The Growing Business of Exploiting Poverty

After listening to the Moyers podcast of his interview with Anthony Bacevich, I went tooling around the PBS archives and found this interesting report on the growing business of targeting poor people as a customer base. One poor person doesn't have much money, but as wages have stagnated, we now have a large pool of people who individually are poor, but together have hundreds of millions of dollars. Dollars a lot of businesses seek by charging these folks more for services and products than other Americans pay.

This goes for everything from cars to healthcare. On healthcare:

SILVIA CHASE:In America there are now close to 50 million people without health insurance. At hospitals they are called "self pay" patients — and each year they ring up hundreds of billions of dollars in services — money paid off slowly, if at all.

For American finance firms that kind of money cannot be ignored: BUSINESSWEEK found some are now pitching their services as hospital debt collectors — for a cut of the self-pay pie.

PAUL BARRETT:Hospitals are now operating much more like other businesses. They don't want to settle for getting their money over such a long period of time, with the chance that after a while the person will stop paying altogether.

They want some cash now. Lo and behold, an industry pops up that is willing to help them do that. We'll buy your loan basically, or you'll transfer the loan to us — hospital's happy, great, 80 cents on the dollar right now, we're done. Now, the finance company or the credit card person is suddenly the one knocking on that person's door, and they're not so merciful. They didn't go into the healthcare business to save people's lives; they're in the money business.

SILVIA CHASE:Traditionally, at non-profit hospitals, the approach has been "pay what you can when you can." No longer. Many are now requiring patients to pay their bills through interest -charging third parties sometimes without the patient fully understanding what she's getting into.

A case in point: April Dial, a 24-year-old woman living in rural Arkansas.

BRIAN GROW: April earns about $17,000 a year. She has no health insurance. She's a diabetic meaning her medical situation is, is pretty significant: She has ongoing medical issues, that she can control to the best of her ability but, as with many diabetics, can often result in sudden drops in blood sugar level that will require a visit to the hospital.

[SNIP]

SILVIA CHASE:April's mom signed the admission papers without fully reading them.

CAROLYN DIAL:But they told me they're not going to see them unless they sign admission papers. Well I wasn't worried about admission papers; I was worried about her, because she comes first.

I don't think I've ever known anybody that's ever went in the hospital that has sit down and read the fine print.

SILVIA CHASE:April Dial's experience with Hot Spring County Medical Center goes way back — this is where she was born. And her three-day stay in September was only the latest diabetes care she received there over the past decade.

Since her father's death seven years ago left the family uninsured, she and her mom have accumulated thousands of dollars in bills from the non-profit hospital. But despite living on their truck-stop waitress wages, the dials had slowly paid down their debt.

CAROLYN DIAL:Hot Spring County would let you make a payment. Even if you only paid them $5 a month, you were still making a payment. And I mean I was, I was going to pay the bill, but I couldn't just dish out 4 or 5,000 — 6,000 dollars at a time. I was paying about $50 to $100 a month.

SILVIA CHASE:But when April showed up at the ER in September there were new rules ever since Hot Spring County Medical Center sold its past-due accounts to this private company in nearby little rock. It specializes in collecting medical debt.

APRIL DIAL:I got this in the mail too. It's Complete Care Inter- Incorporated. I've never heard of it before.

BRIAN GROW: A bill shows up from Complete Care and it's a debt owed to Hot Spring County Medical Center, but now they're charging 5.75 % interest. Here you are not dealing with sky high interest rates. But what you have is $455 minimum payments, which would be difficult for anyone, let alone a truck-stop waitress.

APRIL DIAL:It was like a credit card almost. Audio hit I mean, it was interest due.

SILVIA CHASE:The news would get worse for APRIL DIAL: the hospital had sold not only her new debt, but her past bills, too. In all, she was now told to pay off $7300. Without knowing, April Dial had become a debtor to a new player in the poverty industry.

BRIAN GROW:The fine print which she says she didn't read, says I agree that if payment in full is not made within thirty days I will have the option to pay the outstanding balance over time under the conditions set by Hot Spring County Medical Center or its billing company, Complete Care.

Goes on to say that by electing to pay such balance over time I consent to and agree with all conditions disclosed on the back of my Complete Care Statement, including the charging of a fee and/or interest on any outstanding balance.

You can find the entire transcript here. I've been meaning to do more posts on poverty issues, but haven't had time. When I came across this, it seemed like a natural thing to turn others onto.