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The hidden cost of medical crowdfunding

James Daw for Quartz
Published Last updated This article is more than 2 years old.

Health, the saying goes, is wealth. It isn’t a cliché: At about $8 trillion per year, the global expenditure in healthcare accounts for more than 10% of the world’s economy. The average amount each person spends on healthcare these days is higher than ever.

But those costs aren’t evenly distributed. The availability of services and their out-of-pocket price are dramatically different for different people. Where governments don’t provide for healthcare expenses—like the US or in low-income countries like India, where government programs don’t always reach everyone—citizens who face severe health conditions become vulnerable to financial distress.

This inequality in the affordability of healthcare has given rise to a whole new way of paying for treatment: crowdfunding. Not quite a public safety net, yet not an individual effort either, medical crowdfunding is a third way to pay for medical expenses, which teeters at the nexus of a broken health system, social media, and startup culture. Digital crowdfunding campaigns for medical expenses seek to turn a community—albeit one that potentially stretches as far and wide as the internet—into a safety net.

Creating a campaign is easy. All one has to do is pick one of the many online crowdfunding platforms available and start a page detailing the need, and the ask. One can add photos and videos to the story, and even set up campaigns to benefit someone else. Once the page is live, people can start donating. At that point, it only takes a few clicks to make the difference in the life of a friend, relative, or even a stranger.

Medical crowdfunding is fast, effective, personal, and offers an opportunity to give tangible help with a simple click. Unlike money donated to charity, the recipient is a person with a life story—complete with photographs and videos—a story that could be yours. And so in the span of a few years, crowdfunding healthcare has become ubiquitous, a routine source of extra support that people turn to in times of financial need. From paying actual medical bills to funding experimental treatments to compensating for lost wages, people are turning to these crowdfunding campaigns with increasing frequency.

Since 2009, when crowdfunding platforms first began to crop up on the internet, users have launched millions of campaigns. In the US in particular, crowdfunding has become by all measures a normalized way to pay for treatment. Hospitals and universities have launched and promoted campaigns alongside individuals. A survey published in 2019 by the University of Chicago estimates that about 8 million American adults have started campaigns to pay their medical expenses, and about 50 million have donated to them.

“Health experts worry coronavirus will overwhelm America’s GoFundMe system,” joked The Onion, in a headline that perfectly captures the reliance Americans have come to place on crowdfunding campaigns.

But the same elements that make medical crowdfunding so successful—the ease with which its stories resonate and their ability to generate profound empathy—also make it concerning. That’s because we don’t typically give to the campaigns of those who are most in need of help. Instead we give to those who we think are most worthy of our help, and who are in our own social networks—that is, by and large, people who look and live like ourselves. And so what was intended to be a fix for the inequality of access to healthcare has replicated, or exacerbated, the systemic inequalities that caused the need for them in the first place.

Table of contents

A global phenomenon | Exceptionalism with consequences | The survival of the most deserving | “Begging is not a fair system.” | A disruption that preserves the status quo

A global phenomenon

It’s hard to establish the exact size of the medical crowdfunding industry. GoFundMe, a VC-backed Silicon Valley company founded in 2010, is the sector’s leader, and by a large margin. It has helped users raise about $9 billion—and at least 120 million people have contributed to GofundMe campaigns. While the site hosts other types of crowdfunding, healthcare campaigns are its most common, and account for at least a third of the total dollar amount of donations.

GoFundMe has absorbed two competitors, Give Forward and YouCaring, but there are plenty of other platforms, too, each with different perks. FundRazr, founded in 2009, is one of the oldest platforms. Its users have raised more than $140 million for various causes, of which healthcare takes the lion’s share. There is also CoFund Health, which focuses exclusively on covering medical expenses. And then there’s Just Giving, founded in 2000, which says it has raised $4.5 billion for a range of different causes (it is used by large charity organizations as well as individuals) and describes itself as a tech-for-good company, reinvesting the fee it charges in “innovations for social good.” (Kickstarter, the other crowdfunding powerhouse, operates in products and projects, not causes.)

The sites are typically for profit, although most do not charge a fee (aside from card processing) for donations, or to individuals who set up campaigns. Revenue instead typically comes from fees charged to larger charities that use the platforms, and from voluntary tips left by donors. Until 2017, GoFundMe charged a percentage on the donation, but it has since turned to the tipping model.

Although GoFundMe won’t share any financials, it appears to be thriving: Hundreds of people work for it, and—with its young workforce, and cool open space office—it seems to be the quintessential embodiment of a Silicon Valley vibe applied to a good cause.

The company’s success has gone global. It now has local versions in 19 countries, including Italy, Germany, the UK, and Canada. Its global nature provides some insight into how, and for what, people in different parts of the world are turning to medical crowdfunding platforms.

In Italy, for instance, crowdfunding campaigns overwhelmingly fall into three categories: Requests for research funds; help with expenses related to treatments (such as travel, or accommodation for a caretaker); and financing of experimental treatments, typically to be accessed abroad, or through private providers. As the coronavirus emergency ravages the country, campaigns seek to support existing healthcare centers—through the purchase of equipment, for instance, or whole ICU units.

Things are similar in France, the UK, Canada, and other countries with nationalized health systems or government-funded insurance. It’s not quite the same in the US, however. Fundraisers in America, which can reach millions of dollars, seek to cover the cost of the treatments themselves.

This is true for the US even as coronavirus causes take over the platforms. Without clarity on who will pay the expenses related to hospital stays for Covid-19 patients, trending campaigns in the US are ones aimed at fronting those expenses. “We expect [medical costs] to likely be thousands per day,” writes the family of a young woman intubated after contracting the virus as it asks for donations to help her.

Even looking at other platforms, including ones based outside the US, it’s clear that nowhere else is medical crowdfunding, particularly of the personal expense variety, as popular as it is in the US. The most immediate reason is hard to miss: No one else in the world deals with the price tag of American healthcare.

Exceptionalism with consequences

“[Medical] crowdfunding is definitely very American, because we have huge costs and inadequate insurance,” Arthur Caplan, a professor who founded the division of bioethics at New York University’s medical school, tells Quartz.

“It’s a bandaid, nothing more; it’s just filler for a system that is broken,” says Caplan, who has authored a study on the ethical pitfalls of crowdfunding. “It’s an indication of complete moral failure of healthcare in America.”

It isn’t just that Americans pay more than anyone else—almost twice as much as Germany, for instance, one of the highest spenders on healthcare in the world—but that a much larger percentage of that already high expense is paid by individuals, rather than the government.

Unlike all other wealthy countries, the US government never adopted universal healthcare coverage, opting instead to largely require individuals or private insurance companies to incur the costs. This has resulted in much higher healthcare costs in the US than anywhere else in the world. The percentage of GDP spent on healthcare has risen relentlessly since the 1960s, and so has the amount spent on healthcare every year. As of 2018, $3.6 trillion—or nearly half of the global expenditure on healthcare—was spent on US healthcare.

This increase has dramatically impacted the finances of most Americans. In 1960, people in the US spent 2.6% of their income on healthcare. By 2017, that percentage shot up to 17.6%. More than a quarter of American adults say they’ve had problems covering medical expenses, and medical debt is responsible for half the individual bankruptcy filings in the country.

Research confirms the connection between the affordability of healthcare and the prevalence of crowdfunding campaigns. Nora Kenworthy, a professor of public health at the University of Washington Bothell, found in a 2017 analysis that there was more crowdfunding in US states that hadn’t taken the public insurance (Medicaid) expansion offered with the Affordable Care Act. “In particular, we saw a really disproportionate number of campaigns from Texas,” Kenworthy told Quartz, “which is often reported as the state that has the poorest healthcare coverage…in the country.”

The crowdfunding platforms themselves are well aware of this. Rob Solomon, the former CEO and Chairman of GoFundMe, said the company’s original vision wasn’t to fund medical expenses—the idea was rather to have a place for people to raise money for things like weddings or honeymoons. That medical billing so quickly became its primary application, he said in a 2019 interview, shows a “gigantic gap in the system.”

“I would love nothing more than for ‘medical’ to not be a category on GoFundMe,” Solomon said. “The reality is, though, that access to healthcare is connected to the ability to pay for it.”

While the US might be the worst case scenario, other Western countries also see crowdfunding compensating for a lack of government support, even countries with universal healthcare.

Jeremy Snyder, a professor of public health at Simon Fraser University in Vancouver, has researched crowdfunding in Canada. He found that while campaigns aren’t created to pay for direct medical expenses, they are started to cover collateral costs.

“Certainly in Canada we like to congratulate ourselves, especially compared to our neighbor to the south, on the social care system we have,” Snyder tells Quartz, “By comparison, sure, but when we are looking at campaigns in the Vancouver area, about a third were for lost wages [due to illness], so those folks aren’t being taken care of well enough.”

His findings, Snyder says, reinforce the sense that crowdfunding really does try to address failures in the social safety net. And, indeed, it can. A 2015 University of Minnesota report found that where crowdfunding campaigns are more successful, personal bankruptcy filings are fewer.

The problem, though, is that disadvantaged groups—which are more likely to launch campaigns and are the most in need of them—were also less likely to get funding.

The survival of the most deserving

In the US, the largest healthcare expense is for chronic diseases like diabetes, hypertension, or Altzeimer’s. An acute condition like cancer isn’t even in the top five.

But crowdfunding is an unlikely solution to expenses related to chronic disease because it’s a system that actually rewards perceived merit and worth over need. Campaigns addressing chronic conditions are less likely to get funded, Daryl Hatton, the CEO of FundRazr, one of the oldest medical crowdfunding platforms, tells Quartz. “People want to pay for a solution.”

“That emergency treatment that is going to give you your old life back…and you’ll become another productive member of our society is a lot of times easy to fund,” he says. On the other hand, campaigns to support ongoing struggles are less appealing. “Chronic problems are not fundable because [the campaigns] don’t solve anything. You’re just helping them have a bit better quality of life.”

There is another issue, which has to do with the perceived sense of worthiness that motivates people’s decisions to give. “You have to have a pretty special story of who you are as a human,” Hatton says. “We, perhaps sometimes uncharitably, talk about crowdfunding [as] an ATM on your karma bank.”

People are more inclined to give to people in cases where the giver feels the patient isn’t responsible for what happened—a non-smoker who gets lung cancer will drive a lot more sympathy than a smoker with the same illness. Society tends to prejudicially blame people who suffer from chronic disease—such as diabetes, hypertension, or obesity, for instance—for taking poor care of themselves. As a result, society is less empathetic toward their struggle, and so gives less.

Terminal patients, too, get little support. “People want to…feel like there’s going to be an impact of their contribution,” Kenworthy says. “But that doesn’t necessarily reward campaigns for someone who is in really desperate circumstances, there’s not a clear endpoint in sight, or their health status is declining rapidly, but they still need to pay the bills.”

“Begging is not a fair system.”

That is how crowdfunding replicates the inequalities of the real world: As a way of allocating donations, it is perceived as a meritocracy—an extreme form of survival of the fittest where the fittest is the one with the most compelling case for being helped.

Kenworthy, who has been researching various aspects of crowdfunding as it relates to health inequalities and disparities, says that a key reason crowdfunding exacerbates the inequalities of wider society is related to an individual’s ability to access a narrative of what he calls “deservingness.”

“Our understanding of deservingness, especially here in the United States, is very much shaped by existing and historical biases against specific groups of people,” she says. “In particular, white, fairly privileged, cisgender straight families have been more able to claim that kind of deservingness.”

“It’s no vehicle for justice. It’s no vehicle for the vulnerable or the weak,” Caplan says. “It stinks as a way to rectify economic and class differences. Begging is not a fair system.”

Add the fact that this is a network-based system, and it’s easy to end up with a mirror of society at large: The privileged belong to more privileged networks, so their requests are more likely to end up on the radar of people who have the means to help, and they’ll do so because they see a reflection of themselves in the one in need.

“Rich people are smart enough and empowered enough to know how to do a crowdsource thing while poor people, illiterate people, people who don’t speak English have no idea how to do that,” Caplan tells Quartz. But it isn’t just wealth, or education. Race matters, too, and so does gender.

The advantage that white people have in American crowdfunding campaigns is actually quantifiable. A study published by Kenworthy in March 2019 found that the average donation to a campaign for a black person was $22 less than the average donation to a white person, after controlling for a variety of other factors. For other minorities, it was $12 less. People of color received fewer donations overall. So did LGBTQ people.

Women, too, are at a disadvantage—another mirror of society at large. While campaigns for both genders received comparable donations, the same study found that 80% of the campaigns set up for someone else (a friend, or relative) are done so by women—who are then more likely to take on the emotional workload of crowdfunding.

There is also an issue of privilege reflected in the very storytelling. Kenworthy found that being able to use words like “hard-working” and “breadwinner” in a description yields better results, as it signals virtues that are broadly recognized within American culture. Those are harder narratives to claim for the retired population, she says, noting that this is an example of ageism on the platforms.

“We’re human, we respond to narrative and there’s nothing embarrassing about that as a donor,” Alexandra Samuel, a technology researcher who writes about crowdfunding, tells Quartz. But, she adds, “The ability to produce a good narrative is not an evenly distributed skill.” Nor is access to the tools: People who can afford better cameras will be able to post videos and photos of higher quality, which is likely to have more impact on potential donors—whether or not they are conscious of it.

“I think the karma bank metaphor is a really good one for people to understand why their campaign failed,” Hatton says. “Why? Well, because people don’t think you are worth it, basically.”

A disruption that maintains the status quo

This lack of equity makes crowdfunding a problematic replacement for a functional safety net.

There are interventions that could make the platforms more equal. Samuel, for instance, suggests identifying the campaigns that aren’t getting enough support, and setting up a system to share the wealth by adding a fee to other campaigns. Alternatively, people who support a campaign might be asked if they would like to make a donation to another campaign that has similar characteristics, but is underfunded.

But these ideas don’t fully solve the root problem of inequity. And what is perhaps more concerning is that the more medical crowdfunding becomes ubiquitous, the more it’s bound not just to be shaped by the society it inhabits, but to shape it, as well.

Research found that media reporting of illness-related crowdfunding is overwhelmingly positive, and Snyder notes that the general perception of crowdfunding tends to be noncritical. “[Medical crowdfunding] comes across as a really positive way for people to come together and help each other out,” Snyder says, “And that’s true. It certainly can be a positive social force.” But at the same time, he warns: “It’s kind of taking care of the surface issue, it doesn’t fix the lack of insurance or time off work or whatever it is that’s driving people to crowdfund in the first place.”

Not only does it not fix it, it might even make it worse.

As Kenworthy notes in her research, while it should be a tool for those who are financially burdened by medical expenses, it actually ends up further marginalizing disadvantaged portions of the population. Yet because of the many positive, inspirational stories promoted by crowdfunding platforms—whose algorithms, naturally, prefer successful campaigns—it is seen as a possible solution.

Medical crowdfunding platforms “redirect public attention away from persistent conditions of austerity, deep gaps in the social safety net, and growing health inequities in the US,” Kenworthy writes. And in doing so, it further promotes the idea that entrepreneurial individuals don’t need a healthcare safety net—but can count on their own worthiness to find financial support in case of need.

So, paradoxically, while medical crowdfunding, in its very existence and ubiquity, highlights a systematic problem, it ends up reinforcing the system that created the problem in the first place.

In the end, if the system remains unchanged, the cost of healthcare will continue to go up, likely pushing more people toward crowdfunding—and that might only be good for crowdfunding companies and their stakeholders.

While medical crowdfunding might not be the solution to medical financial woes, particularly in the US, it is still a tempting option for those in need of financial support—and a heartwarming expression of generosity.

“I think it shows admirable altruism in trying to help someone else,” Caplan says, noting that many of the ethical problems raised by crowdfunding depend on the context in which it operates. People aren’t to blame for starting campaigns, or donating to them: They do what they can within a system that failed them. Medical crowdfunding is the player, not the game.