Impact of Your Health on Your Wealth

Posted by on Feb 4, 2016 in Financial Advisor Boise ID, Financial Planner Boise ID, Financial Planners Boise ID, Financial Planning Consultant Boise ID, Financial Services Advisors Boise ID, Peggy's Pearls | Comments Off on Impact of Your Health on Your Wealth

We have all felt the pinch of rising cost of health care. Our health care costs are on a path to $4.8 trillion by 2021; up from $2.76 trillion in 2010 and $75 billion in 1970. Health care is fast approaching 20% of the U.S. economy.

What does that mean to you personally?

Accelerating health care costs leave families with considerably less cash to spend. But what are our options? What can we do differently?

PricewaterhouseCoopers calculates that up to half of all health-care spending results from waste. That waste can be divided into 2 areas.

One area of waste is excessive, defensive medicine that orders redundant, inappropriate or unnecessary tests. What can you do to prevent this? Ask questions, challenge the “why,” get second opinions and look for less expensive options for the same procedure.

We can also control the other major area of waste—our own health behaviors. We can take medication as prescribed. We can stop smoking and drink alcohol moderately or not at all. We can eat healthy whole foods and stay physically active, to maintain a healthy weight. We can very significantly reduce our chances of suffering from chronic diseases such as diabetes and heart/lung problems.

The growing burden of chronic diseases adds significantly to escalating health care costs. Researchers predict a 42% increase in chronic disease cases by 2023; this adds $4.2 trillion in treatment costs. Much of this cost is preventable, since many chronic conditions are linked to unhealthy lifestyles.

We need to become more responsible consumers of health care if for no other reason than poor health is a huge opportunity cost. Poor health makes us miss work, possibly miss promotions. Poor health costs us money that we could spend elsewhere and makes it harder to save.

Olivia Mitchell in Money Magazine states that if a couple in their 50s and 60s with an average income develop chronic health problems, it will slow their savings by half the rate of their healthy counterparts. She adds that a healthy 65-year-old couple would need $295,000 to cover insurance premiums and out of pocket medical expenses over an average life span (or about 20 years). Add an additional $150,000 for a couple with chronic illnesses.

One more way to reduce health care waste is to take advantage of high deductible health insurance policies offered by employers. These encourage conservative use of health care. When paired with Health Savings accounts, they can increase savings for medical expenses.

But perhaps the biggest shift needs to be in our attitude as a society.

Allison Ferguson sums it up well: “Too many people sacrifice their health to earn their wealth. Then, turn around and spend their wealth getting back their health.”