|
Posted by joetaxpayer on August 3, 2007, 10:20 am
rick++ wrote:
>>Since health care costs inflate noticeably faster than the cost of
>>ordinary goods and services, a x25 factor might not be enough.
>
>
> MEdical inflation is about 15% or doubling every five years.
> Regular inflation is 3-4% or doubling about every 20 years.
> You have to look at total costs for medical inflation. Some
> years the premium goes up a lot, while other years they increase
> the deductable and copays. You have to track premiums plus
> out
> of pocket for several "ordinary" years.
The National Coalition on Health Care claims a 2005 increase of 6.9%
'only' twice the inflation rate, and noting that Health Care is 16% of
GDP. They forecast similar growth and predict by 2015 it will rise to
20%. Using your numbers, it would be far greater than that. Either way,
tough to plan for such huge expenses.
Link to NCHC article - http://www.nchc.org/facts/cost.shtml
JOE
|
|
Posted by rick++ on August 3, 2007, 1:56 pm
> rick++ wrote:
> >>Since health care costs inflate noticeably faster than the cost of
> >>ordinary goods and services, a x25 factor might not be enough.
>
> > MEdical inflation is about 15% or doubling every five years.
> > Regular inflation is 3-4% or doubling about every 20 years.
> > You have to look at total costs for medical inflation. Some
> > years the premium goes up a lot, while other years they increase
> > the deductable and copays. You have to track premiums plus
> > out
> > of pocket for several "ordinary" years.
>
> The National Coalition on Health Care claims a 2005 increase of 6.9%
> 'only' twice the inflation rate, and noting that Health Care is 16% of
> GDP.
I computed my numbers from my own routine expenses for the past 15
years
and found a five year doubling. Include premiums, actual payouts,
dental and vision.
You get the same doubling period by comparing the premiums five years
ago
to now, and factoring you are in the next five year older age cohort.
The premiums are up 40% and the age penalty for each five years is
40%.
(Unless you are in medicare where the premiums are up 79% in five
years).
|
|
Posted by Tad Borek on August 2, 2007, 12:37 pm
Samson wrote:
> A question about compensation for elected officials has come up in a
> local community forum. One of the ways that the city council members
> are compensated is with life time health benefits if they serve six
> (probably consecutive) years. How does one go about calculating
> that?
>
> Let's say that there is at least one known factor: The health
> insurance policy goes for about $300 a month for a member who is 50
> years old.
Samson,
That's a good question with other applications...like "how much would I
need to have saved up to cover health insurance costs for life?" Or any
regular cost really. There's no equation, really, because it relies on
actuarial assumptions about longevity and, to a certain degree,
assumptions about inflation and investment returns.
First strip away the purpose (health insurance) and just think of it as
a cash flow occuring monthly, call it $300/month initially. In finance
that's called a "life annuity" (if paid until death) and you can put a
value on it. The value will be tied to the official's age and gender,
which affect life expectancy.
As one estimate you could get quotes for life annuities at
www.vanguard.com. Find out how much it costs to buy $300/mo -- that's an
estimate of the "present value" of this benefit. Whoever budgets for
this benefit would be doing something analogous. A complicating factor
is that the cost will rise over time. You can (and should) add an
inflation-adjustment rider to the Vanguard annuity to get a better
estimate. But whether health insurance premiums will rise at the same
rate as CPI is debatable. They've risen much faster recently. On the
flip side, there's plenty of fat in the system that must eventually be
cut, so perhaps CPI won't be so bad an estimate over the long run. I'd
leave that as an open question though.
My financial opinion: a city council member earning lifetime health
insurance for a mere six years of service, if that's what the benefit
is, sounds like very rich compensation. That is far in excess of what
you'd see in the private sector or better public-sector jobs, including
those with strong unions (e.g. teachers). Or do they just have the
ability to buy health insurance, through the same plan as public employees?
-Tad
|
|
Posted by Elle on August 2, 2007, 1:37 pm
> But whether health insurance premiums will rise at the
> same rate as CPI is debatable. They've risen much faster
> recently. On the flip side, there's plenty of fat in the
> system that must eventually be cut, so perhaps CPI won't
> be so bad an estimate over the long run. I'd leave that as
> an open question though.
It is an enormously open question. Media reports in the last
few years testify amply to many large, well-known businesses
radically changing their health benefits offerings because
the costs were breaking their back. This includes changing
what is offered to current retirees along with future ones
and present employees. General Motors' and Ford's existence
appears to hinge in no small part on how much they will
continue to have to pay for retirees' health benefits.
I would not say the fat "must" be cut. We could be in for a
very rough decade or more at least of continued spiralling,
out-of-control costs. Media reports also testify amply to
how the health care system is so incomprehensible to
consumers that it is impossible for true free market action
to occur such that the fat would naturally be cut. Things
are on a better track, with consciousness raising of this
reality, but...
The OP is right to ask this question here, and elsewhere. I
strongly recommend in-depth reading of what other
contemporary private businesses and governments (federal,
state, and local) have attempted on this matter. I suspect
the ultimate decision will be something like qualifying
mightily what its promises for future health benefits, on
grounds that it is simply so unclear whether the
municipality can remain solvent and serve taxpayers
otherwise. Otherwise, backpedalling (that is, changing the
promises made) is likely. It's rampant now, from my reading.
|
|
Posted by PeterL on August 2, 2007, 1:35 pm
> A question about compensation for elected officials has come up in a
> local community forum. One of the ways that the city council members
> are compensated is with life time health benefits if they serve six
> (probably consecutive) years. How does one go about calculating
> that?
>
> Let's say that there is at least one known factor: The health
> insurance policy goes for about $300 a month for a member who is 50
> years old.
>
> Thanks,
> Samson
It's not possible to predict future health care cost with any sense of
certainty. But does this life time health benefit goes on until they
are 65, at which time Medicare takes over?
|
| Similar Threads | Posted | | bank | April 8, 2007, 6:44 pm |
| When a bank underwrites.... | April 10, 2007, 8:33 am |
| bank CDs vs. T-bills | August 21, 2007, 10:29 am |
| Bank of America? | November 16, 2007, 5:13 pm |
| Bank Accounts | June 13, 2008, 7:24 pm |
| Indymac Bank | July 13, 2008, 4:45 pm |
| IRA To Swiss Bank | September 13, 2008, 3:21 pm |
| open a bank account | November 15, 2006, 4:11 pm |
| Buy bank stocks w/8.5% dividend? | January 20, 2008, 12:06 pm |
| FDIC takeover of bank | December 8, 2008, 11:29 am |
|
|
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap