While consumers are well aware of the rising costs of energy, food, gas, and other heavily used commodities, they may not be noticing inflation making its way into their medical bills. A closer look reveals that the cost of healthcare is actually outpacing inflation.
In fact, it’s not a new phenomenon that’s taking place amid inflation fears. The rising cost of healthcare has been an enduring trend since the 1930s.
“Today, while everyone is concerned about the high overall inflation rate, it’s important to note that historically the cost of medical care has grown at a rate that exceeds the general inflation rate,” Nationwide noted in their Advisor Blog. “In fact, since 1935, the cost of medical care has risen at an annual rate of more than one whole percentage point higher than general inflation (4.67% vs. 3.56%).”
Interestingly enough, healthcare costs did fall during the initial outbreak of COVID-19 in 2020. Social distancing measures pushed back major medical expenses, and doctor visits were done via telemedicine or other technological delivery methods.
“A closer look at the numbers, though, reveals that individuals’ out-of-pocket spending in 2020 declined by 3.7%, largely because of the decreased use of health care services,” the blog noted. “Many hospitals and outpatient care centers suspended elective procedures, such as knee and hip replacements and cataract surgery.”
Positioning Clients for Rising Healthcare Costs
Realizing the increased cost of healthcare, financial advisors are in a position to direct their clients on how to curb costs. It’s just one of the hats advisors must wear when putting their clients in the best possible financial scenario, including when it comes to their medical care.
“To reduce the likelihood that clients will face overwhelming health care expenses in retirement, there are a number of steps financial professionals can suggest to help clients meet those costs, and even potentially reduce them,” the blog said.
The blog offered a number of ways to prevent rising costs, but one particular way deals with risk mitigation. Translated from investing vernacular and into healthcare terms, it basically relates to preventative health: taking care of oneself.
“Behavior certainly influences the amount of health care people will need,” the blog noted. “In your retirement planning meetings with clients, you can supportively remind them that investing more isn’t the only way to increase the odds they will have a comfortable retirement. Taking good care of themselves will make a big difference, too.”
For more news, information, and strategy, visit the Retirement Income Channel.