Consumer Payment Card News

Out-of-Pocket Medical Bills Up 6X Since 1980 – Climbing 8% Annually

New research reveals total consumer out-of-pocket spending reached $486 billion last year, having risen by 8% per year since 2011. Indeed, the market for consumers’ out-of-pocket medical costs, which for individuals has risen from $250 per year in 1980 to over $1,400 in 2016. 

According to NYC-based Kalorama Information, Americans utilize a variety of methods to pay for healthcare products and services. These are required in instances when payment is not made directly from a healthcare plan directly to the provider.

The report says there is still a lot of cash in healthcare; for both elective and non-elective procedures, cash or check represented the most commonly used payment method in 2016, almost $294 billion in out-of-pocket spending. This was due mainly to the use of employee wages to pay healthcare plan premiums, as premiums comprised the lion’s share of healthcare expenditures.

Consumers use several different methods to pay out of pocket for healthcare, the following being the key payment options utilized:

• Cash or check

• Credit cards

• Loans and lines of credit

• Healthcare financing programs

• Flexible Spending Accounts

• Health Savings Accounts

Credit cards follow cash or check in popularity, followed by loans or lines of credit. Flexible Spending Accounts (FSAs), healthcare financing programs, and new Health Savings Accounts (HSAs) accounted for very small portions of overall spending.

Healthcare financing programs are a relatively new entrant in this market. To address consumers’ increasing inability to finance healthcare costs, a rising number of financial services firms have begun offering patient financing programs. These and other such companies allow patients to finance a variety of procedures on favorable terms, and are similar to conventional unsecured consumer credit in that they offer competitive interest rates, high credit limits, card member services, and incentives such as cash back on purchases, no annual fee, etc.

Through 2021, usage of cash will continue to expand by an estimated 6.1% annually, although other payment methods such as healthcare financing for elective procedures and HSAs will demonstrate much stronger growth from their low bases of current utilization.


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