.com/tv-and-radio/video/2016/jun/06/last-week-tonight-medical-debt-john-oliver-video

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Archive of previous episodes: https://www.healthconnectivetech.com/paradigm-shift-of-healthcare/

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Full Transcript

Announcer: It’s time to think differently about healthcare. But how do we keep up? The days of yesterday’s medicine are long gone, and we’re left trying to figure out where to go from here. With all the talk about politics and technology, it can be easy to forget that healthcare is still all about humans. And many of those humans have unbelievable stories to tell. Here, we leave the policy debates to the other guys and focus instead on the people and ideas that are changing the way we address our health. It’s time to navigate the new landscape of healthcare together. And here’s some amazing stories along the way. Ready for a breath of fresh air? It’s time for your paradigm shift.

Michael: Welcome to the “Paradigm Shift of Healthcare,” and thank you for listening. I’m Michael Roberts with my cohosts, Jared Johnson and Scott Zeitzer. On today’s episode, we’re talking to Craig Antico, a former healthcare debt collection industry executive. In 2014, Mr. Antico went on to become a cofounder of RIP Medical Debt, a nonprofit organization that buys medical debt portfolios from hospitals and physician groups with donated money to alleviate the debt of those who simply can’t pay.

Mr. Antico, it’s such an honor. Thank you for being on our show today.

Craig: Thanks for inviting me.

Michael: It’s so wonderful to hear your story. I came across your story recently on social media, just your organization’s story. One of the first things that comes to mind is what led you and your cofounder to start RIP Medical Debt?

Craig: As collectors and collection agency owners, there’s no way we would have come up with this idea because when we first heard it, we thought it was the dumbest thing we’d ever heard. We thought buying medical debt, at least the nonprofit that started it, thought they’d raise about $50,000 and buy $1 million of debt. And that $1 million they were going to abolish and they wanted to know what we thought about it. And we just didn’t see how $1 million was gonna make an impact on an industry that produces that now it’s about $200 billion a year of debt that people can’t pay. So we thought $1 million wouldn’t be enough of an impact. So they said, “Well can we give you a different perspective?”

And we said, “Sure.” And they said, “Well we don’t think people should have to go bankrupt just if they get ill or have an accident.” And we were like, “Yeah, that’s a good point.” And this nonprofit went on to abolish about $30 million of debt, you know all kinds of debt, not just medical debt. And then they decided to just stop abruptly at the end of 2013, and Jerry and I looked at each other and said, “We can’t let this happen. There’s too many people being helped, but we think that medical debt, which is a different kind of debt, you know, we should help just abolish that.” And so we started that on January 1st of 2014 and we’ve been trucking along ever since.

Scott: It’s really just amazing. You basically changed what you were doing for a living and used the knowledge of debt collection and the knowledge that, wow, there are a lot of people in need and figuring out how to put that to good so to speak?

Craig: Yeah. It is a miracle because I never liked the industry of collecting debt, especially collecting medical debt, because medical debt is half of all the debt in this country that’s collected by collection agencies is medical.

Scott: Unbelievable.

Craig: There’s 100,000 collectors, 50,000 of them are collecting medical debt and it’s one of the hardest things to collect because a lot of the people that you have to collect on, like for the hospitals for example, 30% of those patients that are called by collection agencies, actually they qualified for the hospital’s charity care and they just didn’t accept it or didn’t qualify in their own way. It’s just sad. So we are very fortunate that we changed hats and are now debt forgivers. We call ourselves predatory givers.

Scott: I like that, predatory givers. So you make this major decision for yourselves in terms of, hey man, we’re gonna change what we do. How do you go and get money to go do what you need to go do? I heard that a John Oliver before we got on the call, maybe kind of let us in a little bit on that as well.

Craig: Sure. You need awareness first, and the only way that anybody is gonna be able to donate to you is if they know about you. So we were fortunate about two and a half years into our journey now of going into poverty ourselves, we got put on the John Oliver show, Last Week Tonight with John Oliver, the HBO special show, and he donated $15 million of debt to us on his show because he couldn’t do it as the nonprofit. He started his own nonprofit. He started his own debt buying company.

He bought that and then the HBO lawyers for the next six months were like, “How are you gonna do this?” Because this is people’s private information. You can’t abolish the debt on TV. Then it will be a tax liability for the people who, that you’re abolishing the debt for. And so for six or seven months they couldn’t put on this show, and they were just fortunate enough to hear about us through one of our attorneys. So, that’s a good thing because probably 14 million people have seen that show, that particular show.

So we still get calls of people from wanting to know about us because of that show that happened in 2016, but we were terrible before that at raising money. I think we’ve raised $3,000 in the first year. We were just horrific. We knew how to buy debt, how to value it. We knew how to send out tens and tens of thousands of letters a day, but we did not know how to raise money. It’s one of the hardest things we ever did. But we’re getting better at it. We doubled our donations this year to $12 million, and the year before that we doubled them. We abolished $1 billion of medical debt in 2019 alone.

Scott: Wow. That’s just incredible. From a pure, maybe give me an average. If I donated a dollar to RIP, what can you buy debt-wise with that, every dollar?

Craig: All of our costs in, we can abolish over $100 of debt for that $1.

Scott: Just [inaudible 00:06:27] on whatever you donate, and that’s what you can use that as a leverage to abolish that much more debt. Every dollar.

Craig: You either go from the amount that you want abolished, a million, you take off two zeros and that’s 10,000, or you say I want to give 100 bucks and you add two zeros to it, $10,000.

Scott: It’s extraordinary. So everybody who is listening to this, we are gonna have some links that you all can click on if you decide that this is something that makes sense. We’ll get those links up there. Maybe we’ll have the link to Mr. Oliver’s show as well. I think that’s perfectly okay. Can you talk to us specifically about whom RIP Medical Debt seeks to serve, like who qualifies for this, how you figure out how to apply this?

Craig: Sure. The way that we apply it is this. It’s based on low income and hardship, and the way that we define low income is do you make, does your household make two times the federal poverty level or less? So two times the federal poverty level or less. And then hardship is a little harder to define. So what we’ve come up with, and we found that this is based on research. If people start spending more than 2.5% of their gross income on out-of-pocket medical expenses, they can go into hardship. Now we thought 2.5% was a little too low, so we picked 5%.

So if the debt that we’re abolishing is equal to 5% of their gross income or more, or if the debt that we’re abolishing plus any other debt they have that’s on their credit reports or in judgment, we add those two together and we find it, is it more than 5% of their gross income. And the second way that we do hardship is, are they insolvent? Because, 15 million people a year ago insolvent, you know, they have more debt than they have assets. Fifteen million people a year are going insolvent, and they’re not the lucky ones. The lucky ones are the 600,000 that go bankrupt because it’s the most, you know, the highest… No, it’s not the highest. It’s the main reason why people go bankrupt is because of medical.

Scott: Wow. Yeah, guys, Jared, I know you’ve got some questions as well, but the three of us are all just shaking our heads at this gargantuan problem that needs to be attacked. And the fact that you guys are out there doing that. Again, we will have links up for people who need help or for people who want to help in this process. Jared, I know you’re dying to get some questions in as well.

Jared: Yeah. Craig, I know when we look at a GoFundMe for example, this is something that’s fascinating. We’ve seen some stats that your group has provided about explaining the severity of medical debt in America, and particularly there’s some interesting information about GoFundMe and I thought these stats, I mean they blew my mind. For instance, the one about in 2015, it was found that $930 million of the $2 billion that was raised on GoFundMe and that year, or actually that was raised on GoFundMe since its launch in 2010. So $930 million of the $2 billion had been related to medical bills, yet barely 1 in 10 medical campaigns raises the necessary funds.

That was a crazy stat for me to kind of wrap my mind around. And then the other one that I saw from you guys about how one in three GoFundMe fundraisers are for medical bills according to CEO, Rob Solomon. I mean, we hear big numbers all the time, but those are things that are just, I mean, that tells me that this is something that no wonder we talk about it a lot, but we don’t know what to do. It feels like people are, they’re obviously willing to help others and medical need, but it’s not proving to be enough. I’d love to hear what just what you think about that and how you guys raise money to help clear debt, you know, based on stats like that because again, they just kind of blow my mind.

Craig: You’ve got a good point. When that much is coming into a crowd funding site, you will not believe this next figure that I’m gonna tell you, is that $55 billion with a B is lent or given to friends and family for medical debt a year. Fifty-five billion. That’s just completely unbelievable. And then they add another $68 billion to $88 billion a year on their credit cards in other debt just to pay the medical debt that they’re responsible for. And people in the hospital side, people can only pay about 55% of their responsibility.

So the self-pay pieces, the people that don’t have insurance, about 10% of our population, that self-pay piece, they can only pay about 55% of it. The balance after insurance, people can only pay about 55% of it. And it leaves for, this is for hospitals alone. It leaves $200 billion this year that they can’t pay that are gonna have to be paid through a collection agency or a lawsuit or a garnishment, and 1.5% of the people that work in this country have a garnishment for medical debt on their income or on their bank account.

Jared: So you mentioned that the raising funds, that that was one of the bigger challenges that you’ve had to do. There’s the entire debt buying piece, but then there’s the raising funds cover things. Tell us about some of the challenges there in raising the money.

Craig: We now don’t have a problem with raising money. It’s very odd. We have hundreds of churches that come to us now. Churches abolished over $500 million of debt last year. We have lots of people that are coming from media and putting on campaigns themselves. We have nurses. Nurses are coming to abolish debt. Doctors get together and abolish debt. Individuals, high net worth individuals and people that give $5. It’s quite amazing. I think last week we raised $500,000 in a week.

Scott: And so, again, guys just put that in its place. Like so $500,000, add the two zeros, right? We’re talking $50 million.

Craig: Fifty million dollars. It’s such a dramatic impact. I think we got a $3 million donation the other day from a foundation because they know that they can’t make an impact like this anywhere. We’ve helped 700,000 people get out of debt. So it’s, as it gets known more and more, you know, we’ve ever gone out to ask for donations. We’ve never asked for donations. It just keeps growing and growing and growing by word of mouth. And that’s a wonderful way to grow because people just are so excited that their $1 can turn into $100. So I mean we have to start getting more proactive in our giving, in our asking, but it just keeps coming and, you know, we’re just growing at such a great clip.

Scott: Yeah. I have a quick question for you. Your background and being a debt collector, does it help you negotiate better when you’re trying to use the funds that you have to knock out debt?

Craig: I don’t try to negotiate too much, which is interesting. I’m not trying to get the lowest price because the hospitals, they actually need to make some money too. They’re losing so much, so much, and it never qualifies them in the charity care they give because a lot of times people do not accept charity care. They’re proud, they think they’re gonna be able to do it. They’re over optimistic on how well they’re going to be able to handle the illness and the debt so they don’t ask for help.

People just won’t ask for help because there’s a stigma to the debt or asking for help, there’s a stigma to the illness, and what we’re trying to do is, you know, we could go to a hospital and say to them, “Donate all this debt. There’s just no reason why the debt should even be there. You should be donating it and letting us tell the people that the debt is forgiven so that they don’t have this on their head.” But we don’t have to do that because we have donors that care and why not support the hospitals? There’s even debt buyers that buy as investors. Now, they are a great channel for us to find debt, but only about a third of the hospitals sell their debt. So what we do know is what the value is of the portfolio. So that is the key.

If we didn’t know the value, then we’d be overpaying without even our knowledge. We have tremendous knowledge on how much these portfolios are worth and the way that you price a portfolio in the debt buying industry is you take $100 million portfolio and you forecast how much you’re going to collect on that portfolio over the next 5 to 10 years. That far out. Let’s say you think you’re going to collect $15 million out of that $100 million, you’re going to pay about a third of that forecast to that amount that you’re going to collect. And that’s practically it. You can’t go much lower than two and a half times. Like now that I know that I’m gonna buy that for $5 million, well I better collect at least two and a half to three times that amount that I paid because I have to pay the collection agency which charges a third.

I have to pay the bank that I borrowed the money from because I got the borrow 90% of that portfolio’s price from a bank specialty finance company. So then I have to pay all of the interest to that bank and the interest to my investors that I’ve brought in. And then the residual happens after three or four years. Now I can go to a debt buyer and tell them, “Why would you want to collect on this debt for the next 5 to 10 years when I can tell you the patients that can’t pay and will never pay, and they meet my criteria and I’ll pay it for them.” And they’re like, “What? You’ll pay for these accounts?” I said, “Yes, I’ll pay for them.” Even though they’re not able to resell them, you know what they’re going to do?

They’re going to hold on to those accounts for 10 years. They’re gonna keep checking the credit rating, keep seeing if there’s anything happening in that person’s life and as soon as they buy a car, as soon as they start a job, bang, they’re going to start collecting on them again even if it’s 5, 6, 7, 8, 10 years. And I want to get rid of that, that long tail of collections. Even though I’m paying less than a penny, it actually stopping debt being collected on for hundreds and hundreds and thousands of people. So I don’t mind paying a little bit to help a lot of people.

Michael: Craig, there’s so much that you’re bringing up here that is just absolutely fascinating. And one of the things that I found really compelling about your organization’s story is, you know, we’re recording this while the democratic debate’s going on, while obviously there’s just the healthcare conversation. It’s just a huge, how do we pay for this? That conversation is just a mega part of politics right now, and so much of that overlooks the fact that people are struggling with this right now in ways that you’re clarifying for us even more.

One of the things that I found fascinating about what you just said was that people aren’t willing to accept or they aren’t applying for charity care more often, because one of the things that I’ve thought about with this, you know, years ago we definitely, my family definitely went through some challenges with being able to pay for medical care, being able to pay for a chronic patient in our family and trying to figure out that whole scenario and what that looks like. And one of the things I was frustrated with at the time was I didn’t know about some of the options that were available for being able to work with our state funding and some of that kind of stuff to be able to afford this stuff better.

One of the things that I felt was more people just need to be aware of the options out there, and you’re showing this other side of, hey, some people are aware and even aren’t choosing to follow through with that. I’d love to hear a little bit more about how patients are interacting with that, what that process of not wanting to take on that charity.

Craig: I talked with and I’ve worked with AARP, and we went into an innovative process with them to come up with new products, new services that could help the people. And when we were putting up on the board all the things that we could do in this incredible workshop that we were working in, I noticed nowhere did I see Medicaid, for example. And I said, “Wow. I wonder why that is. There’s nobody here on Medicaid that has a problem.” Well, that’s because they’re taken care of. That’s the best insurance you could ever have. Medicaid. Now, you go, and Medicare now, then you go to Medicare.

Now there is a lot of Medicare that doesn’t get paid, but it’s such a small percentage of the debt that’s outstanding, that people are responsible for. The people that have insurance now, and we went from about 20% of the people not having insurance to about 10% of the people not having insurance. And when they got insurance, it all of a sudden changed the question that was asked to them at registration. They now had insurance, so why should we offer them charity care? So they didn’t take it, and the amount of charity care dropped after Obamacare from about 2.5% of a hospital’s expenses to about, I guess, 1.6% of a hospital’s expenses. That’s a tremendous drop.

Now, what’s odd is that the main criteria that a hospital picks for giving someone charity care or not is very similar to us. RIP says anybody that makes less than two times the poverty level gets charity care. Well, that’s exactly the same that most financial assistance policies are in hospitals. And the craziest thing is that one-third of this population makes less than two times the poverty level, but only 1.6% of a hospital’s expenses go to charity care. Now, what? What?

Michael: Right. That is a what. It’s that misnomer about yes, I have insurance, but what kind of insurance do I have?

Craig: The biggest problem that we’re having now, because people have insurance, is that they’ve now become uninsured or under-insured, because as the deductibles increased, they now take on the first dollar up to maybe $3,000. So you might be uninsured, it’s very easy to tell those people, but under-insured means is your deductible equal to 5% of your gross income, and that can happen pretty quickly. You make $50,000, it doesn’t take a rocket scientist to say all I have to have is a deductible of $2,500 to be under-insured. So there’s 68 million of those people that are either uninsured or under-insured, and those are the people that are the highest at risk.

Scott: But let me interject something there for a second. I think it’s important everybody remembers that. So if there’s any people out there listening who are patients, potential patients, what was that specific number about being under-insured? What was the percentage of your salary, of your gross salary?

Craig: The number of your gross income is 5%.

Scott: That’s a very important number. Whatever you make, we listening out there, just make it 5% of that number. And if your deductible is that number or higher, you’re under-insured. Now, you may have to deal with that, like, that may be the best you can do, but you need to be aware of that. That’s part one. And then part two when you do, heaven forbid, have to go, go to the hospital because of an accident or some sort of medical problem, whatever that is, remember that number, like, I am under-insured. So when they start, they may ask or not ask, that’s a great thing to be aware of. It’s like, “Yeah, I’m under-insured. My deductible is very high. I don’t know how I’m gonna pay for this.”

The hospital will start talking to you. They may not ask you the question because they’re just not programmed correctly with these major changes occurring. I mean, I don’t think hospitals are hiding. I think they just don’t know what to say and how to say it, and I think that it’s incumbent upon patients to remember that 5% number. Critical.

Craig: You know, I just went to the orthopedic surgeon with my son, had back problems, football player, and we’re in there and I couldn’t get in touch with my healthcare provider, my insurance provider. So I’m in there kind of blind on a vacation day, and now I have to ask every single question about how much this is gonna cost. And my son’s looking at me like, “Oh God. Why are you asking about the cost? Oh my God.” Because we’re responsible for the first $3,000 of whatever this is.

Now, the good thing is I put $8,000 into my HSA, my health savings account, because I know that my deductible is higher than I normally had, but I chose that. I could’ve chosen a smaller deductible and a higher cost monthly, but I chose to have a higher deductible, which fortunately isn’t 5% of my gross income, thank goodness, but it’s still a big nut to have to hit. So I asked, and I found that the MRI is gonna cost $950. I’m glad I asked the question. People do not ask the question, and the people in the office don’t even know. I had to go to two or three people before I could get the right answer.

Scott: Yeah, and then that’s the other, that’s part of the insanity of the whole setup with, without getting, again, too crazy about all this. Asking questions about costs can be very helpful. I have a friend of mine who needed get a mammogram, a second mammogram for what could have potentially been a problem, but luckily was not one. And she just went and called a few different people and said, “What do you charge for this specific mammogram?” And the change, the cost differences were incredible.

We’re not even talking about saying, “You know what? I need to get one and I can’t afford it.” So again, I’ll go back to everybody like, look, the people on this phone call are lucky enough to make a choice. There are a lot of people who don’t have that ability to make a choice, and being open and asking that as soon as you can will be very helpful, I think. How do providers, you know, you mentioned the orthopedic surgeon. How do some of the providers feel about this service that you’re providing? You mentioned sometimes doctors are coming to you to help abolish debt.

Craig: You know, they love it actually. They have so much debt. It’s about $25,000 to $35,000 per doctor per year that they don’t collect. It’s a significant amount of money that goes by. And many of them want to donate the debt, but they can’t donate the debt because what’s the craziest thing of all is that the tax laws say if they donated the debt, it would become income because they’re on a cash basis. They don’t want to show income when they earn it, they want to show income when they collect it.

So now if they donate it, doing the best thing for a patient, they have to show income based on the gross amount that they charged. And then they’ll have to do some crazy thing and take it off their taxes on the backend. But why would they go through that hassle? So I end up buying it for, you know, a small percentage. If a doctor’s office wanted to sell their debt to us, their assets of debt, I might pay them a very handsome amount for the current debt and pay them practically nothing for their old debt. That might be fair to them. I’d be open to talking to any doctor, any medical group, and figure a way to give them they need so that these patients could get what they need because these doctors don’t have charity care. It used to be that a Marcus Welby… Is that how you say it? Marcus Welby?

Scott: Yes. I’m old enough to know it’s Marcus Welby. You young people. Yes, that’s how you say it.

Craig: Marcus Welby M.D. would go to the patients door to door and he knew his patients. And if he knew that they were out of work, he didn’t charge them. And it’s just not able to be done anymore. It’s illegal to not get paid.

Scott: It’s exactly what he’s saying. I was going to say that it’s actually illegal. Now let’s walk through that. So if a orthopedic surgeon, you just mentioned walking to the orthopedic surgeon’s office, had $1,000 worth of debt, they can’t just let it go. There’s a lot of tax consequences and legal issues they need to deal with. But if you bought the debt at $100 instead of at $1000, they can write off that loss. Is that correct?

Craig: No, actually.

Scott: I’m over-simplifying it?

Craig: No, they couldn’t write off the loss. What it is is in a practice, a healthcare practice, and I’m not talking about large medical groups because large medical groups might actually be able to write things off. They might take income as they earn it instead of income when they collect it. Now, if a doctor is owed $1,000 and he hasn’t collected it, there’s no receivable, there’s nothing. There’s a future earnings is what it is, so he doesn’t have any asset whatsoever.

All he has or she has is a potential income, potential earnings so there’s nothing to write off. Now, if they did take income upon billing or on an accrual basis, then they of course would take the $1,000 they’d sell the debt to me for $100 and they would write off the balance of $900, and then that would be the way they’d work.

Scott: So they would only pay taxes so to speak on the 100 bucks they made and get that off their books. Is that?

Craig: Yeah.

Scott: Okay.  Sorry if I guess I over-simplified it, which is a habit that I’ve got. Michael is fully aware of that. But it’s good for everybody to understand that if that is something that, again, for all the practices out there that are like, “Man, I just want to clean this up,” certainly is an option as well.

Craig: The hospitals, for example, there are some hospitals like New York Presbyterian, for example, that will just bend over backwards to help their patients no matter what. If they called them up and say that I’m making less than two times the poverty level, then it goes into charity care or they write it off if they have to. These are special instances of companies that are caring so deeply about their patients. You hear a lot about garnishments on bank accounts and on income, you know, your earnings.

Now, some of those things are happening because States own these hospitals and they demand that they go through their attorney general and collect on every amount that’s owed. Now, unfortunately, some of these people were charity care eligible. They’ve got to do a better job at checking. They only have approximately 270 days with which to identify a person that qualifies for charity care and then they can reverse the billing because a charity care situation is, there is no bill. No bill is created, no future earning is set. It is just charity care and that’s what it is.

Now, after 270 days, they don’t put it back into charity care. It’s now bad debt. Now a hospital can say to the world, “Hey, I have this tax deduction you gave me world. It’s worth $70 billion a year, and I’d like to qualify for that by showing you how much bad debt I have for people that really qualified for charity care.” And guess what? The government says, “No, sorry. You had to have qualify them before. You can’t do it now. That’s just bad debt. You get no benefit for that whatsoever.” And that’s a little bit harsh, I think. They’re doing a lot of good and it doesn’t show up. So that’s another issue. But if they donated their debt after that time that they had to change it back to charity care, they’d actually get credit.

Michael: This is obviously just a, such a complicated topic. I’m thrilled, thrilled to know that there are organizations like yours out there trying to make a positive impact. We’ve been fortunate enough to have some very, I’ll say like good willed people that are seeking to change healthcare in very positive ways. And obviously the way that we pay for healthcare in America, the way that we collect on healthcare in America, there’s lots of changes that need to happen. Mr. Antico, thank you so much.

Again, everybody, this is RIP Medical Debt is the organization. We will have links in the show notes. But again, thank you so much for coming on the show, and I wish you the absolute best. This is such a great organization and I’d love to see what’s happening.

Scott: Yeah, have a great day, and thanks.

Craig: What I’m going to do for your show is I’m going to abolish $1 million of debt in your show’s name as a thank you.

Michael: Thank you.

Jared: That’s just awesome.

Scott: That’s just an awesome feeling. Thank you so much. This is just a great thing. Everybody have a great day. Sorry, we ran long, but it was obviously important that we were at a little longer on this particular podcast.

Announcer: Thanks again for tuning in to the “Paradigm Shift of Healthcare.” This program is brought to you by P3 Inbound, marketing for ortho, spine, and neuro practices. Subscribe on iTunes, Google Play, or anywhere you listen to podcasts.