Health Care for the Future
Current health care costs are estimated to be, on average, more than $8,000 for every man, woman, and child in the United States. I think we can all agree that there is not enough money available to pay for that. At the center of the problem is the need for law changes limiting excessive lawsuit settlements related to health care that cause the liability expenses for physicians and hospitals to soar. In addition, the vast majority of physician offices are run inefficiently. For the most part they are “mom and pop” organizations. A uniform standard for reporting and for claims processing would go a long way in reducing costs.
I recently met with a physician who does research on longevity and asked him what the most essential steps are to extend life. His answer surprised me. Meditation (prayer) was number one, followed by stretching, aerobic and anaerobic exercise, and finally, nutrition. As individuals we need to take control of our own health. Most of us know how to be healthy, but we often lack the discipline to follow through to make it happen.
We know statistically is that 2.8% of the people cause 80% of the cost of health care in any given year. A number of years ago I discussed with an occupational physician the idea of putting a plan together to simply manage the 2.8% of the people who need care. Unfortunately, those in the position to understand the ways to reduce the costs have no authority in the health care system. The authority primarily resides with hospitals and insurance companies, who by no coincidence, are also the beneficiaries of higher costs. The premium payer is often a business, leaving most employees in the dark about the options they have and the costs they pay.
Congress is currently proposing a national health care program. No country in the world has had success with this kind of a plan because, ultimately, it leads to rationed health care and debt beyond measure. Congress might take steps to achieve success by introducing a public program for some and private pay for others. Because the government can hide their expenses, most people fear that it will eventually lead to the demise of the private pay plans.
Another part of the proposal is to tax health care expenses. If this is done it will result in substantial increases in taxes for people who work. It is estimated that 50% of our population pay little or no income tax. This would reduce their already meager compensation. To remove the deduction for health care is to tax anyone who pays social security, federal and local income taxes. Those least affected by this proposal would be the young, those over age 65, and the non-working poor. The tax increase would result in an average additional tax of $200 each month for every man, woman, and child. Of course, no one is average so a disproportionate cost would be borne most by older Americans not yet 65 and the working middle class.
Because health care represents one of the most formidable costs in a family budget, our advisors have been diligent in recommending to our clients the proper use of cafeteria plans, health savings accounts and the benefits of employer-paid health care. We may see the loss of these deductions in the future. As a result, we are asking our clients to step up their plans to get healthy. Rationed health care will demand we begin to take care of ourselves. Remember, 2.5 million Israelites spent forty years in the desert and had no disease. You can do it too!
Robert Ostrander, CFP®
SWS Advisors, Inc.
