Survey: Out-of-Pocket Costs for Health Care Up 11%

Both health-care consumers and providers felt the squeeze of rising health-care costs in 2014 – with out-of-pocket costs for patients rising 11% -- according to a TransUnion Healthcare report released Wednesday.

“Our latest report demonstrates that consumers continue to feel the pressure of rising health-care costs,” said Gerry McCarthy, president of TransUnion Healthcare. “Despite a slowly improving economy, many consumers are finding they have less money to make these payments."

According to TransUnion, the report included anonymous data estimates for patient payment responsibilities from thousands of providers, including health-care clinics from across the nation. The information was then compared with the credit-information company’s financial data.

The findings are no surprise to National Association of Health Underwriters President Tom Harte, who is also founder and president of employee benefits broker Landmark Benefits. “Health insurance is expensive because health care is expensive,” said Harte.

According to Harte, as employers’ premiums continue to rise they are “cost shifting,”or putting more financial demands on the employee and their dependents --  in the form of higher deductibles or other strategies, like changing the plans they offer altogether.

“Employers are being faced with an average 20% increase in premiums,” said Harte. “They are making decisions on how to absorb those costs.”

A rise in deductibles is a major contributor to the increased financial burden felt by consumers, with patient deductible costs rising nearly 7% in the last year from $1,062 in Q4 2013 to $1,133 in Q4 2014.

“Deductibles have nearly doubled over the past five years through the adoption of high deductible plans offered by employers and the implementation of the Affordable Care Act,” said McCarthy. “We will be tracking this trend closely as we suspect that average deductibles could rise much more in the coming years.”

In just one year, 33-year-old Kristin DiGiovanni of New Jersey saw a spike of 200% in her United Healthcare emergency room deductible. From 2013 to 2014, DiGioavanni’s deductible for emergency room service increased from $50 to $150.

“My yearly salary increase didn’t come close to offsetting my increase in health-care costs,” said DiGiovanni, who worked as a manager in a large clothing retail chain, before recently leaving for work in the public sector in search of better benefit options. “I knew I’d eventually need a job that provided more affordable benefits.”

Director of Sales for Warner Pacific Insurance Services Neil Crosby, who also sits on the Media Relations Committee of NAHU, doesn’t agree with McCarthy that deductibles will continue to rise. But, his reasoning isn’t so comforting. He said at the current levels, they can’t get much higher.

“The deductibles aren’t going to keep getting higher,” said Crosby. “The highest deductible someone with group insurance will see will be about $5,000, while those who insure individually might see as high as $10,000 deductibles.”

And health-care administrators are not immune from the crunch.

“Thousands of health-care administrators across the country face the challenge of providing quality care while also seeking fair compensation,” explained McCarthy.

The report also found that as health-care costs rose in 2014, revolving credit became less available for consumers. For every $100 in health-care costs, consumers had $1,350 in revolving credit to potentially make those payments in the last quarter of 2014. For the same quarter in 2013, consumers had $1,520 in revolving credit for every $100 in health-care costs. The report looked at available revolving credit as an indicator for how consumers might cover out-of-pocket medical costs.

While some subprime risk category consumers might qualify for a type of charity care, McCarthy said that “if hospitals cannot readily provide this charity care, they may end up taking on more bad debt if patients are unable to make payments.”