If you’ve been following the headlines lately, health care has been getting more and more attention in the financial advising world. The impact of rising health-care costs on clients’ retirement plans is a big deal, and it’s one advisors are still figuring out how to address.
This may feel a little out of the traditional financial planner’s wheelhouse—health care isn’t something advisors or brokers were talking about 20 years ago. If you began your career in 1989, for example, you might be wondering how and why this came to be such a dominant issue in 2019.
Even five or 10 years ago, when the Affordable Care Act was passed and implemented, the prudent approach was generally to take a “wait and see” approach on anything health-care related.
Now, the wait and see period has passed, and advisors ignore health care at their—and their clients’—peril. To understand why this issue deserves more of your attention in 2019, we’ll look at how health care has changed over the last 20 years, the choices consumers face today, and how advisors can think about helping their clients.
A Simpler Time
So how has health care changed over the last 20 years? In 1989, the majority of Americans received their insurance benefits from their employers. Costs were on the rise, but many workers were accustomed to contributing very little to their health-care costs.
At this time, health care was a non-issue for many.
For consumers who didn’t have access to workplace plans, health care could be a little more complicated. Options were limited for this market, because carriers could deny coverage to consumers with pre-existing conditions.
In general, individual insurance was less expensive, but fewer people could access it. Some states provided access to “guaranteed issue” plans for these consumers, but they were generally very expensive.
The other avenue by which many Americans received insurance coverage was, and is, Medicare. When the program launched in 1965, the coverage comprised Part A and Part B, or hospital and physician coverage.