Although consumers are well aware of the rising costs of energy, food, gas and other heavily used basics, they may not notice that inflation is showing up in their medical bills. . A closer look reveals that the cost of health care actually exceeds inflation.
In fact, this is not a new phenomenon taking place amid inflation fears. Rising health care costs have been a persistent trend since the 1930s.
“Today, while everyone is concerned about the high overall inflation rate, it is important to note that historically the cost of medical care has increased at a rate greater than the overall inflation rate,” said noted Nationwide in its Advisor blog. “In fact, since 1935, the cost of medical care has increased at an annual rate more than one percentage point higher than general inflation (4.67% versus 3.56%).”
Interestingly, healthcare costs plummeted during the first outbreak of COVID-19 in 2020. Social distancing measures rolled back major medical expenses and doctor visits were made via telemedicine or other technological delivery methods.
“A closer look at the numbers, however, reveals that out-of-pocket spending by individuals in 2020 fell by 3.7%, largely due to lower use of health services,” the blog notes. “Many hospitals and outpatient centers have suspended elective procedures, such as knee and hip replacements and cataract surgery.”
Positioning Customers for Rising Health Care Costs
Recognizing the rising cost of health care, financial advisors are able to guide their clients on how to reduce costs. It’s just one of the hats advisors must wear when putting their clients in the best possible financial scenario, including their medical care.
“To reduce the likelihood that clients will face crippling healthcare costs in retirement, finance professionals can suggest a number of measures to help clients meet or even reduce these costs,” says the blog.
The blog offered a number of ways to prevent rising costs, but one particular way deals with risk mitigation. Translated from investment vernacular and in health care terms, it essentially relates to preventive health: taking care of yourself.
“Behaviour certainly influences the amount of health care people will need,” the blog notes. “In your retirement planning meetings with your clients, you can encourage them that investing more isn’t the only way to increase the chances of them having a comfortable retirement. Taking good care of themselves will also make a big difference.
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