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The Poetry of Toxic Medical Debt

05/07/2015 01:55 pm ET | Updated May 06, 2016

It doesn't happen often that "The Robert Frost of Blogging" takes note of medical debt, but when he does...he waxes poetic.

Tim Torkildson came across a crowdfunding site for RIP Medical Debt and took note of the astounding numbers of Americans who are burdened by billions of dollars in unpaid and unpayable medical debt. He then set the debtors' woes to verse.

I went to see the doctor for a boil upon my back.
He lanced it with a soothing and a knowledgeable knack.
As I was getting dressed the billing clerk came in to say
I needed to cough up a hundred bucks for the co-pay.

I didn't have it on me, and my credit card was shot;
and so I signed a paper without giving it much thought.
Imagine my surprise when in a month I got a bill
For double that amount - it nearly made me very ill!

I set the bill aside so I could think of what to do -
but then a bill collector called me with much ballyhoo.
He said I owed a thousand dollars now, because of fees,
and I would have to pay him or my credit score would freeze.

I needed some forbearance to pay off this sudden debt;
The bill collector merely sneered, repeating his stark threat.
The next time I am troubled with a boil, I'll suffer through;
I do not like a treatment that becomes so fast "past due."
(Inspired by a blog at RIP Medical Debt)

A Paen to Pain

Now, the "thousand dollar bill" is a tad over the top, and there could be some quarrel as to timing and facts, but it is not unusual for "fees" and interest to be added which will increase the size of a debt. The threat to refer the account to a credit bureau is certainly real, as is the effect if/when an account appears on one or more of the three credit reporting bureaus.

It's been estimated that one unpaid medical bill can lower a credit score by as much as 40-100 points. (Fortunately, this tends towards "cruel and unusual punishment" and there are already legislative actions taking place to force the bureaus to weigh medical debt differently from traditional consumer debt such as credit cards and cellphone payments.)

The last two lines of his poetry bear close attention...and empathy.

It has been shown that an unpaid medical bill usually causes a newly-ill but now embarrassed patient to refrain from seeking medical attention. The downside of delaying such help is obvious; an untended problem tends to become worse and the treatment - when it does come - is arguably more expensive, and not as effective as when a malady is acted on early.

What caused the Muse to strike Tim?

What caught his attention was the activity of a nonprofit firm, RIP Medical Debt. This small but energetic operation has launched a campaign to raise public donations to enable them to go out to medical practices/hospitals and debt sellers to buy this old debt and then - to abolish it.

Abolish it?

Which sets that industry on its ear. Usually, when debt is sold by hospitals and larger practices, it is to a debt buyer for as little as a penny on the dollar. That industry, which is under intense scrutiny by the CFPB (Consumer Financial Protection Bureau), sells this portfolio to collection agencies or collection attorney firms for around three cents on the dollar.

The agency is legally entitled, as "owner" of that debt to pursue it for its full face value. As example, an agency can expend $50 or so to purchase a $4,000 medical debt. It then goes into their system, along with manufactured fees and interest, and the dunning begins. For the full $4,000, plus, plus.

RIP Medical Debt intrudes itself into this cozy picture by purchasing that portfolio for the same $50 - but then proceeds to put a stake through its heart. A letter is sent to the fortunate patient that the debt is no longer in existence; a gift from RIP Medical Debt. There will be no more collection phone calls on that account. No more dunning letters about that bill. Ever.

RIP Medical Debt has not only done well by the families it has gifted, it has at the same time subtracted that amount of available debt from the industry. No agency will have a chance to buy it. It is out of their world. Forever.

Tim might call that, poetic justice.