Healthcare in the GoFundMe Era

Some might say we live in the GoFundMe era, a time when people crowdfund for almost everything, even healthcare. In fact, medical is GoFundMe’s most popular fundraising category and one-third of donations to the site go toward medical campaigns. 

Why have medical campaigns become commonplace? So seemingly necessary among uninsured and insured individuals alike? 

Put simply, serious illnesses and injuries are expensive. In addition to medical bills, associated costs can include unpaid time off work, transportation and childcare, to name a few. And we are a population that struggles to afford these expenses due to a tangle of factors — stagnant wages, the increasing costs of healthcare services, and ever-rising health insurance premiums and plan deductibles, to name a few.

Flatlining Income

The U.S. median household income was $63,179 in 2018. In 1999, it was $61,526 — or, $63,231 if you make recommended adjustments based on changes to the U.S. Census Bureau’s Current Population Survey Annual Social and Economic Supplement

The difference without an adjustment means Americans earn only $1,653 more, on average, than they did 19 years ago. With the adjustment, they earn $52 less on average — essentially no change across two decades.

It would seem our nation’s income has flatlined. That is not the case for healthcare-related costs (more on that soon). With wages and expenses at odds, many face tough decisions and financial strain. 

Being Seriously Ill In America Today, a 2018 report by The Commonwealth Fund, The New York Times, and Harvard T. H. Chan School of Public Health found that 37% of the seriously ill used up all or most of their savings dealing with their health and medical condition, 31% had been contacted by a collection agency, and 23% were unable to pay for basic necessities (e.g. food, heat, housing).

It could be that some individuals turn to crowdfunding in hopes of staying afloat and avoiding bankruptcy. 

Medical Debt in America

Americans are substantially burdened by medical debt—again, even those with health insurance. It’s the No. 1 reason people file for bankruptcy. Over the years, several studies on bankruptcy have arrived at this same conclusion. 

A recent study published in the American Journal of Public Health states that 66.5% of all bankruptcies were tied to medical issues and an estimated 530,000 families turn to bankruptcy each year due to medical issues and bills, either from new illnesses or pre-existing conditions. The next most common reason? Unaffordable mortgages or foreclosure (45%). 

The study also concluded that the ACA has not changed the proportion of bankruptcies with medical causes, despite an increase in coverage and access to care under the law. 

Unexpected medical bills top the list of healthcare costs Americans are afraid they will not be able to afford, according to a Kaiser Family Foundation poll that found 67% of people worry about unexpected medical bills. 

Furthermore, 39% of uninsured adults under age 65 said they had received a medical bill within the previous 12 months that they had either expected to be covered or was higher than they anticipated. The bill was less than $500 for half of those people. (Another Kaiser Family Foundation poll found that 34% of people with employer-sponsored health insurance wouldn’t be able to pay an unexpected medical bill of $500.)

What’s the Outlook for Healthcare Costs?

Healthcare costs in the U.S. are increasing at a pace some call unsustainable despite stabilizing — 5.5% to 7% over the past five years vs. double-digit growth in the 2000s.

The average American household spent nearly $5,000 per person on healthcare in 2018, a 101% increase from $2,500 per person in 1984. Insurance costs, which have grown by 740% in that timeframe, are the main driver of that increase. 

Health insurance costs have generally increased across individual and group markets in recent years; however, the silver lining, albeit a small one, is that premiums in the individual market have started to drop slightly after double-digit increases from 2015 to 2018.

Employer-sponsored (aka group) plan costs

According to the Kaiser Family Foundation’s 2019 Employer Health Benefits Survey, more than half of the non-elderly population are covered by employer-sponsored health insurance. Key findings were as follows:

  • Average annual premiums were $7,188 for single coverage and $20,576 for family coverage — an increase of 4% and 5% respectively, while workers wages increased 3.4% and inflation increased 2%.
    • Over the past five years, the average family premium increased 22%. Over the past 10 years, it increased 54%.
  • Average premium contributions by covered workers were 18% of the premium ($1,242) for single plans and 30% of the premium ($6,015) for family plans. 
    • The average dollar contribution for family coverage has increased 25% over the last five years and 71% over the last 10 years.
  • $1,655 was the average deductible for single coverage, an increase of 36% over the last five years and 100% over the last 10 years. 
  • Family deductibles are categorized as aggregate or per-person and were further broken down by plan type within each category. They ranged from averages of $2,905 to $4,779 for the former and $881 to $3,078 for the latter.

Individual (aka Obamacare or ACA) plan costs

For individuals who purchase their own health insurance, average rates decreased from 2019 to 2020 — just under 3% for the lowest-cost bronze, silver and gold plans, and 3.5% for the average benchmark silver plan on which subsidies are calculated. 

Fluctuations for 2020 plan rates varied greatly by county, according to a Kaiser Family Foundation analysis; enrollees in some counties saw double-digit rate increases, while others saw decreases and even paid nothing for no-cost coverage after premium tax credit subsidies were applied. 

For the 2020 coverage year, average premiums were as follows for the lowest-cost plan in these categories:

  • $331 for bronze plans.
  • $442 for silver plans.
  • $462 for benchmark plans (second-lowest-cost silver, used to calculate subsidies).
  • $501 for gold plans.

Despite slowing rate increases, and even decreases, consumers who buy their own health insurance in the individual market still paid, on average, twice as much for coverage in 2019 than they did in 2013, the year before the Affordable Care Act fully took effect. 

Another analysis showed that ACA exchange premiums increased 28% from 2014 to 2017 and that almost 90% of ACA exchange plan enrollees had deductibles above $1,300. (And this does not take into account any unpaid Obamacare premiums that caused people to drop their coverage entirely.)

As for individual deductibles, median increases from 2019 to 2020 were as follows: 

  • $6,368 to $6,741 for bronze plans.
  • $4,471 to $4,604 for silver plans.
  • $1,241 to $1,430 for gold plans.

Enrollment dropped from 17 million in 2014 to just under 14 million in 2019 — 10.6 million people had coverage in 2013, the year before the ACA fully took effect.

Overall, the increasing cost of healthcare impacts whether or not we use it. Concerns over the ability to pay prevent people from seeking medical services or filling prescriptions. About half of U.S. adults said they or a family member put off or skipped healthcare or dental care in the past year due to cost, and 29% of adults reported not taking their prescription medications at some point in the past year due to cost. 

Why are healthcare costs increasing?

Overall, national health expenditures were projected to grow 4.8% in 2019, up from 4.4% growth in 2018, and to reach $3.8 trillion. Under the current law, spending is projected to grow at an average rate of 5.5% per year from 2018 to 2027 and reach nearly $6 trillion by 2027. 

What’s behind rising healthcare costs? Is it strictly costs or do societal factors such as opioid addiction and obesity come into plan?

Every sector of the healthcare industry has experienced annual cost increases driven by built-in administrative costs that “significantly outpace the Consumer Price Index,” according to Modern Healthcare, which reported that prices typically rise through facility fees and other fixed costs as health systems “consolidate and snap up physician practices.” 

When it comes to access to care, consumers have increasingly more convenient options in the form of telemedicine, retail and urgent care clinics, something supported by employers and health plans, but this “care anywhere and everywhere” often results in higher utilization in the short term despite the long-term goal to decrease spending.

In terms of the impact societal needs have on healthcare costs, they do play a role. Spending for mental health and substance abuse reached $187.8 billion in 2013, according to some of the most recent data available, and ranked fourth for cost. 

Depressive disorders were most costly among mental health and substance abuse disorders and were the sixth-most-costly health condition overall, behind diabetes mellitus ($101.4 billion), ischemic heart disease ($88.1 billion), low back and neck pain ($87.6 billion), hypertension ($83.9 billion) and injuries due to falls ($76.3 billion).

The cost of obesity isn’t far behind; though the numbers are a bit older, the estimated annual medical cost of obesity in the U.S. was $147 billion in 2008 U.S. dollars. The prevalence of obesity was nearly 40% and affected about 93.3 million U.S. adults in 2015-206.  

One report estimates that obesity raises the annual medical care costs of obese adults by an average of $3,429. Nearly 94% of that cost is incurred by third-party payers. The share of total healthcare spending devoted to treating obesity-related illnesses increased from 20.6% in 2005 to 28.2% in 2013. 

The opioid epidemic also plays a role. Opioid overdose care totals $1.94 billion in annual hospital costs, and there’s a heavy reliance on public health insurance programs to cover those costs — 66% of patients had public insurance coverage (33% Medicare, 33% Medicaid), 16% had private payer, 14% were uninsured, 3% were covered by programs such as workers’ compensation. 

Opioid patients would add about $11.3 billion to the healthcare system annually, and Medicare and Medicaid would take on $7.4 billion of the expenses if the payer mix remained constant. 

Retail prescription drugs surpass all of these issues, accounting for 10% of U.S. healthcare spending, $333.4 billion, according to the National Health Expenditures survey for 2017. Prescription drug spending grew just 0.4% in 2017 but was projected to have grown 3.3% in 2018 and 4.6% in 2019. 

The Other Costs of Healthcare

When we talk about the cost of healthcare, we’re usually referring to charges associated with medical services. However, there are other costs as well, “life costs.”

People challenged by medical bills reported putting off vacations, cutting household expenses, using up their savings, taking on extra work, increasing credit card debt, borrowing money and taking money out of long-term savings accounts. 

Others have said healthcare costs impacted their ability to save for major life milestones such as buying a home, getting married or having a family. One survey found that medical bills prevented or delayed day-to-day activities for over half of U.S. adults and impacted longer-term goals for a quarter of them.

Is GoFundMe the new norm for medical bills?

It seems as though everyone is just a hospital visit away from starting a GoFundMe campaign these days. While none of us can predict illness or injury, or what they’ll cost us, choosing the right health insurance plan up front may help us manage medical expenses when they arise.

So what is the “right” coverage for you? If you enroll in a plan with an affordable monthly rate but a deductible beyond your budget, and you may find yourself unable to pay medical bills if you need care. Try to select a policy with a premium that works for your budget as well as out-of-pocket costs (e.g. deductible, coinsurance) you can realistically handle.

In general, a bronze plan will have the lowest monthly premium with the highest annual deductible and a gold plan will have the highest monthly premium with the lowest annual deductible. However, you may find plans at any metal level could work for you if you qualify for subsidies and enroll through an exchange.

To find the most affordable coverage for their unique circumstances, Americans who buy their own health insurance should do the following:

  1. Look at the government health insurance website to see if you qualify for subsidies (i.e., premium tax credits and cost-sharing reductions) that help lessen your monthly premium and out-of-pocket expenses. 
  2. Under the Affordable Care Act, individual major medical policies must include certain free preventive services. Use them to help maintain and monitor your health.
  3. If you can’t get Medicaid, aren’t subsidy-eligible and can’t afford Obamacare, then you may want to look into other coverage options. For example, temporary health insurance can offer short-term benefits while you figure out a long-term plan.
  4. You may want to add other types of benefits such as a hospital or dental insurance, which can be used alongside your major medical or short-term health insurance plan to help lessen your out-of-pocket costs when you need medical and dental care.

Should the worst happen and you find yourself drowning in medical debt, you may want to reach out to your providers to discuss payment plan options before bills head to collections. And, of course, GoFundMe seems to be here to help for the long-haul. 

If you need assistance finding and choosing health insurance benefits, contact a licensed health insurance agent who can guide you through the process and answer your questions.