The ‘tragedy’ of American healthcare: Olympic gymnast Mary Lou Retton’s family is crowdsourcing for her hospital bills. She’s not alone.

But what’s not unusual is her family turning to sites like Spotfund and GoFundMe to help pay for health costs. Medical fundraisers are the No. 1 reason for crowdsourcing on Spotfund, accounting for 27% of all the platform’s fundraisers, a company spokesperson said.

One-third of GoFundMe campaigns raise money for medical bills, according to a study published in the American Journal of Public Health last year. Although most people who turn to crowdsourcing to meet healthcare costs don’t have an Olympic gymnast’s level of name recognition. Only 12% of campaigns met their goals, and 16% received no donations at all, the study showed.

“Returns were highly unequal, and success was low,” concluded the researchers, who analyzed 437,596 medical GoFundMe campaigns in the U.S. between 2016 and 2020. They found that healthcare-related GoFundMe campaigns raised more than $2 billion from 21.7 million donations during the study period.

“Despite its popularity and portrayals as an ad-hoc safety net, medical crowdfunding is misaligned with key indicators of health financing needs in the United States. It is best positioned to help in populations that need it the least,” they added.

“Medical fundraising is one of our largest categories,” a GoFundMe spokesperson told MarketWatch. This includes everything from hospital care to travel for family members.

As of Saturday, Retton’s daughter’s campaign had raised approximately $422,000 of her $50,000 goal, likely helped by her mother’s status as a beloved gymnast and Olympic champion. 

But nor is it a level playing field for people who have no level of notoriety. Several recent studies have suggested that White fundraisers on crowdsourcing sites are more likely to reach goals than African-American fundraisers.

Attractive photographs and compelling storytelling also helps. GoFundMe’s advice for would-be crowdsourcing: “It may be that you’re raising money for an inherently emotional life event like a medical emergency. In these cases, we recommend including a photo of the beneficiary doing something they love as the main photo, as well as photos that show their current state like them in a hospital bed–those can be added in the story.”

‘A lot of people turn to GoFundMe’

“A lot of people turn to GoFundMe or other crowdfunding websites, ask friends and family, put charges on their credit card, but that can only go so far,” said Cynthia Cox, a vice president and director of the program on the Affordable Care Act at KFF, a healthcare think tank. “They end up making other sacrifices like declaring bankruptcy, and losing their house or car.”

Medicaid coverage for low-income Americans varies by state. “You have to have a very, very low income in Texas to qualify for Medicaid,” Cox said. “In a different state, she might have qualified for Medicaid, but that seems unlikely here.” Texas is also one of a handful of states that continues to resist Medicaid expansion.

About one in 10 Americans, translating to 23 million people, has significant medical debt, according to an analysis by KFF. “It’s not just the direct medical costs, it’s also the lost wages — not just [of] the person who’s sick, but of the family members who care for them,” Cox added.

One of the main reasons so many people turn to crowdfunding for medical debt: It usually takes people by surprise, said Patricia Kelmar, senior director of healthcare campaigns at U.S. PIRG, a public-interest research group. 

“People are looking to pay for these bills and they have to raise a lot of money in a short period of time,” she told MarketWatch. “Some people put it on a credit card; some people ask friends and neighbors, because the last thing they want is to go to collections.”

“It’s not uncommon for people to have a $2,000 or $7,000 annual deductible, and most people only have $400 in their savings account, so meeting these bills very suddenly — generally it’s an accident or diagnosis — sets people back quite quickly,” she added. 

Some 37% of people could afford to cover a $400 emergency expense last year, up from 32% in the previous year, according to the Federal Reserve.

“The tragedy is we’ve worked really hard in this country to get people insurance: our government-funded programs, Medicare and Medicaid, and really urging our employers to offer us workplace-sponsored insurance, and the plans offered on the health-insurance Marketplace,” Kelmar said. 

Open enrollment for Medicare runs from Oct. 15 to Dec. 7. For the health-insurance Marketplace, it runs from Nov. 1 to Jan. 15.

The No. 1 cause of personal bankruptcy

Medical issues are often cited as the No. 1 cause of personal bankruptcy in the United States. That can have a devastating impact on people’s long-term financial health.

Kelmar cites a range of challenges for Americans when it comes to healthcare costs. “It’s very difficult to shop around, you can’t get prices in advance and you can’t avoid the cost of healthcare. You can’t say, ‘I’m not going to do it today. I’ll do it next month and save up.’”

“The problem is the prices for prescription drugs and hospitals have been going up and up. That’s when people are suddenly hit with a big bill. People who have to contribute their own premiums will pick a high-deductible plan, as their monthly output will be less,” she added. Indeed, rising medical costs have long been one of the key drivers of inflation.

Prescription drugs often come with a myriad of complex patents that make it difficult for generic drugs to gain access to the market, Kelmar added. Competition from a generic drug can bring down the cost for the generic drug by 40% compared with the brand-name drug, according to a 2019 report by the Food and Drug Administration. With two competitors, that price reduction rises to 54%. 

Another curveball to healthcare-related sticker shock: surprise out-of-network charges for ambulance trips. Just over a dozen states have laws to protect consumers against out-of-network ambulance charges.

Earlier this year, the Biden administration advised people against using medical credit cards, citing high interest rates. Americans paid $1 billion in deferred interest payments for healthcare charges on medical credit cards from 2018 to 2020, found a Consumer Financial Protection Bureau report published in May. Medical credit cards are used exclusively to pay for healthcare expenses.

“People used cards or loans with deferred interest terms to pay for almost $23 billion in healthcare expenses, and over 17 million medical purchases,” the CFPB said. The consumer-advocacy agency crunched data submitted to regulators by lenders, and said medical credit cards can inflate medical costs by 25%.

Anxiety about high costs can have a profound effect on people’s health. About four in 10 U.S. adults say they have “delayed or gone without medical care in the last year due to cost,” KFF polling from 2022 found.

Retton’s case, given her daughter’s account that she does not have health insurance, may be a cautionary tale for all Americans. “People who don’t have insurance can consider signing up for the Affordable Care Act Marketplaces, where millions of uninsured people are eligible for significant subsidies to get free or low-cost insurance coverage,” Cox said. “This is exactly the sort of scenario that health insurance can protect against.”

“Someone with severe pneumonia, requiring a ventilator and ICU care, can easily rack up charges in the tens of thousands of dollars, if not over a hundred thousand dollars,” Cox said. “And that’s with the discount insurers tend to negotiate with hospitals. Someone who doesn’t have insurance, and who doesn’t qualify for charity care, could be on the hook for even more.”

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