Have you ever watched HBO’s Last Week Tonight? It’s a show where British comedian John Oliver reads a teleprompter explaining to Americans what is wrong with our country. It’s also a show where smug, self-satisfied progressives who miss John Stewart can be entertained while thinking they are watching “smart” content.
In reality, Last Week Tonight is frequently one of the dumbest shows on cable (in the sense that watching it makes you less informed about the world). And yet it is almost inescapable if you have an internet connection. Even if you don’t subscribe to HBO you’ll find clips every Monday morning on left-leaning media sites, or someone who wants to feel self-righteous and pseudo-intelligent will slip it into your social media channels.
A prime example is the most recent episode where Oliver takes on the debt collection industry. A representative headline reporting on the show (from a site that should know better) is “Watch: John Oliver just topped Oprah with one of the largest giveaways ever on TV.”
Oliver didn’t top Oprah nor was he involved in one of the largest giveaways ever on TV. The actual amount of money that Oliver gave away wasn’t that significant — $60,000 — but he was able to fool people who don’t know much about economics into thinking he actually gave away $15 million.
I’m not kidding. There are a lot of people this morning who really think a third-tier cable talk show host gave away $15,000,000.
You can watch the clip here. But I warn you it’s crude, simplistic, misleading, overly long, and filled with Oliver’s attempts at what he considers to be “humor.”
We could spend all day parsing the economic fallacies and Nanny State assumptions in the video. Essentially, Oliver thinks that one of the most regulated industries in America simply suffers from a lack of regulation. He also thinks we should pay our debts “when we can” but if we can’t, well, that’s why rich people exist: so that we can redistribute money from the haves to the have-nots.
But let’s set aside those complaints and focus on the absurd claim that Oliver “gave away” $15 million.
Here’s how it works: Oliver starts a debt collection business (and is shocked and horrified to find that it’s relatively easy to start a business in America). His new company then buys nearly $15 million dollars of medical debt for less than half a penny on the dollar ($60,000). He then donates the debt to a non-profit that “forgives” medical debt (i.e., refuses to seek collections). Then Oliver claims he “gave away $15 million.”
Oliver says he bought “out of statute” medical debt from Texas. According to Texas law, debt collectors cannot sue individuals in an attempt to collect debts that are more than four years past due. So the debt is essentially uncollectible anyway. Yet Oliver falsely claims that is “medical debt they no longer have to pay.” That is not true — the legal obligation to pay the debt remains even if the statue of limitations has expired.
So how much did Oliver actually give away? Probably less than $60,000.
What Oliver bought was a very strict and limited right to attempt collections on a large amount of debt. Essentially, Oliver bought the right to ask people “Will you pay me what is owed?” and if they say “No, I don’t think I will” he has absolutely no legal recourse. None.
That is why the debt Oliver bought is not worth $15 million — because attempts to collect the debt when people still had a legal obligation to do so already failed. So how much is the bad debt worth? It’s worth what Oliver could collect.
If Oliver was able to get the 9,000 people on the bad debt list to send a check for $6.67 he might be able to recoup his $60,000 investment. But the companies that sold the debt doubted they’d even recoup that trivial amount, which is why they sold the debt at the price they did.
Oliver therefore didn’t give away $15 million; he gave away the right to collect about $60,000 in uncollectible debt. If you think this is semantics ask HBO’s accountants if they’ll be writing off this “$15 million debt” on the company’s tax returns next year.
So what does it matter if Oliver pulls this silly, dishonest stunt? Because it allows him and his viewers to feel better about themselves (“Oliver is so generous, and I’m a good person for supporting him!”) when the reality is that thousands of hospitals and medical businesses are the ones that were hurt when they came up $15 million short of what was owed them.
In 2014, U.S. hospitals provided $42.8 billion in uncompensated care, representing 5.3 percent of annual hospital expenses. You know who paid for that uncompensated care? You did. You paid more in higher insurance premiums, higher deductibles, higher taxes, and higher cost of medical care to compensate for those who couldn’t — and those who merely wouldn’t — pay what they owed.
The salaries for the nurses and hospital janitors didn’t go away just because John Oliver bought some bad debt. The cost of the electricity to run the heart monitoring machines didn’t disappear either. The $15 million represented actual expenses that have already been paid. That means all of the $15 million of bad debt Oliver bought was already absorbed by the hospitals and passed on to you and other health care consumers.
So when you see a smug Brit on TV tell you he gave away $15 million you can correct his ignorance by responding, “No, you didn’t. We did.”