Crowdfunding medical bills: It may make you feel good, but it’s a distraction from our safety net’s real problems.

Crowdfunding Is Not a Safety Net

Crowdfunding Is Not a Safety Net

Moneybox
Commentary about business and finance.
Jan. 16 2015 4:54 PM

The DIY Safety Net

We feel good when we crowdfund people’s medical bills. We should feel worse that we even need to.

Illustration by Holly Allen
Is crowdfunding just a Band-Aid for a flawed model?

Illustration by Holly Allen

Recently, KJ Dell’Antonia took note on the New York Times’ Motherlode blog of what seems to be an increasing number of people using crowdfunding sites not to jump-start an innovative business or artistic project but as a do-it-yourself safety net. “Families and parents struggling to get out of a financial hole and hoping to use GoFundMe to help have been all over my social media of late,” she wrote. “Are you seeing more of these pleas, too?”

Helaine Olen Helaine Olen

Helaine Olen is a former columnist for Slate and co-author of The Index Card. She was the host of the Slate Academy series the United States of Debt.

Well, yes, I am. So probably are you. The stats might say the economy is improving, but our inboxes continue to swell with tales of woe. And the stories are heart-rending. A quick search will turn up a family that needs help with the expenses associated with a baby’s heart transplant and another that needs money for its mom to live on because breast cancer treatments mean she can’t work.  

These are tragic tales, so sad they may make you nostalgic for the days when you only received Kickstarter requests/shakedowns to fund your cousin’s son’s indie film. We want to help people in actual need, so we donate. And certainly giving money to these individual causes helps someone out of a jam he otherwise can’t handle. But we should also ask: By helping the few whose stories touch us, are we also inadvertently allowing bigger problems to fester? By focusing on individuals who are suffering, do we neglect the situation that’s actually causing their woes?

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Nowhere is this issue more clear than in medical appeals. After all, one reason this particular type of crowdfunding exists is, as GiveForward founder Ethan Austin put it during an appearance at New York University’s Stern School of Business last summer, “Our health care system is shit and it’s trending shittier.”

Crowdfunding medical expenses is a growth opportunity, as a business consultant might say. High deductibles, cost shifting, and increasing out-of-pocket costs seem to lead more and more people to seek aid with their doctor bills. GoFundMe raised $147 million last year in its “Medical, Illness & Healing” section, making it one of the site’s most popular categories, Kelsea Little, the firm’s public relations manager, said in an email. GiveForward only raises money for medical needs, and numerous other sites, including FundRazr and Healthline, also feature appeals for aid with health care­–related bills.

You can’t, of course, blame crowdfunding sites for the United States’ flawed model for paying our medical bills, or for the fact that insurance companies like to nickel and dime their policyholders by claiming a prosthetic leg that will allow a teenager to run as well as walk is a “luxury item.”

But these sites are playing to a myth we like to indulge. As a society, we believe in the plucky individual who, with the right attitude, a little gumption, and some help from her friends, can surmount the odds to recover and triumph over any setback. So don’t complain. Crowdfund. “The more effort you put into your GoFundMe campaign, the more you will get out of it,” Little told U.S. News last year, which also advised readers they should “start with a heartfelt, personal story.” When I spoke with Austin, he said people should be “upbeat” and include a picture of the intended recipient looking healthy and enjoying life.  

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I don’t doubt both the sites and the giving are well meant; no matter how much you lobby for health care reform or more generous insurance policies, these people need help now, not in the future. I certainly donate. Yet something feels deeply icky when a business or society asks people to sell themselves because they are ill or otherwise in a bad place. When we are not in the virtual world, we are more inclined to admit that. That was a fairly common criticism of Jerry Lewis’ muscular dystrophy telethon, for example. “Every year it was the same,” Jon Wiener once wrote in The Nation. “Jerry did his telethon shtick, parading little kids in wheelchairs across the Las Vegas stage, making maudlin appeals for cash.”

Perhaps to cover up that bottom-line reality, people who work at and use crowdfunding sites to raise money for basic needs talk about the satisfaction people get from helping others. Analogies that combine the heartwarming with our market- economy ideology abound. “People are coming together to fill spots where there are market gaps or challenges people can’t address without the support of others. It’s a little bit like the modern era of barn raising,” says Breanna DiGiammarino, co-head of Indiegogo Life, a spinoff from crowdfunding site Indiegogo that’s devoted to highlighting “personal” appeals.

A fundraiser can serve two purposes, DiGiammarino says: getting individuals the help they need as well as spreading awareness of a greater problem. “It can also serve as a message to share with others who have influence in our system of health and government that there is a need for change.”

Perhaps. But I suspect it’s just as likely that donating to a charitable cause on a crowdfunding site allows us to think we are taking meaningful action when, in fact, we’re simply offering a friend or acquaintance a bit of financial help. Think of it this way: According to management consultant Aon Hewitt, the average person with employer-provided insurance will pay slightly less than $2,500 in out-of-pocket costs this year. Altogether, the Kaiser Family Foundation predicts that out-of-pocket medical expenses will exceed $400 billion in 2016. GiveForward has raised less than $200 million over the course of its entire existence. You do the math.