Who’s paying for America’s funerals?

Time has a way of changing one’s perspective.  I’ve told you before that I started in this business as a funeral director in 1980.  I was paid $1,000 per month and our funeral home conducted virtually 100% of our funerals in the traditional “casket, funeral, vault, burial” method.  I remember that the final billings, including cash advances, for funerals at that time to be about $ 2,500.  To someone being paid $1,000 per month that seemed like a lot of money to me.

Delving in to some research I can tell you that America’s “Median Family Income” in 1980 was $21,020. . .so that funeral price of $ 2,500 represented about 1.4 months worth of a family income or looked at another way 11.8% of annual family income.  The “Median Family Income” for America in 2020 was $ 67,521.  Comparing traditional services with cash advances I would argue in our area the cost for that $ 2,500 funeral in 1980 is now about $12,000. . . .or about 2.1 months or 17.8% worth of an average annual family income.

Today, after 40 years of home ownership, raising children through college,  buying automobiles. . . . that doesn’t seem like an unfair or high price for the services one receives with a complete funeral service.  Again, time, and experiences can change perspectives.

So, it appears that on those numbers alone, funeral costs have somewhat outpaced family income in America over 40 years.  However, my cost estimates are pretty raw and don’t take into consideration cremations, direct cremations, and the like.  And, consumers now have many more options to bring that price down should they wish.

One thing I think has changed over those 40 years is “Who is paying for those costs”.  There is no place, in my opinion, where you can find a definitive breakdown of who is paying these costs, but I would argue that our nation has moved from a “self-reliance” method of paying for these services to a place where many look for help in paying for these costs.  And, that may be reflective of what some say is a “widening gap” between family affluence and family poverty.  What some believe is a growing group of each. . . and a loss of the middle class in America.

I kind of got on this subject by reading this article from the Daily Iowan about one county’s quest to raise money for countywide funeral assistance.  Reading the article made me think about my time as the Chairman of our County Hospital’s Foundation Board and the amount of “Uncompensated Care” that our hospital provided.

So, while we have always had “County Burials” or what used to be called “Welfare Services” my guess, from what I read, is that the average funeral home receives a higher proportion of taxpayer funded funeral payments than in the past.  Just my hunch.

Here’s a couple other items I found. . . one from that article and another by doing a little research.  According to the article, GoFundMe claims it is the leader in “Online Memorial Fundraising”.  They claim to help raise about $330 million a year for an average of 125,000 services.  The United States had approximately 3.2 million deaths in 2020.  . so if GoFundMe helped with 125,000 of those. . . that’s about 4.0% of all services in America were helped by GoFundMe.

Then we know that America will have over 100,000 deaths due to opioid mis-use in 2021.  Many of those folks lives have been in a downhill spiral where they have low enough assets so taxpayers have helped fund many of those death care needs.  100,000 of 3.2 million would be another 3.1% of all deaths.  By saying this, I don’t want to disregard or disrespect families who have taken on the responsibility of paying for these services on their own. .  .because that is the case in many cases.  I just want to point out that back ten years or so ago, these deaths to our young people were fewer and taxpayer resources were appropriated less for this cause.

Tom Anderson
Funeral Director Daily

Finally, we know that the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 provided up to $9,000 per death to families who lost loved ones to Covid-19 in certain instances.  This release from FEMA dated November 1, 2021, informs us that FEMA has provided $1.2 billion to 196,000 families to date from this act.  That’s an average of $6,122 per death and the 196,000 represents 6.1% of those 3.2 million 2020 deaths.

So, those three items — Online fundraising, county taxpayer funding, and the FEMA funding — appear to have paid, at least in part, about 13.2% of America’s deaths.  When you add already guaranteed government benefits for some veterans, my guess is that about 15%, or more, of death care payments may come from government sources. . . . .my point is that is quite a bit higher than when I started out in 1980.  And, I’m not including the Social Security Death Benefit, because ultimately, that is an “earned” death benefit of a Social Security system payor.

Funeral Home’s Benevolent Role:  One thing most lay people do not know is the benevolent nature of funeral homes in their community.  The article from the Daily Iowan quotes Johnson County Social Services Director Lynette Jacoby, “. . . What’s been happening is, the funeral homes write off a very large portion of the expense for services, they end up donating those costs. . . .  while families on assistance will still receive funeral services from funeral homes despite not paying the full amount, the funeral homes themselves will be the ones losing money.”

From my perspective, Jacoby is very insightful.  Her comments reflect exactly what happens when a funeral home accepts $3,000 ($2,100 when you recognize a cemetery gets $900 of that payment) from her county to conduct a full service traditional service.

A Hospital’s Uncompensated Care cost: Here is a quote from the American Hospital Association in a 2019 article about uncompensated care at their member institutions, “Hospitals in 2019 provided $41.6 billion in uncompensated care, meaning care for which no payment was received from the patient or insurer. . “

And, here’s a quote from a Minnesota report on hospital margins, “There remains ongoing concern with the continued growth of uncompensated care costs from Minnesota’s uninsured population and its increasingly underinsured population, including patients with high deductibles and copayment obligations they cannot afford. . . . .Uncompensated care costs, in the form of charity care write-offs and bad debt expenses, are a key challenge to a hospital’s ability to achieve a positive operating margin.”

Final Thought:  It appears that funeral homes are receiving a higher percentage of their revenues from governmental sources.  If so, that could be a cause for concern if we are taking less than we need to operate just for the “right” to handle a call.  I’m very benevolent, but there comes a time when you have to watch your margins.

And, this article comes out during the Christmas Season when we are all reminded to give back to society.  I’m all for that and we do need to be reminded every so often how lucky we all are.  But, as a funeral home owner or manager, there can be consequences when you get too benevolent on the business side.

The difference between a hospital’s uncompensated care and the uncompensated care that you provide with your funeral home’s benevolence is easily seen in that, at least in Minnesota, 76 of the 78 hospitals are non-profit or government owned.  They have something, fundraising or taxpayers, to fall back on if their uncompensated care results in margin compression.  At your funeral home, it’s more than likely it is a bank loan and interest payments that you will see if your benevolence goes too far.

Related articleBusinesses selling ornaments, crosses to benefit veterans’ burial fund.  The Greeneville Sun  (TN)

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