The following is a conversation between Craig Antico, Co-founder of RIP Medical Debt, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer WNYM in New York City.
Denver: Do you know what contributes to over 50% of all personal bankruptcies? It’s medical debt, which is carried by millions of Americans. In fact, over 40% of people diagnosed with cancer will deplete their assets in just two years. But an organization has come along to address this problem in a unique and creative way. It’s RIP Medical Debt, and it’s a pleasure to have with us tonight their Co-founder Craig Antico.
Good evening, Craig, and welcome to The Business of Giving!
Craig: Thank you, Denver, for having me.
Denver: The studios of this radio station, where we’re at at the moment, are only about 100 yards away from Zuccotti Park, the site of Occupy Wall Street, and the founding story of RIP Medical Debt began there. Tell us how it all got started.
Craig: Well, Jerry Ashton, our co-founder, along with me, went down to Zuccotti Park when it first started the Occupy Wall Street Movement. Now, Jerry is a Navy journalist going way back, so he was really curious. He said, “Is this for real?” So, he went down there. He brought his pad, he brought his video, he brought his camera—
Denver: His tools.
Craig: — his tools of the trade, and he ended up interviewing people. He ended up becoming a Huffington Post columnist, just to chronicle Occupy Wall Street for the next two to three years. As he’s there, the people are saying, “Why is a collector in our midst?”
Denver: What do you mean: a collector?
Craig: Because he is a collector from way back. A Collection agency, collection man–
Denver: A debt collector.
Craig: –a debt collector, and he had been doing that since the ‘70s. He’s one of the best collectors I’ve ever seen because I come from the collection industry as well; I ran collection agencies. Now, he said, “Hey. Wait, wait. I’m not here to enforce the 1% here.” And they started to confide in him. They’d ask him about their student loan debt, about their medical debt; “What can I do?” because a lot of people are just like, “I’m not even going to open up the mail. I’m not even going to accept the phone call.” So, they were really concerned about that.
They ended up having an idea. In order to bring awareness to this medical debt problem and just debt in general, they figured what they would do is start to buy medical debt themselves. So they asked Jerry, “What do you think?” In his infinite wisdom, he said, “I think that’s the dumbest thing I’ve ever heard .” Well, it ended up, he just, as a volunteer, told them what they should do. They went on to actually abolish debt, and they were our inspiration for RIP Medical Debt.
Half of all debt is medical; 58% of all the bad marks on a credit report are medical debt.
Denver: Craig, what’s it like to be somebody who is hounding people for money or else, to now be in this situation where you’re giving them a new lease on life?
Craig: It’s miraculous because I’ve been in this business for over 30 years, and I’m talking about the collection business, debt collecting. Half of all debt is medical; 58% of all the bad marks on a credit report are medical debt. So, we know medical debt, and it’s one of the hardest, hardest types of accounts to collect, and I never liked doing it.
I started in the family business, and I started to make a lot of money and said, “Well, what am I going to do now? I can’t leave.” And I stayed. I stayed for all those years…for 17 years. And then came Jerry Ashton saying, “Hey. Look at this. Look what’s happening here. This nonprofit has abolished over $40 million of debt.” I said, “What?” And we looked at it, and we said, “Well, I think we’re pretty qualified to do that.” And they had stopped what they were doing, so we decided on January 1, 2014, we’re going to start doing this; maybe we could raise the same amount of money that they raised. Nope. The hardest thing we ever did. We knew how to collect. We know how to buy the debt. We did not know how to raise money.
Denver: A fundraiser. That’s tough.
Craig: Fundraising is not like business. It is a different animal. And it took us many years to actually get into the actual way to raise money.
Denver: It’s funny about Occupy Wall Street…I was talking to somebody on the show about this the other day, and Occupy Wall Street was a big failure. At the end of it, people said they didn’t know what they wanted, and the whole thing kind of just withered away.
But if you now look back, and you look at the 1%, you look at inequality, you look at debt; they really were groundbreaking in what they did, and it just is a cautionary word that you can’t judge things too quickly. You have to look over a period of time to see the influence that Occupy Wall Street actually had on our society.
Craig: I think so, too, because if you look at the top issues that were addressed by the UN, for example, inequality was not at the top just five years ago. And now, it’s one of the top things that we’re looking for. And what we care about is righting a wrong.
Now, a lot of people that have medical debt, they qualified for charity care. Now, they might not have accepted it…See, that’s the interesting part: it’s not all an indictment of the hospitals. A lot of people will say—we’ve worked with AARP on some groundbreaking work in this area. They said to us they interviewed over 200 people that were 50 and older, and they asked them, “You qualify for charity care. Will you take it?” “No. That’s not for me. That’s for somebody that really needs it.” I’m like, “Wait a second. They need it more than anybody because they don’t have the income that they used to have.” 60-year-olds, 70-year-olds that aren’t working are basically on a fixed income. All of a sudden, you get a $5,000- $10,000 bill. You are down for the count. That’s really a bad situation.
We estimate that almost 50% of Americans have medical debt – 50%!
Denver: How many people, Craig, in this country have medical debt? How much is the medical debt in total?
Craig: We estimate that almost 50% of Americans have medical debt; 50%!
Denver: That’s incredible.
Craig: Because what happens is hospitals alone – they produce debt at a prodigious rate; the bills just keep coming. There’s about a trillion dollars of bills that occur. Now, it used to be in the recent past – maybe year 2000-ish – that about 10% of the cash that came into a hospital came from the people. That’s their portion. Now, patients are paying 30% of that amount that the hospitals get a year, so more and more people can’t pay that responsibility, that piece. So, we’ve got probably around 100 million people,150 million people that have medical debt right now.
Denver: What age or age group has the most medical debt?
Craig: You wouldn’t believe this: 26- and 27-year-olds.
Denver: Right after they get off their parents’ insurance.
Craig: As soon as they get off their parents’ insurance. But the crazy thing is, it’s that their parents might not have paid the bills since they were 18, and they’ve been responsible since they were 18 years old. So, they didn’t know that they even had debt.
Denver: What is the life cycle of a medical bill before, at least, it gets to you guys?
Craig: First, a patient comes to the hospital. Let’s just say we’re talking about hospital debt here because that’s most of the debt that we can buy. Now, a patient comes to the hospital. They get registered. At that moment, they should be qualified for charity care: Can they afford to pay this bill? But a lot of times, especially since the ACA Obamacare, where people now have insurance, they’re not being checked to see if they qualify for charity care. Usually, you say, “Do you have insurance or not?” Well, all of a sudden, a tremendous amount of people – maybe 20 million people – got insurance.
But what the hospitals really aren’t paying attention to is that 20 million people might have gotten insurance, but they got high-deductible plans. So now their deductible is $2,500, $3,000, $5,000…because a lot of times, people are looking for the lowest cost monthly. That means you’re paying a big deductible. They can’t even pay dollar one. I don’t know if you’ve seen in The Atlantic, they did an article on: if someone had a surprise charge, could they pay?
Denver: I think $400.
Craig: $400…and almost 50% of people could not come up with $400. They’d either have to sell an asset or incur debt.
Now, people can get charity care, and most of the time, a bill will not even be created. So that’s the interesting part: if you qualify for charity care, you have to be a consumer that knows your rights. So when you go to the hospital, the first thing you do is “Am I making two times the federal poverty level or less?” Because that’s the cutoff most of the time, and a third of our population is two times the poverty level and below. So, the anatomy of a bill is: should there even be one or not? And that’s what we call charity care.
And you can go on a website for every hospital in the country and see what their financial assistance policy is, which is charity care, and you apply for it. Unfortunately, it’s an opt-in. If it was an opt-out—
Denver: it makes all the difference in the world.
Craig: –it makes all the difference in the world. If we had an opt-out policy, which is really essentially what our RIP Medical Debt is. It’s an opt-out policy because we find the people that qualify for charity care almost, and then we buy that debt and abolish it.
People don’t know that it’s happening; they just get a yellow envelope that says, “Your debt has been forgiven, wiped out completely, taken off your credit report, a no-strings-attached gift.”
Denver: That’s sweet. Well, let’s get to the meat of all this. How do you go about relieving this debt for all these people? What’s the process?
Craig: We just received donations of about $850,000 in the last couple of months that we are now going to go and buy debt in the areas that those donors care about. Now, it could be – they might care about demographics: Are they women? Are they children? Are they 27-year- olds? Are they veterans? Or geographically: are they in Appalachia? That’s where I care about; Or in New England? Or are they in New York City? Things like that. That’s what people care about.
Denver: People have debt everywhere, so you follow where the donors intent is in terms of where they want to relieve.
Craig: The donor cares about cancer? We’ll find cancer debt. So, what we’re going to do is we’re going to find $100 million of debt, and with that $800,000, we’re going to buy it. Now, what we have to do is we have to qualify it, make sure that it meets the three requirements that we have. And those are – and similar to charity care: Are the people making two times the poverty level or less? That’s the first criteria.
Second criteria: Are they spending 5% or more of their gross income on medical expenses or this debt in particular? So if a person has $5,001 in debt that we’re abolishing, and they make $100,000, they will get their debt abolished.
The other thing is that a lot of people, like you said in the opening, are usurping all of their life savings…
Denver: Yes. That’s what they’re doing.
Craig: The toxicity of medical debt, especially in cancer, people are spending 10-, 20-, 30% of their gross income…they’ve got to start using their savings or credit. And if a person is insolvent – which is what that means: their assets no longer meet their requirements of their debt – we abolish debt for them, too.
Denver: What’s the ratio between the amount of money that you would put up and the amount of debt you’re able to forgive? I’m sure it differs, and depending where you’re at, but let’s say if you had $100,000, by and large, how much debt could that relieve?
Craig: That could relieve $10 million, and sometimes a little more. If our costs are lower – let’s say the accounts are very large, and I don’t have to use a lot of money to find the data on them; I don’t have to send out as many letters, then the costs are a little lower, and I might be able to abolish 110 times the amount that we’re given. You just usually just add two zeros to the amount that you want to give. You want to give $10,000? Add two zeros, that’s $1,000,000. You just add a couple of zeros on there and maybe a little more, and you’ve got how much debt we can abolish.
…it might take a debt buyer 5 years to 10 years to make the required amount of money that they need to do this business in itself. Some of these debt buyers, they might have 30% of their income coming from 10-year-old accounts and older. So, they’re working these accounts for a long time. Debt never dies. It never dies.
Denver: So, what’s the incentive for these entities that are owed this money? Have they just pretty much thrown up their arms and say: this is better than nothing? What’s their reason for doing this?
Craig: What’s interesting is a lot of the people in these hospitals know that a tremendous percentage, maybe 30% to 40% cannot pay and never will be able to pay this debt. So should we be pursuing them? Should we be suing them? Or should we just say, “I’m going to sell it to our RIP Medical Debt and make at least something.” Because if you think about it, the bad debt piece of a hospital is between 5% and 10%. So, for the lion’s share, they’re collecting the money.
Now, it’s a matter of: what percentage can I collect of that debt that I have left? It’s an arduous task to collect it, believe me. A collection agency that gets a $100,000,000 in debt might collect $1 million, $2 million, $3 million…that’s a very small amount. What we tell the debt buyer is: there are people, companies that actually buy the debt from hospitals; about 30% of the hospitals sell their debt. More of them are going to sell to us because we’re not going to collect on it.
But let’s just say the secondary market for debt…there are billions and billions of dollars. We have $5 billion that we can select from. That’s why when a company comes in, or a person comes in – and 70% of our donors are people, individuals – they come in and say, “I want to abolish debt for my community.” We’ll look at their county or group of counties, and we’ll then be able to go through that $5 billion of debt that we have as a potential inventory, and we’ll make a bid to the debt owner. This is a debt buyer, and they’ll sell it to us.
Because – listen to this – it might take a debt buyer 5 years to 10 years to make the required amount of money that they need to do this business in itself. Some of these debt buyers, they might have 30% of their income coming from 10-year-old accounts and older. So, they’re working these accounts for a long time. Debt never dies. It never dies.
Denver: Until you guys come along, and you kill it.
Craig: We come along and what we’re telling these debt buyers and even hospitals, we’re saying, “Instead of waiting 7-, 10 years to get your money, I’ll pay you right now for all that stream of money that you’re going to make over the next…” But the crazy thing is they might only collect 3%, but they have to talk to or send letters to the 90%, 97% of people.
So, we’re trying to remove — we are removing the hardship of collections for the people that can’t pay and never will pay, even though 3-,4-,5% will pay. Why are we hitting all those 95% of the people that can’t? So that’s how we’re doing it.
Denver: Yes, for the hospital and the medical entity, it’s a big carrying cost for them to just… service this, and continue this debt. And it’s funny, I guess they would never agree to this kind of arrangement for an individual. It has to be bundled.
Craig: Think of it this way: if I went to a hospital and said, “Hey, I’ve got Mary Jane here from Podunk, Iowa. She owes $1,000. I’m a charity. I want to pay $10,” which is 1%. “What? Are you kidding me?” Even if it was $100,000, and I said, “I want to pay $1,000.” No way. But I add 10,000 accounts together and that $100,000,000 becomes a $1,000,000, that might be 20% of their whole–their profit for a quarter. It makes a difference when you add numbers.
Denver: Well, I watch Last Week Tonight, a show on HBO, which is hosted by comedian John Oliver. It’s a great show, airs Sunday evening at 10:00 p.m., and he helped to catapult this effort into a completely different orbit. Tell us how he did that.
Craig: Well, he did it by making fun of the whole industry that I come from. He made a real horrible portrayal of the collection industry, of the debt-buying industry,
Denver: It’s probably not that hard to do.
Craig: Well, it’s funny. It only takes a couple of bad apples to make the whole industry look bad. I mean, if you think about it, hospitals have the smallest amount of collectors that any industry has; that’s a trillion dollar industry – 8,000 accounts per collector. So, you have to use collection agencies or even sell the debt.
Now, he made fun of the industry – and by the way, the industry thought that I was part of the whole deal. They wouldn’t even talk with me. These are people I’ve known for 30 years – because how else would we be able to buy the debt if they didn’t trust the charity? They trust the charity; that we’re going to buy the debt that really qualifies for charity care. But John Oliver – and we’re going to build a statue for this guy –
Denver: Well, I don’t blame you.
Craig: — because we got so many inquiries about our help because he donated $15 million of medical debt to RIP Medical Debt because he couldn’t do it himself. He was trying to do–he’s even started churches. He’s done some incredible things to bring to light problems-
Denver: How easy it is to get something like this started!
Craig: Yes. It’s like I started this, and any idiot can do it. And he’s like, “And I’m an idiot.”
Denver: That’s right. And to prove it, I just started one.
Craig: So, he didn’t realize that he had to be a charity to do this; and he’s doing a comedy show, so he couldn’t do it because his goal is to be a comedy show. Our goal is to help eliminate medical debt. So, he’s lucky he even found us to do this; otherwise, he would have invested $150,000 and never been able to do a thing. From within two weeks of him being introduced to us, we were able to put this on the show. Otherwise, they would have never been able to do it.
But if it wasn’t for him, we might not even be in existence because he brought…and so far, his show, Last Week Tonight with John Oliver, that show – that segment on debt buying has been seen by over 13 million people, and it continues to bring people to us.
We’ve had churches come to us. We’ve had NBC came to us, and did a whole… $150 million of debt is abolished now because of them.
We have abolished over $800 million dollars in medical debt. With this next purchase next week, we will break the $900 million mark, and within the next month or two, we will break the billion-dollar mark.
Denver: I saw the piece. By the way, how much debt have you been able to abolish?
Craig: We have abolished over $800 million dollars in medical debt. With this next purchase next week, we will break the $900 million mark, and within the next month or two, we will break the billion-dollar mark.
Denver: Which you were going to do in 2020, but it looks like you’re going to beat that target.
Craig: We’re going to beat that target.
Denver: Who funds you? You said 70% from individuals, but how do you get your money? You’re a non-profit.
Craig: Seventy percent of our money comes from individuals, not dissimilar to the way all of charity is in this country. I think there’s $420 billion given to charities in this country, and about 70% of it comes from individuals. But what we’re noticing is more churches are coming to us than ever before. I think we have 60 churches. One just gave $430,000, which is a phenomenal amount. It’s going to abolish over $50 million of debt for a region of this church.
Now, we’re not any denomination. We’re not supporting churches per se, but I think churches realized that: Hey, we care about people first. We care about our community of givers and community of followers. And they feel it’s their mission.
Denver: Yes. I think, like all donors, they care about leverage, and they can leverage their money here at an astronomical rate.
Craig: You almost can feel like you’re a billionaire giving money. You give $100,000, and it’s gonna buy us about $10 million. It’s like “Holy cow! I feel like I am really a philanthropist now.” But you know what people should realize—
You can act like a billionaire, but you don’t have to give a billion.
Denver: What’s the guy’s name? Mark Anthony or something like that… The Millionaire, that old show, remember?
Craig: Yes. I remember that. It’s funny. You can act like a billionaire, but you don’t have to give a billion. We’ll have the $100,000 pledge instead of the billion-dollar pledge.
I’ve always envisioned my whole life…I can’t wait for the day that I could give a million dollars. That was one of my goals: to give away a million dollars. Haven’t achieved it yet, and I’m not going to make a fortune being in a non-profit, but that was always my goal.
Now, people can do it with $10,000–give a million dollars away.
It’s the person that gets the $1,000 debt abolished, that they couldn’t even imagine how they were going to get out of it. Or it’s the $10,000 abolishment where they’re inundated with cancer debt, and this is one more thing they don’t have to think about …they’re telling me when they get these letters, there’s like a renewed hope in humanity, that there’s someone out there that actually cares because they’ve got $20-, $30-, $100,000 of debt, and now “I can see the light at the end of the tunnel.”
Denver: I know you had been working with four universities who were studying the impact of what it was like for a person or a family to have this debt relief. Where do we stand with that?
Craig: We’ve had a little bit of a delay, but we’ve been doing it for over a year now. And a big part of the work is: How does the access to credit change? How does the cost of credit change when we abolish debt for people? And of course, credit scores are very important to that. We use TransUnion; TransUnion is an incredible strategic partner of ours because they want to use information for good and not be seen as only a predatory information giver. We call ourselves a predatory giver.
And it turns out that there’s been a problem with some of the reporting recently with some of the debt that we bought, so there’s a little bit of a delay. Not something your people need to know much about; I get into too much detail sometimes. But within the next six months, we’re going to be doing some reporting on what’s happening.
Denver: Yes. It would be very interesting to see.
Craig: Well, let me tell one more thing. The researchers – MIT, University of Chicago, UC-Berkeley, and UCLA – have recently got an over $1 million grant to not only study the impact from an economic standpoint, but the impact from an emotional and mental perspective.
So, we’re going to be able to do surveys to hundreds of thousands of people and find out how this is really affecting them, and how does abolishing debt actually affect them. Because we get stories all the time about people, how this made a difference to them. And you would think that it would be on the people that get abolished $50,000, $100,000 because the biggest debt we’ve abolished is over $250,000, but it’s not. It’s the person that gets the $1,000 debt abolished, that they couldn’t even imagine how they were going to get out of it. Or it’s the $10,000 abolishment where they’re inundated with cancer debt, and this is one more thing they don’t have to think about. Because they can’t even…they’re telling me when they get these letters, there’s like a renewed hope in humanity, that there’s someone out there that actually cares because they’ve got $20-, $30-, $100,000 of debt, and now “I can see the light at the end of the tunnel.” We’ve gotten many for cancer.
$55 billion is lent to friends and family for medical debt and expenses… and $88 billion is borrowed to pay for this.
Denver: I can imagine. It’s somewhat analogous to having to pay bail. And if you’re a poor guy and the bail is $1,000…I had a guy on the show who said, “Well, that might as well have been $1,000,000. It’s the same amount of money. I have no hope of getting it.” So, we tend to look at it from a relative point of view of how much, but the paralysis that debt can set in; it’s all having to do with the individual and their circumstances and what they can do.
Craig: Very good point. I’m amazed that people that have a very low income give to us. I mean, the percentage of their income…it must be a significant amount. You and I and then the whole country, we average about 1.5% to 2% of our income; some of these people are spending 10% of their income on charity. They’re just amazing people. And those are the ones, unfortunately, that are getting hurt by our medical debt.
You won’t believe this: $55 million is given to friends and family each year for medical debt. Now, that is an unknown statistic from those people. And that’s saying, “Hey. My son needs it; my daughter needs it; my neighbor needs it…” They’re just giving the money or lending it, knowing that they’re not going to get it back. And I just heard a statistic that $88 billion – did I say million before? It’s $55 billion is lent to friends and family for medical debt and expenses, and $88 billion is borrowed to pay for this. This is unbelievable.
Denver: It is unbelievable. Well, let us close with an individual story in terms of somebody that RIP Medical Debt has been able to help and what it has meant to them.
Craig: I’m going to go back to one of the first people that got their debt abolished. This person showed us – and we interviewed her on TV – she had about 30 different bills from hospitals throughout New York City. The bill that we forgave, she pulled it out of her pile; it was only $990. And she said, “”When I got the call about this, I was like “What? You’re calling to tell me that you’ve forgiven my medical debt?”” She’s like, “I get calls all the time for collecting an amount of debt. I’ve never heard anything like this.” And she said, “My parents,” and she lived with her parents because she was 26 years old, very similar to the number one person in debt with medical debt, and she said, “My family had to move to a smaller house. They had to give me money to help pay off my debt. And you don’t know how important this was to me to have this happen.” It was just $1,000, but it made a big difference. So those are the kind of stories that we get.
Denver: A very sweet way in which to end. Well, Craig Antico, the Co-founder of RIP Medical Debt, I want to thank you so much for being here this evening. Where can people learn more about what you do, or maybe provide you some funding so you can go out there and relieve even more debt?
Craig: We look forward to hearing from you, but go to www.ripmedicaldebt.org and you’ll find us there.
Denver: Very good. Well, thanks, Craig. It was a real pleasure to have you on the show.
Craig: Thanks, Denver.
Denver: I’ll be back with more of The Business of Giving right after this.
The Business of Giving can be heard every Sunday evening between 6:00 p.m. and 7:00 p.m. Eastern on AM 970 The Answer in New York and on iHeartRadio. You can follow us @bizofgive on Twitter, @bizofgive on Instagram and at www.facebook.com/businessofgiving.