With the current hysteria surrounding health care reform, it is important to note that the cost of healthcare is where the underlying need for reform exists.  This significant issue for businesses, employees, and health insurers is continuing to grow.  In 2008 alone, national spending on health care reached $2.3 Trillion dollars.  There is not a single cause of the amazing growth in cost for health care, many factors come into play.

Treatment costs:

• 51% of the growth in health care spending is driven by medical price inflation.
• Doctors in the U.S. earn two to three times as much as other industrialized nations.
• Physicians a tending to become specialists, which can charge up to twice a much.
• Compensation for doctors in the ten year period between 1997 and 2006 has increased for some specialists as much as 97%.
• Medical technology improvements contribution to health care spending growth ranges between 38% to 65%

Prescription drug costs and utilization:

• Prescription drug prices, between 1997 and 2007, grew on average two-and-a-half times the rate of inflation.
• Specialty drugs are expensive; a new cancer drug can cost $100,000 or more per treatment cycle.
• Half of all adults in the U.S. take at least one drug a day.
• 7% of all adults in the U.S. take at least 5 drugs a day.
• Two thirds of people who go to a doctor’s office leave with a prescription.

Cost Shifting:

• Government programs, such as Medicaid, SCHIP, and Medicare, pay physicians and hospitals lower rates than private insurers.
• Providers adjust the prices charged to insurers to offset losses from partial or non-payers.
• Cost shifting represents 15% of the amount spent by commercial payers to hospitals and physicians.

Conventional wisdom says that most people need life insurance only during their working years to provide for their families in the event of a premature death. The thought was that by retirement, they had paid off their mortgage and accumulated sufficient wealth and sources of income to self insure the family’s survivor needs. Many families are now approaching their planned retirement ages with more debt and significantly less accumulated wealth than originally anticipated. Many people in their 50s and 60s are now deciding to work longer and some may never fully retire. Continued employment helps bridge the income shortfall, but it doesn’t secure income for spouses and heirs who may survive them. The “self insurance fund” is no longer sufficient to provide the desired level of family security. Only life insurance can bridge that gap immediately and tax efficiently.

Did you know that 56% of small to midsize firms are not protected if an owner, partner or key executive dies, and 70% of them would be vulnerable if one of them were to become disabled? Where would you get the funds to purchase their share of the company? What if an outside owner with a different vision for the company purchases this share? A business continuation plan can help prepare for these events, so you can concentrate on what you do best – run your business.

A predictable asset for unpredictable times. Those of us who have more money then we will spend will pass the excess on to others at death. Efficiently passing on assets left at death can be challenging, especially when future values of assets and the state of the markets for them are relatively unpredictable. To maximize the part of the estate intended to be transferred to family members, you should review that asset and see how life insurance can help.

The Pension Protection Act of 2006 allows for new opportunities to fund Long Term Care Insurance. The new legislation stipulates that the use of non-qualified annuity money to pay for Long Term Care insurance premiums can be tax-free. According to the U.S. Bureau of Health and Human Services, 70% of individuals over the age of 65 will need Long Term Care at some point in their life. The average cost of an semi-private residential care facility is $7000 per month, to pay someone to come into your home to care for you averages $29 per hour. Where is that money going to come from?