Is Medical Crowdfunding a Panacea or a Band-Aid?
US healthcare stats make for grim reading. The land of opportunity has no universal healthcare coverage and 28.4 million people remain without medical insurance. That’s 10.5% of Americans. Health expenditures stand at $9,523 per head and 70% of Americans have less than $1,000 in the bank to cover medical emergencies.
Enter crowdfunding. In recent years, Americans have been turning to the crowd to fund medical treatment. 22% of Americans contributed to a crowdfunding project in 2016 and around two-thirds of contributions went to someone in need. Donation-based crowdfunding platforms like YouCaring and FundRazr provide a lifeline for those that need to pay medical expenses. The founder of Fundrazr refers to crowdfunding as “crowd-insurance”, and GoFundMe CEO Rob Solomon has called the company a “digital safety net”. It’s easy to see why. The platform has raised $2 billion since 2010 with $930 million from medical campaigns . A whopping 70% of campaigns are in the medical category. Now Facebook is entering the crowdfunding business and with its huge reach, medical crowdfunding is bound to explode in volume.
P2P lending for medical treatment has also seen rapid growth in the US. According to the latest data from Crowdsurfer, Lending Club have issued almost 14,000 loans totalling $116 million related to medical expenses since January 2013. The use of alternative finance to fund healthcare is bound to accelerate with Republican efforts to repeal Obamacare. If passed, this health care bill would leave an estimated 22 million more Americans uninsured by 2026.
Alternative finance has been vaunted as a solution to America’s healthcare shortfall, but serious doubts remain. A recent study poses unsettling questions regarding the efficacy of crowd-sourced healthcare solutions and their impact upon meaningful healthcare reform.
Researchers from the University of Washington examined 200 GoFundMe health campaigns and found that 90% failed to reach their goals, raising only 40% of their target. The study found that crowdfunding reflects inequality and class dynamics, giving an advantage to those with expertise in self-marketing and social media and creating barriers for marginalised sections of society – precisely those that tend to bear a disproportionate burden of chronic health conditions and medical debt. Crowdfunding for healthcare is failing to address the needs of those who need it most.
The question of platform fees also looms large. GoFundMe charges fees of 7.9% on each transaction and Facebook takes 6.9%. Whilst platforms are in the business of making money, it is perhaps harder to justify charging sick people than it is entrepreneurs, or creatives. There is bound to be much debate on this issue in the years ahead. There are concerns regarding patient privacy, too. The success of a campaign depends on how much it divulges of a person’s health history and financial situation, freely available to the public long after the campaign ends. The potential for identify theft and fraud is real.
The prevailing criticism of medical crowdfunding is that it only addresses the symptoms of the American healthcare problem, rather than tackling the cause. It’s also argued that it diverts attention from a deeper debate regarding the role and responsibilities of the state in caring for its citizens and prevents meaningful, wholesale healthcare reform from taking place. There is truth to that supposition, but the fact remains there is a role for crowdfunding alongside universal healthcare. Even in Canada, where there is an effective single-payer healthcare system, there has been a rise in crowdfunding for treatments that aren’t covered by the government. Alternative finance remains a critical channel for funding healthcare in the US and in the absence of other options at this time, it provides a lifeline to those in need.