Financial Bondage: The Morality of Debt Management and Why Debt Ownership Matters
20 for 2020 is a newsletter sent to 20 people in preparation for the U.S. Presidential election of 2020. This is the ninth newsletter and its subject is Financial Bondage: The morality of debt management. Feb 2020
In the expose article PROFITING FROM THE POOR: What it Looks Like When a Hospital We Investigated Erases $11.9 Million in Medical Debt by Wendi C. Thomas for ProPublica, Dec. 24, 2019. The expose profiles Methodist Hospital part of Methodist Le Bonheur Healthcare. Methodist Hospital was “Founded in 1918 by a rich Mississippi cotton plantation owner”. “Methodist operates five hospitals in Shelby County, Tennessee and it is adding two more.”
According to the article:
“From 2014 through 2018, Methodist sued more than 8,300 people for unpaid hospital bills, including many people who were low-income. The hospital, the city’s largest, garnished hundreds of workers’ paychecks, including those of its own employees.”
Prompted by an investigation by a June 2019 ProPublica and MLK50 into the hospital’s aggressive debt collection practices, Methodist was moved to change its direction.
“Of the hundreds of Methodist defendants a reporter observed in court this year, more than 90% were black women.”
“Less than a week after the investigation was published, the hospital’s attorneys began dropping lawsuits from court dockets. By the end of July, the hospital had completed an internal review, pronounced itself ‘humbled,’ announced an overhaul of its policies and started to erase the debts.”
The article profiles the tremendous suffering and then relief that four of recipients incurred.
According to the article:
“The psychological effects of debt, ‘including the fear of never being able to pay off debt and the stress of being contacted by collectors — lead to feelings of hopelessness, shame, and despair,’ a review by the law center found. ‘Even the children of indebted adults show impaired socioemotional development.’”
“‘Health care is a business,’ Bosco said. ‘There are really good providers who take their mission as healing professionals really seriously and then there are, I think, entities like private debt collection companies that see it as an opportunity to make money, and often making money off the people who can least afford it,’ she said.”
“While 1 in 6 Americans had a medical debt on their credit report, that rises to 1 in 4 Tennesseans and nearly 1 in 3 African Americans, according to recent research.”
“‘People fear medical debt more than they fear a medical crisis,’ said Jenifer Bosco, a staff attorney at the National Consumer Law Center, a nonprofit focusing on consumer law for low-income and other disadvantaged people.”
One of those profiled whose debt was released was so happy when her letter arrived that “she planned to frame it and hang it on her wall, as a reminder to hold on to hope even when the situation is bleak.”
Hospital and Medical Debt has gotten to such an imbalanced and dysfunctional point that a group of former collection agency executives has formed a nonprofit agency that purchases from hospitals select old debt that has failed to be collected by collection agencies. According to the article "Former Collection Agency Executives Start Charity to Buy and Forgive Medical Debt" by Robin Young on Aug. 12, 2019, their organization, RIP Medical Debt, works with TransUnion Healthcare Systems and TransUnion and simulates peoples income to select the people whose debt they will purchase. A complete invasion of privacy. Is this a proper role of a credit bureau? They pay the hospital a premium for this debt and possibly the debt has already been written off by the hospital. They use monies collected through donations at their website to finance these efforts.
While this may seem like a humane thing to do, it in fact just perpetuates the core problem and not a solution. It also invades privacy. The role and practices of debt management and collection agencies needs to be reviewed and a change in moral direction as a society is required, especially for healthcare. Health care may be a business but it is unique among all businesses. Health is to be private and its costs and fees should be reasonable and accessible. Human pain, suffering and disease are not something to be exploited but rather treated with respect, dignity and compassion, so as to not deny the inalienable rights of life, liberty and the pursuit of happiness.
In the past, healthcare debt was not allowed to be reported to credit agencies and did not impact credit reports. This is how it should be.
It is about time we as a people took a good look at debt and how it has changed in the last thirty years, starting with healthcare. We now have young people coming out of college with student debt they may never be able to repay, and why is it credit card debt can be at over 24% annual interest, yet loans to corporations are at all time low, and interest paid on savings accounts in almost zero? All of this directly impacts the day to day lives of many if not most Americans. It affects our nation and our society.
It would be wonderful if some Universities were to study this from a historical and moral perspective and publish their findings. Moral principles that serve as a basis for a just society include: The dignity of life- human beings are equal in dignity and created in the image of God, The common good-activities are to be done for the good of all and not just one party, Subsidiarity –activities are to take place at the lowest level possible without undue interference from higher levels. The elimination of unnecessary layers and bureaucracy, and Solidarity-the notion that we all share and participate in what we are doing, not just now but from generation to generation and no one is exploited. These principles must all be adhered to together in order to have a just society.
If you agree, please write I agree and send a copy to those listed below or the school or schools of your choice:
Dean Nitan Norhia President Amy Gutmann
Harvard Business School University of Pennsylvania
Soldiers Field 1 College Hall, Room 100
Boston, MA 02163 Philadelphia, PA 1910