ARBOR WEALTH: Health care premiums, ACA and Roger Miller
“I lack fourteen dollars havin’ twenty-seven cents … So Dang Me!” From“Dang Me” written and recorded by Roger Miller
We recently received a notice that our health insurance premiums were increasing in August by some 23 percent. We had a similar increase last summer. That’s 46 percent in premium increases in 12 months.
Here’s the kicker. The policy hardly covers anything, so ultimately, we end up paying for almost all of our health care out of pocket anyway. Essentially, the policy is a post-deductible catastrophic safety net. In other words, if one of us is diagnosed with a serious and life-threatening illness which costs tens of thousands to treat, we’ve got some financial fallback. Otherwise, it’s just money out the door every month.
Sound familiar? Figured it would. Health care costs are threatening to decimate more individual family finances than outsourcing and automation combined. A frightening number of bankruptcies are caused by health emergencies.
We used to enjoy a better policy, but switched to another plan a couple of years back. We inquired recently about returning to the old plan. No problem, our provider said. Of course, it would cost $3,500 more annually than what we paid 18 months ago.
How has the Affordable Care Act impacted health care costs? Well, in our case, health insurance companies appear to be in a price-raising frenzy. And in every conversation with our provider, we detect an undertone of worry, fret and fear from the other end of the line. That’s if we can get them on the line. The result? The decision by health care companies to raise prices as a hedge against uncertain future regulations and requirements.
One good thing about the ACA is the clause restricting health insurance companies from denying coverage because of a pre-existing illness. But if the cost of health providers complying with this regulation means constant and significant premium increases for lesser and lesser coverage, one wonders if the American pocketbook can withstand the consequences.
The specter of ever-rising health care costs on the average American investor is daunting. The U.S. has the distinction of spending the highest amount on health care among the world’s industrialized countries, about 16% of GDP. The remarkable rise in private insurance premiums is but one contributing factor. But, few of us wish to risk going without health care insurance.
Investing in health care providers may be an option for some. Another way to recoup some of those ever-increasing premium dollars, based on your investment objectives, may be to invest in companies that pay a dividend. One of the reasons we favor dividend-paying instruments that have historically increased their dividends to shareholders is that you’ll have a few more dollars to help offset 23 percent jumps in health care premiums.
Margaret R. McDowell, ChFC, AIF, a syndicated economic columnist, is the founder of Arbor Wealth Management, LLC, (850-608-6121 — www.arborwealth.net), a “fee-only” registered investment advisory firm located near Sandestin. This column should not be considered personalized investment advice and provides no assurance that any specific strategy or investment will be suitable or profitable for an investor.