Friday, November 8, 2013

The Hidden Side of Health Care Costs

I'm not always a fan of Employee Benefit Research Institute (EBRI) reports, but this one resonated with me. 61% of workers report an increase in health care costs. But, the bigger story is that most of them say that this increase is affecting them in other ways. In these days of half the political world touting self-reliance and the other half touting the government providing for all, this survey through my lens says that neither works on an island. We need a bit of both.

So, what does the report say? It tells us that among the 61% whose health care costs are increasing (I am reading that health care costs for this purpose are the sum of premiums and out-of-pocket costs), as a result of this:

  • 32% have had to decrease the amount they are saving for retirement
  • 57% have decreased the amount they are saving for other purposes
  • 22% are having trouble paying for necessities such as food, heat, and housing
  • 38% are struggling to pay other bills
  • 1/3 have seen increases in credit card debt
  • 27% have essentially drained their savings
  • 16% have had to borrow money
If I were on one side of the aisle (in Congress) or the other, I would say (you know which side comes down where on this one):
  • This is exactly why we need the Affordable Care Act (ACA, PPACA, ObamaCare)
  • Forcing people to have what the government deems the proper health insurance cannot work
Let's consider what is happening though. When I was in my teens, oh so many years ago, most of the adults around me were retiring in their late 50s or early 60s. They looked forward to their golden years. They had defined benefit pension plans. Now, unless they are among the particularly fortunate group, their means of saving for retirement is a combination of a 401(k) plan and whatever they can save on their own. Ask these people when they plan to retire and most will laugh at you. They cannot see that on the horizon.

Also, back in my teens, by the time people retired, they owned their homes free and clear. Now? A recent survey that I read (sorry, I can't find the link) informed me that at age 65, more than half of homeowners still have a mortgage and for many of them, it has a very substantial balance.

Whatever the reason, and that's for a different day and a different post, we need some real changes. In the credit card era, people lose track of what they owe. And, much like the federal government, it's tough to make a dent in that when so much of your income is used for debt service. Unlike the federal government, however, the average guy on the street just can't borrow money at interest rates from 0% to 4%. No, your credit card company probably charges you some amount in excess of 10%.

Do I have the answer? No, I don't. If I did, you would hear me screaming it far and wide. But, in a day when take-home pay for many Americans is decreasing (higher taxes, higher employee cost of benefits) and the cost of goods, services and debt service is not, it gets really difficult for the economy to grow.

To me, this is the ultimate hidden side of health care costs. Because of the increases in personal costs of health care, the non-health care side of the economy is stifled.

We need change, but I don't see that kind of change-a-coming.


  1. I can't find the survey that said most people retiring at age 65 have mortgage debt, but here's one from Securian in 2013 that says 67% of the Boomers expect to carry mortgage debt into retirement:

  2. Anonymous, thanks for reading and commenting. And, thanks for the link.