By Judith Garber, Lown Institute Staff
This weekend, I thought I would read about something other than health care for a change, so I picked up a copy of The Unbanking of America: How the New Middle Class Survives by Lisa Servon. Using a mixture of academic research, history, and undercover journalism, Servon answers a question that plagues economic policy wonks – why are fewer and fewer people using banks?
The short answer is, mainstream banks no longer care about serving the middle class. According to Servon, professor of city and regional planning at the University of Pennsylvania, policies in the late 20th century loosened restrictions on opening new bank branches and offering investment products. This allowed banks to grow bigger and bigger, with large banks eventually replacing small community banks almost entirely. At the same time, the savings and loan crisis of the late 80s, and fluctuating interest rates, encouraged banks to seek profits in their fee structures rather than relying on interest income.
Given the high transaction fees at banks, it’s no surprise that many low- and middle-income workers choose instead to use alternative financial services such as check cashers, payday lenders, and saving circles. Although these services are sometimes more expensive than banks, Servon found from her experience working at a check casher that customers appreciate the convenience, friendliness, and transparency they offer. Unlike the hundreds of pages of fine print on credit card contracts, check cashers post their prices in bold letters on the wall “like a fast food restaurant.”
Many condemn alternative financial services for being predatory, but Servon notes that without these services, some would face even worse outcomes. For one payday loan customer, her choice was either take out a loan to pay for car repairs, or lose her job. Servon concludes that rather than trying to get more people into mainstream banks, banks should be working harder to serve their customer’s needs (perhaps with a nudge from the government).
Despite my weekend goal of not thinking about health care, I couldn’t help but notice the parallels between banking and health care. From excessive billing to profit-mongering to consolidation, the problems Servon sees in financial services are also present in our health care system (as Elisabeth Rosenthal thoroughly explains in An American Sickness). And Americans are getting fed up with the non-transparent prices, inconvenient hours, and impersonal treatment that increasingly characterize both health centers and banks.
While alternative financial services have grown to meet the needs of banking customers, when it comes to health care, Americans are stuck. While people can go their whole lives without needing to use a bank (if they choose), virtually everyone needs to go to the doctor or hospital at some point. The current “alternatives” to primary care and emergency care, such as urgent care centers and walk-in clinics, are more transparent with their prices than hospitals, but they don’t provide the opportunity for lasting doctor-patient relationships. And when we have a major health problem, there is little choice in where to receive care or what care to receive; even less information on how much it will cost.
Just as Servon calls for banks and the government to do more for low- and middle- consumers, we need hospitals and the government to increase investments in social services, price transparency, and access. In the meantime, Neighborhood Health Stations (pdf) are a viable alternative. They provide a place within the community for residents to get access to primary care and urgent care (including same-day appointments at convenient times), while also building relationships between clinicians and community members through fitness and recreation programming.