New saving/investment is the lifeblood of financial services, aswell as the fuel for achieving personal financial goals. Yet, manyaffluent households lack the budget flexibility to keep saving andinvesting consistently. Why?


Related: Start Medicare at age 65? Not sofast!


For your clients, you can sum it up in one phrase:health care. Here are a few facts you may want toshare, along with sources of each (for your further review):

  • Over the last 15 years (2001-16), health care costs for atypical American family of four have increased at an average rateof 8.4% per year, to $25,826 in 2016, according to the Milliman Medical Index (MMI). That’s more thanfour times the 1.9% average annual increase in the U.S. ConsumerPrice Index (CPI) over the same period.

  • Over this 15-year period, median nominal household income in theU.S. increased at a 1.9% annual rate, according to the U.S. Census.

The gap between a 1.9% nominal gain in median income and an 8.4%annual increase in health care costs has drained a huge amount ofthe discretionary income Americans once had available for savingand investment.


Related: Candidates give lip service to cuttingdrug costs

  • Soaring health care costs are hurting both households andbusinesses. According to Milliman, employers now pay 57% of totalhealth care costs, while employees pay 43%. “Employees areshouldering more of the health care cost burden than they were 15years ago.”

  • Although Milliman says U.S. health care costs only increased by4.7% in 2016, “the lowest annual increase since we first measuredthe MMI in 2001,” this trend will not continue in 2017. Accordingto Kaiser Family Foundation, the average healthinsurance premium increase next year is expected to be about9%. Obamacare observer and blogger Charles Gaba hascalculated the weighted average state-by-state request for premiumincreases in 2017 at 24.2%.

It’s interesting that medical care only accounts for 8.4% of theCPI’s total weight, compared to 15.3% for transportation. Clearly,the CPI weight has fallen behind the reality Americans are facing.If the CPI weighted medical care at 12-15% of the CPI, U.S.inflation rate would be higher.


Of course, nobody seems to have any big ideas for holding downhealth care costs. It’s become like a giant, ever-growing tax,draining America’s wealth.


To save and invest more for the future, your clients may have totighten their belts in other areas.


They also can demand that political leaders address the risingcost of health care, not with platitudes and politically-appealingsound bites but with cost-effective solutions. The future ofObamacare is a distraction. Cost containment is what really mattersto most Americans.

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