Thanks to Miranda Kerr and Evan Spiegel’s collaboration with Undue Medical Debt, 261,000 Californians woke up one morning with $550 million in medical debt removed from their lives. This is not an abstract concept for the families involved. It’s the difference between being eternally shut out of a mortgage and having a credit score that can improve. For some who receive it, the relief is truly transformative. There is no doubt about that portion.
Everything surrounding the $550 million amount merits closer examination because it is more of a rhetorical device than a practical one. In order to operate, Undue Medical Debt buys bundled, non-performing medical debt on the secondary market. This debt is sold to anybody who will take it for pennies on the dollar after hospitals and collection agencies have essentially written it off as uncollectible.
This model’s leverage is very amazing; in face-value debt relief, it is frequently about 100 times the donated amount. However, given Spiegel’s reported net worth of $2.1 billion, the actual capital Spiegel and Kerr expended to provide $550 million in headline relief was only a small portion of that amount, probably in the single digits of millions.
This is not a charge of dishonesty. The donation’s mechanics are known to the public and aren’t significantly concealed. What it brings up is a more unsettling question about what this type of generosity truly does as opposed to what it seems to. In terms of money, the system that held the debt was already almost worthless.
On the other hand, forgiving it generates significant PR value, including public goodwill, worldwide press coverage, and the particular kind of adulation that comes with billionaires who seem to be solving issues rather than profiting from the circumstances that led to them. The more profound criticism, which is more difficult to ignore, focuses on what is addressed and what is subtly ignored.
In the US, medical debt is a result of the way healthcare expenditures are set up to bankrupt common people for common events like childbirth, auto accidents, and cancer diagnoses. After the fact, forgiving the debt relieves a symptom. It doesn’t address the root cause of the 261,000 Californians who initially had medical debt, and it doesn’t stop the same circumstance from happening again the next year for a different group of families in a different state.
Who gets to make the decision is another issue. Private wealth gives enormous discretionary power to people who are not subject to public oversight or an electorate when it selectively forgives debt for a particular population, in this case Californians, chosen presumably for reasons related to Spiegel’s own residency and business interests.
In this paradigm, the option of which Americans should receive medical debt relief becomes a private decision made by individuals whose wealth rests on a tax and economic structure that, according to critics, undercontributes to the public systems that would otherwise address this issue on a large scale.