MEDICAL EXPENSES SOAR

Health-care expenses in the United State increased from $604 billion in 1989 to an estimated one trillion in 1999 according to a report by the Employee Benefits Research Institute (EBRI), www.ebri.org. That represents an increase of over 50 percent in just ten years.

The medical expense component now represents 13 percent of the nation’s gross national product. The share of public budgets consumed by health care continues to grow because public budgets have remained relatively fixed as a proportion of GNP while health-care expenditures have expanded, the report said. This suggests that the public is spending more on health care than on social services and education.

This represented $2,354 per person in 1989 and approximately $4,000 in 1999. The EBRI report said growth in health-care expenditures per person has out paced almost all other goods and services. Only food and housing expenses cost individuals more per year.

People are starting to sense that medical cost inflation must be controlled. This is just further confirmation that this is a big problem. Congress is now considering legislation that promises it would bring medical cost inflation in line with general inflation. The Congress is considered by many to be an extreme optimist.

Such a plan is only a temporary solution, however, because doctors and hospitals would find ways to increase fees to make up any money saved. The insurance industry’s response to health-care inflation - managed care - is useful but may not be the ultimate solution either.

From a personal planning basis, it is critical that all members of the family have basic coverage, major medical and, where appropriate, long term care coverage to cover temporary or terminal stays in nursing homes.