Monday, November 14, 2011

Healthcare Bull Dozer

The Anthem letter arrived thanking me while saying my healthcare insurance premium will increase 17.4%.  Factoring last year's 8.6% increase that is a compound annual growth rate of 12.89% and for the last seven years the CAGR has been 6.5% (even after increasing the deductible and eliminating Jenna from our family plan). 

Fidelity does a study each year, predicting the Healthcare costs for retirees (e.g. the Medicare Gap costs of Healthcare).  I've been following that since 2002 when it was estimated at $160K and for 2010 it was $250K which is a 5.74% CAGR.  Meanwhile my Health Savings Account (established in 2003) has grown a measly 4.06%. 

So I am losing ground in the Healthcare cost "inflationary war".   The only "wins" I have (and I thank God for those) is the family health has been close to perfect during that period (which keeps the premiums down).

Healthcare Insurance is really a bankruptcy insurance policy since most major medical costs can't be afforded by the average person. That is why I prefer to have a high deductible policy with a Health Savings Account.

The trouble with understanding the finances of Healthcare is that it is a complex web, rule driven, constantly changing, rarely transparent, and ignored by the individual until it touches their life or a loved one's life. 

But it is like a bull dozer - slowly approaching each of us.  Some avoid it's impact, and others get hit. If you are hit, then the speed of impact seems to accelerate and overwhelm your ability to get out of the way to avoid it's destruction.  

How do you avoid a Healthcare Bull Dozer?  The best exercise is running faster than the Bull Dozer :)

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