Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Is Healthcare the Silent Killer?

Politics / Healthcare Sector Sep 06, 2016 - 06:49 PM GMT

By: Rodney_Johnson

Politics I’ve never heard anyone brag about what they spend for a medical procedure. Healthcare isn’t like housing or transportation. People are proud to shell out big bucks for a big house, and many drivers can’t wait to show off their expensive set of wheels.

But when it comes to healthcare, we’re only smiling when we save money, not spend it, which makes the current trend so much more difficult.

While government officials point to slower price increases and bray on about bending the healthcare cost curve, everyday people are watching more of their hard-earned dollars fly out the door to pay for care. Even though overall costs might be rising at a slower pace, the amount consumers have to pay is shooting to the moon.

And the pain doesn’t stop at the door to retirement. As the healthcare monster devours more dollars, we have less money to spend where we want, which adds to the misery in our economy, and will eventually add to a nasty financial setback.

Middle-income households now spend more on healthcare than any other cost outside of shelter. This part of their budget jumped more than 3% from 1984 to 2014, and now eats up 8.9% of their funds.

Most of the increase occurred in the last 10 years, as healthcare spending rose 25% from 2007 to 2014. As these families spent more on doctors and prescriptions, they spent less on food, housing, clothing, and transportation.

Keep in mind that this calculation ends just as the ironically named Affordable Care Act went into action. Since 2014 things have gotten much worse, not better.

Consumers who purchase insurance on the healthcare exchanges know about rising prices all too well. Premiums have increased by double digits every year for most buyers, and in 2017 prices will shoot higher by almost 30%.

In just a few short years, premium prices are up 50%, and that’s just for the privilege of buying insurance. Sure, there are subsidies out there for almost 90% of buyers, but that covers just the premium cost. Once you have insurance, there’s the small matter of the deductible.

Insurers have reconfigured policies to include higher deductibles to keep premium prices lower than they would have been. That’s nice in theory, but with premiums up by double digits each year, tacking several thousand dollars onto the deductible just adds insult to injury.

Deductibles of $5,000 and $6,850, on top of $1,000-per-month premiums, are common. This is also where workers who get their insurance through their employers are feeling the heat.

Firms still pay roughly 80% of insurance premiums for employees, but the plans are less generous, requiring more deductible payments. The effect, while not as pronounced, is the same. Consumers have less cash to spend on what they want.

For retirees, the math gets more complicated.

The government deducts Medicare Part B payments from Social Security checks. This year, the price of Medicare Part B is expected to climb more than 20%, or about $27 per month. But inflation has remained tame, so the Social Security Cost-of-Living Adjustment (COLA) could be as small as 0.2%, or even flat. For those receiving the average benefit of $1,335 per month, this equates to less than $3 per month. The increase in Medicare Part B will eat up all of that gain and then some.

Recent retirees might get some relief. If they earn less than average income, then the Hold Harmless Act would shield those who retired in the last year from a Medicare cost increase that would reduce their benefits below the prior year’s level.

Unfortunately, this only works once, and then the recipients must eat the cost. The price of Medicare Part B jumped 16.1% last year, so those who were able to avoid that price hike now have to pony up.

To make it even more of a puzzle, if the COLA ends up at 0%, then the Hold Harmless Act doesn’t apply, and all Social Security recipients will get hit with the full cost increase, thereby lowering their incomes.

The end result is that most everyone in America is paying significantly more for healthcare, either through premiums, deductibles, or a combination of the two. This leaves us with less money to spend on what we want. It’s harder for young families to afford having children or buying homes, while retirees can’t spend as much on maintaining their lifestyles. For those in the middle, saving for retirement and education is difficult.

The problem with healthcare is that it doesn’t fade with an economic downturn. When our economy resets and financial assets drop, healthcare costs will remain high, eating up more of our falling incomes, and creating a further drag on the economy.

And it doesn’t stop with consumers…

The premium subsidies for the health exchanges, and the makeup payments for the Hold Harmless Act, come from somewhere. Or, more to the point, from someone. That lucky person is the U.S. taxpayer, who is on the hook for ever-rising healthcare costs as the government declares bigger sections of the population eligible for assistance.

As equity markets reach new highs and consumer misery plumbs new depths, something’s got to give.

Don’t be left holding the bag when the markets roll over. Make sure you have enough left in your pocket to pay for your premiums… and your deductible.


Follow me on Twitter ;@RJHSDent

By Rodney Johnson, Senior Editor of Economy & Markets

Copyright © 2016 Rodney Johnson - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Rodney Johnson Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in