Health care costs - a 2012 report

[walkinwood]

I came across this report from the Kaiser Family Foundation today - interesting reading
The Henry J. Kaiser Family Foundation | Search

A summary from the doc

Key Facts

• In 2010, the U.S. spent $2.6 trillion on health care, an average of $8,402 per person.
• The share of economic activity (gross domestic product, or GDP) devoted to health care has increased from 7.2% in 1970 to 17.9% in 2009 and 2010.
• Health care costs per capita have grown an average 2.4 percentage points faster than the GDP since 1970.
• Since 2002, the rate of increase in national health care spending has fallen from 9.5% to 3.9%.
• Half of health care spending is used to treat just 5% of the population.
• Although only 10% of total health expenditures, spending on prescription drugs has received considerable attention because of its rapid growth (114% from 2000 to 2010).
• In 2008, 27% of the nonelderly with 3+ chronic conditions spent more than 10% of their income on health, compared to 11% of the total nonelderly population.
• Many policy experts believe new technologies and the spread of existing ones account for a large portion of medical spending and its growth.

In another area they say that the average (2009) healthcare spending for a person above 65, including all sources (medicare, medicaid, out of pocket etc.) was just under $10K.

Doesn't sound as dire as some people make it out to be.

 

[Live And Learn]

A summary from the doc:
Half of health care spending is used to treat just 5% of the population.

Thats scary !

In 2010, the U.S. spent $2.6 trillion on health care, an average of $8,402 per person.

I'm budgeting $26k per year to age 65. $19k in premiums and $7k in other stuff. I'm only planning on hitting the out of pocket max once every 3 years otherwise I'd be budgeting $31k per year. That 5k makes a big difference in when I can retire. I'm afraid of the risk so I'll probably end up changing it so that I chain myself to a job for another 8 years !

In another area they say that the average (2009) healthcare spending for a person above 65, including all sources (medicare, medicaid, out of pocket etc.) was just under $10K.

Thats about what I had budgeted post age 65 - $20k per year (for 2). At least I got that right !

 

[W2R]

Last year (age 64) I spent $3921 on medical costs. These included insurance, ongoing prescriptions, deductible and copays, dentist, $250 for dental x-rays and $448 for the bone graft to prepare for my dental implant. I have federal retiree medical insurance, which is tremendously helpful because they subsidize it.

This year, who knows? I must start Medicare this June, so that will be roughly $600 more, to pay for Part B for half a year, in addition to my usual insurance cost. I will be paying around $3000 or more for the implant and crown.

Now, the bone graft, implant, and crown for my dental implant do not bother me a bit!! It was my choice to get the implant and I knew it would be costly. I could have done nothing and I would have been just fine but I wanted the implant. I am paying directly to the dentist and oral surgeon and no insurance or government bureaucracy is involved. That is so much less stressful to me than otherwise. Their services are worth what they cost, to me, so it is all good.

 

[Mulligan]

Thats scary !

I'm budgeting $26k per year to age 65. $19k in premiums and $7k in other stuff. I'm only planning on hitting the out of pocket max once every 3 years otherwise I'd be budgeting $31k per year. That 5k makes a big difference in when I can retire. I'm afraid of the risk so I'll probably end up changing it so that I chain myself to a job for another 8 years !

Thats about what I had budgeted post age 65 - $20k per year (for 2). At least I got that right !

Health care is a very concentrated cost. Not only does 5% consume almost half, but I recently read that about 23% consume 83% of the total cost. Even though it doesn't change the total amount of healthcare costs, statistically speaking there is a good chance you aren't spending much outside of paying your premium. For ER people, we have to be prudent and prepare for the worst, due to a possible long retirement. But, there is also a good chance you won't have to spend a lot of money either, premiums aside. I try to be positive and hope for the best, that is why I carry a HD plan. By a stroke of luck, I took the $5500 deductible instead of the $7500 one. Since the Healthcare Act came in after I bought my plan, the $7500 would have been cancelled next year as it doesn't meet the grandfathered requirements which is around $6k.

 

[ERD50]

Health care is a very concentrated cost. Not only does 5% consume almost half, but I recently read that about 23% consume 83% of the total cost. ...

That guy Pareto really gets around! He was almost always right in my business too.

Pareto principle - Wikipedia, the free encyclopedia

The Pareto principle (also known as the 80–20 rule, the law of the vital few, and the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes.[1][2]

-ERD50

 

[Mulligan]

That guy Pareto really gets around! He was almost always right in my business too.

Pareto principle - Wikipedia, the free encyclopedia

-ERD50

Interesting, read. I had never heard the actual term before.

 

[Live And Learn]

I made a mistake in my post above - I'm only budgeting 15k, not 20k, post age 65.

I like the idea that statistically I won't pay more than my premium however I've had about 4k OOP expenses every year for the past 4 years. So I already know that I need to count on a substantial OOP amount. I'm hoping I've budgeted too much, but fear I've budgeted too little.

My plan, once I actually retire, is to take annual below budget spending and save half. The other half will be spent on additional entertainment / hobby expenses.

If I've budgeted too little and need that extra $5k (and get to max OOP) then vacations get cancelled. Not ideal but its my plan b. I live in Florida --- I used to come HERE for vacations --- I shouldn't need to go anywhere else (or at least thats what I try to convince myself !).