Proponents and opponents of various health care reforms, each with different agendas, have warned that the cost of health care insurance will double in the next ten years unless we adopt their plan to stem the tide. Flash news! The cost of health care and health care insurance will double in ten years, regardless of what anyone does.
Inflation fluctuates of course, so some limited periods are more and others are less, but in the end the averages catch up with you. And on average, costs double in about ten years—always, for everything.
Not to give away my age, but I remember when anyone earning $100 dollars a week was considered to be doing pretty well. The minimum wage was $1.25 and many worked for even less than that. Now you need to earn that much a day, at least, to match it. And it wasn’t all that long ago.
When I hear people warning of prices doubling in the next ten years as if it were something unexpected, it catches my attention because it reveals yet another area in which people are unaware of the basic facts upon which our financial planning and decisions must be made if they are to be sound.
It is easy to be lulled into complacency because progression appears to be slow, but it is the compounding effect that causes dramatic consequences when the time period gets longer. Numerically expressed, 2 becomes 4 becomes 8 becomes 16…. Looking ahead ten years is troubling but not horrendous. But when that 2 becomes 16 and the cost of something has become 8 times as large in just 30 years, we may be unprepared to cope.
Without getting into specific examples in this post (but don’t be surprised if it comes up later), I just want to suggest that we all keep in mind the effect of this ten year doubling projection on all of our financial affairs, but especially in our planning for the long term. It can be quite dramatic.
