Inflation causing Americans to skimp on critical health care expenses, study finds

High inflation is causing many Americans to skimp on everything from buying groceries to paying for critical health care expenses, according to a recent Nationwide Retirement Institute survey.

Over the past 12 months, nearly one in five Americans (18%) say they have skipped meals or didn't buy groceries due to high inflation, including 28% of Gen Z and 23% of millennials, according to the survey.

As food insecurity deepens, Americans are also struggling to pay for critical health care expenses. Many have cancelled or postponed plans in the past 12 months to see a specialist (14%), take a prescribed medication (10%) or get an annual physical (11%) due to high inflation, the survey said.  And almost one-fifth of Gen Z (17%) and millennials (19%) have cancelled or postponed plans in the past 12 months to see a mental health professional.

“As the price of health care and basic necessities continues to reach record highs, Americans have been forced to make tough decisions that sacrifice their health and wellbeing.”  Kristi Rodriguez, senior vice president of the Nationwide Retirement Institute

"As the price of health care and basic necessities continues to reach record highs, Americans have been forced to make tough decisions that sacrifice their health and wellbeing," said Kristi Rodriguez, senior vice president of the Nationwide Retirement Institute.

"While these decisions are understandable and challenging, making short-term tradeoffs may have long-term impacts,” she said, adding, “Neglecting your health now can lead to far bigger costs as you age and approach retirement. This is such a critical time to consult with a financial professional to create a plan that prioritizes your health-care needs now and in retirement."

As Americans brace for even bigger expenses in the future, the survey finds that one in ten (10%) have decreased their retirement plan contributions in the past year to pay for health-care expenses, because of high inflation. Another 14% of adults are considering decreasing their contributions this year. This number is higher for Gen Z and millennials – at 21% and 20%, respectively, the survey said. In their search for additional savings, 14% of Americans say they are considering downgrading their health insurance plan because of high inflation, which rises to 23% and 20% for Gen Z and millennials, respectively.

Review Medicare plan

One area of potential relief for those already age 65 and over is reviewing their Medicare plans during open enrollment, which runs through December 7. According to the National Council on Aging (NCOA), only about 10% of people switch Medicare plans each year during open enrollment, which could mean they're overspending for coverage they don't need or use.

"It's important people utilize online tools and resources in addition to leveraging a financial professional," Rodriguez said. "For instance, older adults could save money right now by re-evaluating their Medicare plan during open enrollment."

Although Americans are making daily decisions and tradeoffs to manage high inflation, many have not put a plan in place to pay for health-care expenses in the near term and stay on track to meet their retirement goals in the long term, according to the survey. For example:

• Less than a fifth of Americans (17%) have adjusted their family's budget to pay for health-care expenses in the past 12 months.
• The majority (72%) report that one of their top fears in retirement is their health-care costs going out of control, but only 39% have a plan to pay for health- care costs in retirement
• 15% have delayed a large purchase or investment to pay for health-care expenses in the past 12 months

Helping clients

Rodriguez pointed out that the role that financial professionals play in creating more secure financial futures for their clients is even more important during high inflation. "By incorporating health care into financial -planning conversations,” she said, “financial professionals can help clients better prepare for the rising costs of health care."

To help financial professionals guide these conversations with their clients, Rodriguez mentioned  Nationwide’s Health Care Cost Assessment tool, which uses proprietary health-risk analysis and updated actuarial cost data to help them and their clients estimate future medical and long-term-care expenses.  Nationwide has also teamed up with NCOA to create the NCOA My Medicare Matters® tool brought to you by Nationwide to help guide clients through their Medicare options.

The Nationwide Retirement Institute study was conducted online in the United States by The Harris Poll on behalf of Nationwide among 1,140 adults age 18+ residing in the U.S. ("national sample"), including 283 Gen Z (18-25), 285 millennials (26-41), 286 Gen X (42-57), 286 Boomers+ (58+).  The survey was conducted from August 26 – September 8, 2022.

 

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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