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Perfect Storm of Problems for Health Care Customer

NEW YORK ( BankingMyWay) -- According to TransUnion, the Chicago credit ratings firm, out-of-pocket costs for health care patients jumped 25% in the first half of the year and 38% in the past 12 months, to $2,568 through the second quarter of 2013.

At the same time, credit availability has dropped for consumers by $1,000, which TransUnion calls a recipe for more personal debt.

"The trend of growing consumer health care costs continued during the first six months of the year, and we suspect they may expand even more with the recent one-year grace period granted to some insurers for out-of-pocket expenses," says Milton Silva-Craig, president of TransUnion Healthcare. "As a result of this extension, patients expecting to pay no more than the Affordable Care Act's prescribed cap for out-of-pocket expenses may find that they owe both the maximum amount for hospital services and an additional maximum amount for prescription drugs."

An additional problem as Americans wait for the grace period to end and for Obamacare to kick in fully: A study from the Columbia Business School shows that the average consumer will pay $611 next year by choosing the wrong health care allowable under the ACA. Overall, Americans are expected to pay an additional $9 billion in taxes to cover costs related to choosing the wrong health care plan.

"Consumers' failure to identify the most appropriate plan has considerable consequences on both their pocketbooks as well as the cost of the overall system," says professor Eric Johnson, co-director of Columbia Business School's Center for Decision Sciences. "If consumers can't identify the most cost-efficient plan for their needs, the exchanges will fail to produce competitive pressures on health care providers and bring down costs across the board, one of the main advantages of relying upon choice and markets."

Meanwhile, Silva-Craig worries that the surge in health plans raising costs ahead of Obamacare implementation "will make it more difficult for patients to pay their bills, further burdening hospitals with the likelihood of more bad debt," he adds.

TransUnion lays out its formula for reaching that conclusion, one that compares revolving credit to specific health care costs:

As of Q2 2013, the ratio of total revolving credit line to health care costs was 13.2 to 1. Thus, for every $100 in health care costs, consumers had $1,320 in revolving credit to potentially make those payments. For the same quarter last year, this ratio stood at 18.7 to 1, meaning consumers had $1,870 in revolving credit for every $100 in health care costs.

"A 30% decline in health care purchasing power is quite significant, especially when this takes place in one year's time," Silva-Craig says. "More and more, health care costs are pushing the consumer to their financial limits where they may need to prioritize which bills to pay first."

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