Healthcare’s ‘New Normal’
The recent market volatility has probably woken a lot of investors from their complacent slumber. The markets have been advancing in more or less a straight line going on three plus years (and save for the Eurozone debt crisis of 2011, volatility has been more or less nonexistent). In fact, the relative risk-adjusted return for large cap domestic equities over the past three years has been considerably higher that the long-term average. In short, we’ve had it pretty darn good. The combination of attractive entry points at the end of Q1 2009 and of course the Fed-induced sugar high via quantitative easing have produced one of the best bull markets in modern history.
When markets go down people are reminded of the main reason they are saving in the first place: retirement. “Am I still on track?” “Will this continue?” “Am I missing something?” Chances are, millions of investors ARE missing something. And it is not something out of their control, like predicting future market returns. It’s actually something they CAN control. That something in fact isn’t tied to their 401(k) or IRA. But it has everything to do with their financial wellness.
The health savings account is arguably the best retirement savings vehicle ever created by the federal government. After a minimum balance is reached in the account, funds can be invested in equities, bonds, etc. If consumers take a long-term view and are able to contribute even modest amounts each month, the power of compound interest will be their friend once they reach retirement, and their financial wellness will be fit.
Perhaps the most under-appreciated attribute of the HSA is that funds can be withdrawn tax-free as long as they are for a qualified medical expense. The fortunate savers who start early enough will likely get a LONG way down the road of covering their out-of-pocket healthcare expenses in retirement. Of course, markets need to continue to appreciate in the long-run and ample savings needs to be earmarked for the HSA, but the point is, get proactive and learn more about HSAs and the associated retirement planning options that can lead to sound financial wellness.
Our content is aimed at educating consumers about price disparities in healthcare. Or more broadly, to assist in the inexorable march towards consumer directed healthcare. (No, we don’t peddle HSAs). Just as consumers are still very unaware of the potential benefits of health savings accounts, so too are they uninformed about the information already available through open data, or data that is free to access and generally furnished by federal, state, and local governments. A lot of this data can have direct benefit to the financial wellness for millions. We strongly believe that consumers will take on a much more proactive approach to their healthcare budgets just as they were forced to own their retirement savings plans when pensions went out of style with Don Johnson and perms in the 80s. The photo below is a screen shot from our NH open data project (www.healthyhive.com/nh). Note the variance in coinsurance for a lower back CT scan (2013, PPO plans).
Love or hate the Affordable Care Act, the stage has been set. The American consumer is once again going to need to rely on self-reliance, re-tooling, and some ambiguity in the coming years as the healthcare maze is navigated. We hope to be a beacon along the way.