January 3, 2023
STAT News recently published an article where Jay Zagorsky, Clinical Associate Professor of Markets, Public Policy, and Law discusses the explosion of buy now, pay later platforms in healthcare.
Based on a report by the Consumer Financial Protection Bureau, buy now, pay later loans for health products and services increased from $10 million in 2019 to $230 million in 2021. It’s increasingly difficult for patients to afford health care because of spiraling out-of-pocket costs, so the loans are viewed as an easier way to pay for what insurance does not cover. Though this may seem like an attractive option for patients, there are associated risks. As Professor Zagorsky points out, people often overspend when using buy now, pay later platforms because breaking up payments makes a product seem more affordable than it is. He says,“If you’re not really understanding how they’re trying to fool you into making the price seem so much cheaper, you can get into deep financial trouble.”
With the introduction of buy now, pay later options to more consumers, it has become evident that the current medical billing and collection system is simply not working. Creating more financing options is not the solution, but creating affordable options is.