Inside the medical debt charity that John Oliver just made famous

When comedian John Oliver forgave nearly $15 million in medical debt in theatrical style on Sunday night, he drew laughs by proclaiming himself more generous than Oprah, who once gave away $8 million worth of cars.

But Oliver, host of “Last Week Tonight with John Oliver” on HBO, also pointed to a very real and serious problem: Getting sick often means amassing large health care bills that insurance companies won’t pay and patients can’t afford.

When care isn’t covered, hospitals and health care providers would rather not deal with trying to collect on delinquent bills. So they sell their patient debt to a collection agency that buys the debt for less — a lot less — than what is outstanding. These agencies then go after the patient for the original amount, hoping to turn a profit.

Legally, collection agencies have from three to 10 years to collect on the debt, but Oliver pointed out that many don’t give up then. Companies also use aggressive collection tactics, which Oliver mocked, such as threatening the debtor’s dog or calling their boss at home.

 
To highlight how “disturbingly easy” it is to found one of these collection agencies and obtain debtors’ personal financial information, Oliver started his own agency for $50, naming himself chairman of its board. Central Asset Recovery Professionals (acronym CARP, as in bottom-dwelling fish) of Mississippi, then purchased nearly $15 million in medical debt for under $60,000.

Instead of going after 9,000-plus debtors to reclaim that debt, Oliver announced that their obligations would be turned over to a charity, RIPMedicalDebt, and disappear forever.

Declaring his move the biggest TV show charity giveaway since Oprah’s cars, Oliver stood between two giant gold dollar signs, and pressed a giant red button. As money (presumably fake) fell from the ceiling, he loudly declared himself “the new queen of daytime talk.”

Craig Antico, a cofounder of RIPMedicalDebt, said the nonprofit aims to eliminate at least $1 billion in medical debt for the country’s poorest patients.

That goal sounds huge, but since medical debt is sold on the cheap — because it’s hard to collect — Antico said it takes less than a cent to buy and then forgive a dollar of debt. “It only takes $14.45 million to abolish $1 billion in debt,” he said.

He should know. Both Antico and RIPMedicalDebt cofounder Jerry Ashton had previously worked in the debt collection industry. The two decided to change their ways after talking to protestors from the Occupy Wall Street movement in New York.

“They were very concerned about consumer debt and poverty,” said Antico. “And they came up with the idea of buying medical debt to show how the debts are bought and sold.”

“People don’t realize that you can do this,” he added.

Antico and Ashton initially bought medical debt with their own money.

“But my wife told me it didn’t make sense to go into debt to get people out of it,” Antico said, so they began to try to raise donations from the public.

RIPMedicalDebt currently forgives debt only for those whose annual income is less than twice the federal poverty level. This includes the debts John Oliver bought for under $60,000.

So far, the TV mention hasn’t yet bumped up donations to RIPMedicalDebt. For nearly a year, the charity has been trying to raise funds to pay the debts of veterans. But it has only managed to raise about $8,000 of its $75,000 goal.

Antico said that a lot of potential donors are skeptical.

“They don’t think we’re real,” he said, pointing out that RIPMedicalDebt just became a tax-exempt nonprofit in mid-May. “People kept saying, ‘You don’t have a 501(c)3.’ But now that’s put to rest.”

Antico said that future plans include targeting other groups for debt forgiveness.

“There are so many people who need this that we can specify people, like cancer survivors or people in Detroit, because it’s especially hard hit.”