The inevitable in life, so they say, are death and taxes.
Apparently, you can add “increased health care costs’ to the list.
Despite endless promises from politicians over decades to cut into the cost of health care, investors still expect to see the costs rise in the coming year.
Spectrem’s Investor Pulse asked more than 900 investors what their expectations were for the cost of healthcare over the next two years. The questions were asked in January 2017, while the new presidential administration was being formed.
While approximately 7 percent see no change in the cost of healthcare going forward, 85 percent see an increase in cost. That includes almost three-quarters of the investors expecting an increase of at least 5 percent, and almost one-quarter of them expecting an increase of more than 15 percent.
Only 8 percent overall see costs of healthcare decreasing over the next two years.
Advisors need to assess again an investor’s health care spending process. Are they properly insured, either through work or with a private insurance plan? For those investors who think health care costs are going to go up by double-digits, do they need to increase spending on health care insurance, or make other financial plans to cover any anticipated costs?
Interestingly, those investors with the lowest net worth had the best outlook on the topic, with 16 percent expecting health care costs to go down. The wealthiest investors surveyed, those with a net worth over $5 million, were the most pessimistic, with 92 percent expecting an increase in costs.
The new presidential administration and the majority GOP leadership in the House and Senate have promised a repeal and replace health care package to do away with the Affordable Care Act. Some of the official complaints about the program relate to the cost of insurance for the consumer.
The investors were asked by Investor Pulse to name the one part of their health insurance program they would like to see improved, and 49 percent of them said “lower premiums”. Premiums are where the greatest share of health care costs go, unless there is some drastic medical event in the family.
While it makes sense that health care premiums would be the greatest concern of those with the lowest net worth among the investors surveyed, even 40 percent of those with a net worth of $5 million or more selected “lower premiums” as their choice for making a change to their current health insurance program.
But lower premiums was not the only health insurance issue considered as the most important. Nineteen percent of investors said they wanted lower deductibles, and 19 percent said they wanted improved network coverage, aiming probably at having more choices for health care professionals within the insurance program. In fact, 30 percent of the wealthiest investor surveyed chose “improved network coverage” as their No. 1 concern with their health insurance coverage.
Thirteen percent said they wanted “Lower prescriptions”; that percentage was fairly standard across gender and net worth segments.
Top Takeaway for Advisors
Advisors can go over an investor’s health insurance policy to see if their coverage can be improved on. They should also discuss any health concerns the investor or the extended family have that could cause financial issues down the line.
©2017 Spectrem Group