Rising out-of-pocket health costs and limited policy change will shape the consumer health experience in 2018. Healthcare coverage and services will be more expensive this year as an acceleration of trends from 2017 continue. There are a few positive trends that will help save you money. Generally speaking, we are simply left doing more with less. This is our 2018 healthcare report.
Healthcare Policy Changes
Healthcare policy had few policy changes in 2017, except for one large alteration – healthcare is no longer “required” for individuals. The penalty associated with the individual mandate has been repealed. This means individuals will not see any tax penalties if they decline health coverage. The financial impact on the healthcare system remains to be seen. If you want to fly without a healthcare safety net and pay out-of-pocket for all health expenses, you can.
With the 2018 budget still being negotiated, there could be amendments, but overall existing health policies remain intact. While there are both positive and negative implications here, what is clear is that healthcare costs will continue to rise in 2018. We will expose the areas where you can take advantage and the areas you need to ensure your coverage for all of the just in cases.
The most glaring and important statistic is that healthcare costs continue to outpace inflation. This is expected to continue in 2018. This includes an increase for larger employers for health costs and an even bigger increase for smaller employers.
The good news – prescription drug costs are expected to increase at a slower rate. They will still increase but the greater adoption of generic prescriptions is one factor that has helped mitigate their cost growth.
The bad news is that out-of-pocket costs continue to rise. Not only with medical expense costs but also in with rising insurance deductibles. While this scenario is not unique to 2018, these cost trends raise troubling concerns. Will consumers decline health insurance to lower monthly costs or increase their movement toward high deductible health plans (HDHPs)?
Healthcare continues to take a larger hold of the total US GDP. This translates to increased health costs as a total percentage of personal income. It costs more to pay for healthcare and related expenses.
Amazon Health to the Rescue?
Recent days have seen a small but bright healthcare “savior” enter the market – the new partnership with Amazon, Berkshire Hathaway, and JP Morgan – that we will refer to as “Amazon Health”. This new venture represents expertise in streamlining out-dated business (Berkshire Hathaway), digital integration and access (Amazon), and of course lots of access to cash (thanks JP Morgan!). They also represent over 95,000 employers, so have plenty of users to test with from day 1. Regardless of the product opportunities, their representative economic and political influence might be the most important result of this partnership.
Don’t expect a new health insurance provider from these three juggernauts, like a “Geico” for healthcare (Berkshire Hathaway acquired Geico in 1995).
Do expect a system that increases access to healthcare services that decreases consumer costs by driving more provider competition and creating end-to-end system efficiencies.
Getting your prescriptions delivered to you same day seems a likely reality. With CVS’ purchase of Aetna, the competition in the prescription space is going to heat up. Competition of this nature is good for health consumers in the short-term. It often results in a streaming of systems and increased negotiations with providers. The result is lower costs for consumers.
Could this mean Amazon Health will finally crack the nut that has eluded US Healthcare for so long – one place to store all of your digitized medical records? How much will “Amazon Prime Health” cost? Will I be able to binge watch my favorite TV show and shop for healthcare all in one place? All of these remains to be seen. We are rooting for any changes that can help consumers pay less for health costs.
Health Savings Safety Net
With rising out-of-pocket health costs and limited policy change slated for 2018, consumers can’t wait for long-term options. They need help with health costs today. They need a health safety net.
An HSA provides the only direct way to save pre-tax dollars for qualified out-of-pocket medical expenses. By definition, it is a way to save money for health! Increases in the individual and family HSA contribution limits are good news for you.
While most increases are a negative indicator in the healthcare space, increases in the 2018 individual and family contribution limits ($3,450 and $6,900 respectively) means you can save more pre-tax dollars for healthcare. This limit decreases your out-of-pocket healthcare costs in 2018.
Opening and establishing an HSA today creates more options for you. Free options, like a Lively HSA, are hard to find in the healthcare space. You can save and Invest in your health® so you finally have the health safety net you need today.
2018 looks to increase the increased cost and decreased coverage trends in healthcare. For most health consumers, there is no option to wait for long-term solutions. We need help saving and planning for health costs today. Health savings tools, like the HSA, are a rare light in an otherwise stormy healthcare outlook. HSAs can bridge the gap while longer-term developments, like Amazon Health, become accessible.
Consumers need to take action to control their health costs and negate potential financial burdens. Waiting is not an option in 2018. What do you think 2019 will look like?
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.