Barron's had a fantastic (not being sarcastic) article about potential health care cost inflation coming for retirees. It laid out the threat and dug in with some numbers.
Apparently, health insurance companies are asking for regulatory approval to increase premiums by 10-20%. One expert said to prepare for 10-14% increases for a couple of years and then expect 5% after that. "Currently, retirees with modified adjusted income below $97,000 pay $1,979 a year in Part B premiums. Healthview projects that the premium will rise 6.3% in 2024 and 6.2% in 2025, 8% in 2026, 7.8% in 2027, and around 6% annually through 2031." Part G Medicare, the one I believe to be the most robust supplemental plan currently costs an average of $1517/yr with projections of 10+% increases over the next few years.
There was mention of the potential pain for people who retire before they can start Medicare for having to find health insurance either through Healthcare.gov or some other way. There was one anecdote from an advisor about a couple in this situation, 63 and 61 years old respectively who "pay $42,000 a year for a high-deductible policy they wanted so they could keep funding a health savings account. Their out-of-pocket spending can run another $3,000 for the year."
I put that one in quotes for how absurd it is. First, it does seem like health insurance companies are pricing HSA eligible policies out of making any sense which is unfortunate. The above couple is paying $45,000 all in to be able to sock away $8750 into an HSA. There was no mention of some sort of extreme situation that might require that type of premium or any sort of extreme income that puts them in the highest tax bracket. They could probably find a premium for half the $42,000 that would probably mean no HSA contribution and come out far ahead. Even $21,000 seems crazy high but getting close to $2000/mo for health insurance in your early 60's is about where the market is.
We've spent a lot of time on how to potentially sidestep or minimize the impact of health care costs and ways to greatly reduce the extent to which we need to rely on or interact with the healthcare system which to my way of thinking is permanently broken. I'm not a believer in socialized medicine but we're at a point where we are getting torched financially but we have the long waiting periods that people associate with socialized medicine.
If you do some research you will find that all sorts of changes to our health and how we "manage" chronic maladies started to change, coincident to the US adopting the food pyramid calling for more "healthy grains" a little over 40 years ago. Obesity rates started to go up and have been going up ever since. Obesity rates are sky high now and the odds of health problems go up dramatically for those who are overweight.
I talked about this at fire training yesterday. I said it seems as though the food pyramid was created to sell us unhealthy, high margin junk food that makes us sick or worse so that we can then pay for medication to manage our sickness for the rest of our lives. I acknowledged it as crazy talk but it is what I think and the response from the group was some general nodding and an acceptance of the plausibility of that idea. Right or wrong, I am convinced it is true supported by the increase in obesity rates, increase in Type 2 Diabetes and all the rest. Have you seen the commercial for Cologuard that claims the incidence of colon cancer is on the rise for those under 50? Assuming that is true, it is the diet suggested to us by the food pyramid that is to blame.
Here I will not surprisingly say to eat less carbohydrates. It is the carb content underlying the food pyramid that is killing us as well as the seed oils that go into processed food. To the extent you can eat meat, cheese, eggs and fish at the exclusion of carby and processed foods, the healthier you will be. Don't take my word for it. Do the research but no one will be hurt by eating less sugar and less processed food.
Get far enough into researching this and you will see that the right habits will greatly slow down the aging process. The right habits also includes staying physically fit. Weightlifting the most effective way to do this because done correctly it is a cardio work out and it builds muscle mass. We naturally start to lose muscle mass as young as 30 (Google it). Building muscle mass back up or as I have called it before, staying ahead of deflation is crucial. It speaks to body composition. Lifting weights will keep you muscular and a proper diet will keep your body fat percentage where it should be, about 15% for men, 20% for women.
Walk the walk time even if I sound like a jerk; I've been lifting weights since the 70's but just figured out diet six years ago when the doctor told me I was pre-diabetic. I started in that day on low carb, literally the next meal. I resolved the pre-diabetes and lost 20 pounds in just a couple of weeks on my way to a 30 pound drop to 190 and I have been there ever since. My abs came back which probably puts my body fat around 12%. I'll be 57 next month and I could probably pass for a fit 40. Something I think I've said here before, if you're doing the work that results on looking younger on the outside, you're probably also younger on the inside.
I describe all of this as simple even if it's not easy. Lift weights and cut carbs. That's it. Since I've been doing this and writing about it, I've had a lot of people from various constituencies ask me about it and have seen both successes and people who can't stick with it. Ultimately it is up to us of course. I talk about preventing or solving our own problems and how we take care of ourselves is a very tangible example.
We've talked about the financial impact too. I've been on a lot of medical calls with the fire department and occasionally the patient will take no prescriptions. We had one a year or two or go, he was 81, did have stents put in 20 years earlier but somehow took no prescriptions. He went out of his way to say he lifted weights. My father made it to 88 with no prescriptions before 55 years of smoking cigars caught up to him. He was sick for six months before passing away. How much money did the 81 year old patient and my father save not taking meds? We would save more due to the way health care costs have been going up.
I've also been on medical calls for people in their 40's and 50's with long lists of meds they take. The more you take care of yourself the better the odds of spending nothing on health costs other than insurance. My annual physical last year cost less than $200 which is all I spent money on...other than insurance. Another example of how broken the system is, I pay $6000/yr for essentially catastrophic coverage so I can get a $200 or $300 discount on my physical.
Again, do the research and you will find that getting in shape and cutting carbs can reverse chronic maladies that many people take medication for like hypertension and Type 2 Diabetes. No absolutes but it is possible and there is no downside to eating less sugar and less processed food. Here's a link about reversing T2D by fasting. There's another study, although I am not finding the link right now where people reversed T2D in just 72 hours by fasting for that long. Of course they then need to change what they eat to maintain that. This doesn't get talked about more because there's no money in skipping a meal.
I will always bang this drum. The quality of life aspect of feeling better, able to do what you enjoy for longer without spending a lot of time waiting in the doctor's lobby hopefully resonates with everyone. The financial aspect of being able to get that $300,000 and rising number from the annual Fidelity retirement health care cost study down should resonate with everyone who cares enough about personal finances to read a blog like this one.
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