John Oliver buys and forgives $15M in medical debt, illustrates horrors of America's debt-collectors

I would also like to point out that no one is doing anything to cap the actual cost of healthcare in this country. I am hoping that someday soon Congress will pass some kind of act that guarantees affordable care.

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Which country? Because in the US there’s been a major fight to do just that.

The health care companies have the money, so they have the upper hand. Their owned and operated congressmen defeated Obama’s public system in 2009, and after he adopted 15 years of Republican healthcare policy as a “better than nothing” alternative, Republicans been fighting that ever since.

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I mean the US, and it sounds like you agree that it would be nice, and also that we don’t currently have one.

My family is paying $900/month for you-better-not-get-sick health insurance. We found out a few days ago that insurers in NC have asked for a 19% increase in premiums for 2017, on top of the 30% increase for 2016. Yet the policies they offer cover less and less. Our current policy has no cap on out-of-network out-of-pocket expenses, for instance.

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My point is that it’s not that “no one is doing anything to cap the cost of healthcare.” You have a President and many in Congress who have been fighting hard to do so. In fact it’s been the defining fight of his presidency.

The problem is that a larger number in Congress are funded by the healthcare companies to fight AGAINST reforms. The healthcare/insurance companies are investment companies. The investors are the customers, not the patients. Funding the fight against healthcare reform provides an excellent return on investment.

This is what a public insurance system - like in Canada - is all about. Those who run the system are answerable to the voters, who are both the patients AND the investors.

Unlike US Medicare/Medicaid - forbidden by Congress to negotiate lower drug prices - the Canadian system can negotiate bulk pricing on drugs. And you don’t get things like the CEO of UnitedHealth Group resigning in disgrace and still getting a $1.1 Billion (yes, with a B) golden parachute.

Which is why Canadians pay 47% less for the same level of healthcare, and that includes less taxes for it (the blue “public” portion of this graph.) Essentially, Americans and Canadians both pay for healthcare through taxes. But Canadians then GET that healthcare, while Americans are required to pay a second time.

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This is of course awesome, however, there is a small issue with taxes. Debt forgiveness is considered taxable income and may prove to be more problematic. You can normally eliminate the debt by filing for bankruptcy, but now that it’s forgiven 36% of it is tax owed to the IRS, and you can’t get out of that. If you had 10k in medical bills forgiven you suddenly have a 3k+ debt to the US government. Similar to Oprah’s car giveaway, you may think you are doing a good thing until you realize that the people you are giving that gift to cant afford the taxes or insurance. Hopefully this doesn’t end badly. Medical debt is a real problem.

So at first blush, while Oliver’s forgiveness of your $5,000 in medical debt saved you $5,000, you are obligated to pay tax on that amount. But if you were listening closely to Oliver’s explanation of the process, he added that the debt would be forgiven “with no tax consequences” to the debtor.

[…]

The answer is found in Section 108, a provision that offers a host of exclusions to the general rule that the forgiveness of debt generates taxable income. Hidden among the more well-known exception for bankrupt or insolvent taxpayers, or the forgiveness of a mortgage on a principal residence, is subsection 108(e)(2), which provides that “no income shall be realized from the discharge of indebtedness to the extent that payment of the liability would have given rise to a deduction.”

[…]

…and that deduction is provided for in Section 213, which allows a tax deduction for “medical expenses not compensated for by insurance.”

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And this:

http://strikedebt.org/taxanalysts/

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He did say it was being passed to a company that specialized in debt forgiveness without an impact on taxes (would have to re-watch and scroll to the right part for exact wording). It does appear they are aware of this aspect.

well never mind @nimelennar got to it before me with a more complete answer

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Great! I’m glad.
Anyone want to kickstart some debt forgiveness companies?
:slight_smile:

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I think that the guy who previously had the phone number that got assigned to my company phone is finally down to U or V after the 13 years that I have received calls for him… I hope that Oliver bought his debt.

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Not that I’m saying it’s impossible, but it would strike me as very odd and perverse if you could have to pay taxes on someone else doing a financial transaction that you might not even be aware of and that you never consent to. I think a fundamental part of receiving income or a gift ought to be your willingness to take it.

And if the tax system is so arcane as to require you to report that kind of debt forgiveness, I’ve got an easy workaround. Don’t forgive the debt, simply hold it, never make any attempt to collect on it, and before your organization disappears or changes ownership, “lose” all records of who owes you money.

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Student loan debts are extremely lucrative and are often non-dischargeable which means they survive bankruptcy.

For other kinds of debt like credit card debt once it goes into collections for long enough any profit is better than no profit which is why it gets sold off to some speculatory predatory collector.

It’s also very possible that by the time the debt gets to these scummy operations they legally cannot collect on it anymore so they try to “settle”. I’ve dealt with some of these firms in the past and they are the worst of the worst. One tried to collection a debt I had long since paid off. They threatened me with lawsuits and wage garnishment. I told them to send me proof that they owned the debt and the “proof” (they sent me some payment history paperwork which was basically worthless as “proof”.) They continued to threaten me so I told to just fuck off and sue me already. I’m still waiting to get served some 10 years later.

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For unpaid medical debt (numbers are 18 months old):

http://www.modernhealthcare.com/article/20141211/NEWS/312119987

42.9 million people x $1,766 = ~$75.8 billion.

If you use the half-a-cent-on-the-dollar figure, that’d be ~$379 million.

It’d be more than that, since Oliver was only buying the lowest quality debt, and because having so much demand for the debt would drive the price up.

I love John Oliver’s ideas, his long-form rants that break complex or hard-to-understand issues down into easily-understood action steps, and the results he often gets. Well done, Mr Oliver.

But there’s something about his delivery, the way he breaks up his explanations with goofy fish-in-a-barrel jokes and mugging and flailing (“Oh no! Excel! Everyone hates Excel spreadsheets! Aaaaahhhh!!”) that bugs the hell out of me sometimes. I want to say John, I get what you’re doing here, but you can aim a little higher.

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Yes. A million times this. As much as I love his stuff, the “follow up everything with an out of context joke before moving on to the next thing” schtick is totally overdone.

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Wish John Oliver had brought up Strike Debt! (http://strikedebt.org), Rolling Jubilee (http://rollingjubilee.org), and Debt Collective (https://debtcollective.org), offshoots of the Occupy Wall Street movement, which have been organizing around this issue as well as buying and retiring debt for years now. What he did was great but we need to connect with each other to make a real difference. Not referencing these ongoing efforts is a systemic failure in our media these days.

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My guess is, in the eyes of the law, it’s probably not a whole lot different than your bank selling off your mortgage to someone else, to whom you then start making payments. Which is actually pretty standard practice, at least where I live.

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Relevant…

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Yep. I totally lived it.

In 2005 the company where I worked closed my entire department. I led a very upper middle class life. Suddenly I couldn’t afford private school, rent and feeding my son. Long story short I plunged into severe depression.

Six months before, the company started paying us later and later so I borrowed money to pay the rent and when they paid us I would quit the debt. The irregularity of the payment and the insecurity of spending six months without knowing if I had a job to work or not really did a number on me as I was a single mother.

So, suddenly I was unemployed and indebted with the bank. I called them and tried to negotiate. There’s some banks that offer unemployment insurance. No dice. That small debt kept growing up to the point where I became totally desperate and started thinking about suicide.

My lawyer told me that I was paying taxes over taxes, a practice that is kind of illegal where I live and that I had already paid double the original debt so I should drop it and let the debt expire. It was hard and shameful but I did. It expired in 2010. I’m still deeply ashamed even rationally knowing that I did everything that I could, sold everything I owned, lost everything I had and had to restart my life with nothing…

Then they came. Every day. All the time. By phone. By cellphone. By letter. By email. I changed addresses. I changed my number. They discovered the new number. They discovered the new address. I blocked loads of emails. They changed emails. It doesn’t matter that the debt expired.

The stalking is worse than anything I have experienced. And it is a cruel reminder from the time I got sick and suicidal that simply won’t go away and let me heal.

These guys are vultures. I hate them.

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Another interesting aspect of this is this: these losses have absolutely been calculated in at the highest level; the hospitals and insurers have it as a basis of their spreadsheets.

Which means that healthcare is thus proved to be priced too expensively: if so many millions are priced at cents on the dollar, it means that, really, the actual price should be AT MOST the average of the paid amounts plus that which they sell so cheaply: that amount is the REAL amount total healthcare costs; not the inflated amounts which the system says it is … and then conveniently forget to mention that many of those dollars are actually sold much cheaper AND STILL NETS A PROFIT OVERALL.

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