TransUnion Report on Consumer Health Financial Exposure

It is now common knowledge that consumers bear a lot of health care cost, especially through deductibles and copays.  A TransUnion health care report gives some perspective on these financial pressures.   (TU Report)   TransUnion provides credit reporting and other services and has branched into health care, so it is well-placed to see how patients handle their increased cost share.  The data comes from actual payments owed by patients to providers.  The report notes that average patient deductible costs rose 7% from 4th quarter of 2013 to the 4th quarter of 2014, or from $1,062 to $1,133.  Total patient payment costs rose 11% from $2,245 to $2,491.  Major joint replacements and natural and caesarean births accounted for a significant piece of these costs.  One metric TransUnion uses to calculate consumers’ ability to handle out-of-pocket payments is the ratio of coverage by revolving credit, such as a credit card.  On average at the end of 2014, that ratio was 13.5 to 1, down from 15.2 to one at the end of 2013.  This means that for every 100 dollars of health care cost they might incur, the average consumer had 1350 in a revolving credit.  The segment of subprime consumers had much less cushion, only 3.6 to one ratio in Q4 2014.  Helps to explain why many low-income patients live in fear of health needs.  A TransUnion survey also revealed that 54% of consumers said they were sometimes or always confused by bills and 62% were often or always surprised by the amount of their out-of-pocket costs.  Only 25% say they get pre-treatment estimates of the cost of services or their share of the cost.  On the flip side, providers often end up with bad debt from consumers who have difficulty making their out-of-pocket payments, and are more often using services and software to evaluate patients’ ability to pay at the time of service and to provide cost estimates to patients.  Just another data point regarding financial stress from health care out-of-pocket costs.