Cost of Living: Healthcare is one of the fastest growing costs & one of the hardest to cut

Bryce: [00:00:27] Welcome to another episode of Get Started Investing podcast, where we attempt to answer the most common money and investing questions from. If you're joining us for the first time, a massive welcome. We do strongly recommend that you scroll up and start episode one. Now, while we are licensed, we are not aware of your personal circumstances. All information on this show is for education and entertainment purposes, and any advice is general advice. But with that said, let's crack on. My name is Bryce, and as always, I'm joined by my equity buddy, Ren. How are you? 

Alec: [00:00:55] I'm very good, Bryce. Very excited for this episode. The final of our five part series on Cost of Living. You've gone under the hood of the Australian Consumer Price Index, the measure of cost of living and how much has changed over time. Spoiler alert, it's gone up. Yes, there are 11 categories that make up the CPI over the past five episodes. We've chosen five of them to dig a little deeper, understand what moves them, and understand how we manage our money and any tips we have about saving money. We've covered furnishings, household equipment and services, transport, food and non-alcoholic beverages, insurance and financial services. And now we're finishing up with one that is hard to think about saving money in. But there are some things that we can do. And that is health care. 

EM Community: [00:01:51] Hi, Equity Mates. Loving this series. It's been super helpful. Other than checking which doctors bulk bill, which I always do. What suggestions do you have for reducing health care costs? Discuss. 

Bryce: [00:02:04] Yes. Health. So before we jump in, take a look at our own budgets and then ways in which we can save across the board when it comes to health. A quick reminder that today Ren, today is the day that our book Don't Stress Just Invest, is available. 

Alec: [00:02:20] Is live. 

Bryce: [00:02:21] It is live. It's launched. 

Alec: [00:02:21] And if you're wondering how this book is different from the first book, Get Started Investing was our first book. We distilled everything we've learnt over the past four or five years of doing the podcast and building equity markets. It was our attempt to include everything. This book is the opposite of that. It is our attempt to explain the absolute simplest way to invest and why that is enough. So if you've been wondering how to get started investing, if you've got friends or family members or colleagues that wonder why you listen to an investing podcast when you've got other choices out there, this is a book for them to get them started, and it's the book for you to keep you going. When you think about what is enough when it comes to investing. 

Bryce: [00:03:09] So it's live now. Thank you. If you're one of those that were part of the pre-order, but you can now grab it at any bookstore around the country and yeah, let us know what you think. Jump into the Facebook community, buy one for your friends, buy one for family, buy on for anyone who's interested in starting their investing journey because this will definitely get them on the right track. But health. So what is included in the Consumer Price Index when it comes to health? We've got medical consultations, pharmaceutical products, we've got medical and hospital services, dental services, Vision's care, and that's it. Health insurance actually fits, obviously, in the insurance part.

Alec: [00:03:49] Yeah, we've been a little bit confused, but some databases will say one thing, some will say another thing. We're relying on the ABS, the Australian Bureau of Statistics, who don't include insurance here. They include it in insurance. Yes. So if we're wrong.

Bryce: [00:04:06] You'd think they would be the source of truth. 

Alec: [00:04:09] Regardless, Bryce, whatever the source of truth is, here is the truth. Between March 2022 and March 2023, health costs have risen 5.3%. Medical and hospital services have been the biggest contributor to that rise, up 6.7%. But really, a lot of health has got more expensive. One big thing that has got cheaper, the government reduced the co-pay for medicines on the Pharmaceutical Benefits Scheme, the PBS, and that has reduced cost for some people. 

Bryce: [00:04:42] Reduced the co-pay. 

Alec: [00:04:44] Yes. Now, Bryce, with the magic of podcasting, it'll feel like no time has passed at all, but I've just done some googling. If you're on a can, if you've got a concession card, your PBS medications cost 7.30. If you do not have a concession card, they used to cost 42.50 from the 1st of January 2023. They now cost $30. Oh wow. That's a 29% reduction. So the government is just footing more of the bill for those PBS medications and that has been deflationary. It's reduced cost for people. Great, first time in 75 years, the general co-payment under the PBS has fallen. 

Bryce: [00:05:23] Was that the Labour Government decision? 

Alec: [00:05:24] We're not political on this show, that's true. But yes, it was.

Bryce: [00:05:28] All right, well, let's have a look at what's in our budgets for this category. And again, I am going to be honest, I don't have anything budgeted for health specifically outside of my health insurance premiums. Yeah, and probably I don't factor it in. But like, if I really needed big health payments, that's what the emergency fund is.

Alec: [00:05:51] Yeah, yeah, yeah. And a lot of people would consider their gym membership part of their health bucket. Yes, good point. The Australian Bureau of Statistics would consider it part of their recreation bucket. Yeah. So yeah, recreation and culture is that bucket. 

Bryce: [00:06:06] So. So that's not to say, though, that I don't go and get my teeth checked at the dentist or get my eyes checked or anything like that, and we'll get to that in a moment. But do you have anything? 

Alec: [00:06:17] I'm the same. I've got my health insurance that I cover every month, and for me that is my health spending. So, Bryce, if that's the extent of our health budgets, I guess the question becomes we had 11 categories to choose from. Why did we make this one of our five? 

Bryce: [00:06:33] Yes, well, it's because it was one of the biggest contributors to inflation. So we thought it would be remiss of us not to recognise that whilst you and I don't have it as a big line item in our budget, there's plenty of people out there that would have, you know, it's definitely worth acknowledging and there are ways that you can think about this. And for us it really does come down to maximising the fact that we're paying for health insurance. 

Alec: [00:06:58] Mhm. So we've both done some digging on our health insurance because there's a lot of little ways that you can save more. If you really do understand your health insurance policy. And I'm going to give you an example of extras that I knew about and then extras that I didn't know about. So to start with an extra that I knew about. So I'm with NIB. Not happy to take this one. Me too. Also not enough. Yeah. So I've got hospital and extras cover and my extras cover 50%. So it's like 50% money back. But I was aware that NIB have their own dental and eye care clinics or they partner with certain companies to offer those services. So generally, if we go to a dentist or an optometrist, we get 50% back. But if we go to one of the dental eyecare centres, we get 100% back. So it's free essentially. 

Bryce: [00:07:52] I think for me that's up to a limit though. Yes, for mine, like you couldn't just go in there every week and get your teeth cleaned. I think there's a 

Alec: [00:08:00] Sure, yeah, there's. 

Bryce: [00:08:01] A limit. And so for me it's I. 

Alec: [00:08:02] Actually go twice a day. I don't own a toothbrush. I just go before and after work. So we went and got our eyes checked at Bailey. Nelson had my very first eye check at 30 years old. Better late than never. And one thing they offer is a free pair of glasses every year for NIB customers. Nice. I didn't need them, but I asked if I could get them sunglasses and was in no uncertain terms, told no. But for people that do need glasses, if that is part of your extras plan, like make sure you take advantage of that. 

Bryce: [00:08:39] So yeah, I'm very similar. When I major in dentistry, I get optical and I get physiotherapy. I use the dentist twice a year. No, no charge at the NIB clinics physiotherapy, which was great. During COVID, I was celebrating at a park, busted my ankle by doing a cartwheel, and it saved me a lot of money. Over the course of 18 months getting physiotherapy, it was 60% back for each trip up to a limit. Luckily that was there because it made it less painful, both figuratively and had hit my bank account list. [00:09:11][31.6]

Alec: [00:09:11] Yeah, yeah. So I mentioned earlier that I wanted to talk about one thing I knew about, one thing I didn't know about the 100% back on certain dentists and certain optometrists was one thing I was aware of. But as we were just flicking through the NIB app and I want to stress again, not sponsored, but just that's over with, I noticed that. Does this thing support your mental health members? Get free access to Silver Cloud, a digital mental health and wellbeing platform. And then another one there's like a skin assessment. I don't actually think that's why you go to a doctor. I think it's like an online quiz that says if you have fair skin, you should go to a doctor. But still, there's a bunch of stuff that I had no idea was here. I can book GP telehealth appointments through this app. I think it's capped price, so not free. But again, I think it's just worth stressing to know what you're paying for and make sure you're taking advantage of it because the best way to reduce your health care costs is to figure out what health care you're already paying for and then not double pay for it.

Bryce: [00:10:12] Well, we're going to take a quick break. And then on the other side, we're going to talk about some of the other ways in which we can reduce costs when it comes to our health care budget. So welcome back. We're talking about health care. We've just discussed our own circumstances when it comes to our health insurance. But there are other ways that you can reduce the impact of health costs. 

EM Community: [00:10:41] Hey, equity mates, loving the series. Just wanted to give my tip for saving on health costs. I always call a doctor and just check that I can get a telehealth appointment because sometimes it turns out to be cheaper because it's a shorter appointment and I save on my transport costs and getting time off work. So not always a change to my bank balance, but certainly less of a hassle than going to the doctor. 

Bryce: [00:11:08] So one of those ways. When is telehealth now? During COVID, it really sort of took off. It's not like it wasn't around, but obviously a lot of people used it a lot more than they had. And in most instances, from my experience, telehealth was cheaper than going to a doctor. Now, of course, you can bulk bill depending on where. 

Alec: [00:11:27] You are with telehealth. You're not constrained geographically. 

Bryce: [00:11:31] This is true.

Alec: [00:11:31] Like if you found a bulk billing doctor that had availability in another state, maybe not. 

Bryce: [00:11:36] I was going to say I was just going to say, I wonder if states actually matter. You probably in terms of Medicare or 

Alec: [00:11:43] Medicare is national but like New South Wales Health, like health care is a state based, let's just say same state. But you know, like if you found someone in Newcastle that was a bulk billing telehealth appointment, there's no reason you couldn't. 

Bryce: [00:11:56] Yeah, yeah. But I thought, I think where you can take it. Not all doctors do it as frequently as they have in the past during COVID, obviously. But it is a cheaper option if you can't find someone that is taking the telehealth option. 

Alec: [00:12:09] The other thing is there's a number of start-ups that have sprung up and have really capitalised on COVID that are pure play online and over the phone healthcare operations, pilot, instant script. 

Bryce: [00:12:21] Instascript.

Alec: [00:12:22] So they're another option if you're looking for a cheaper option. I don't think that free, although there's, I think there's a lot of promote promo codes out there. I know a couple of podcasts that I listen to certainly do for pilots, for pilots. So I'm sure you could find a free first doctor's consultation. But that's another option. 

Bryce: [00:12:42] So then third is when you're getting pharmaceutical options or medications, ask for when you're talking to the pharmacist, the generic option, you can either get a branded or generic. The chemical makeup is always the same. And most times I've done this, the pharmacy has given me the option. Yeah. Do you want You sure you want that? We can just give this. Yeah. The local pharmacy option. Yeah. That's always way cheaper. Yeah. 

Alec: [00:13:06] They're not different. 

Bryce: [00:13:06] No. Then the same with Woolies and Coles. If you're buying Panadol and ibuprofen, there's always a Kozo Woollies branded one that is significantly cheaper than the branded Panadol for paracetamol. 

Alec: [00:13:19] And similarly, if you're getting prescribed medicine, you can ask your doctor, is there an equivalent that's on the PBS? So the PBS, the government subsidised, not on the PBS. You pay full freight. So it's worth asking if there is a PBS listed equivalent again, your GP is going to be all over that. 

Bryce: [00:13:39] But then it's not quite a saving. But it goes without saying that preventative measures are always the best when it comes to health and living a healthy life over the long term is probably one of the biggest cost savings that you could do. To your point, it's it's important to remember that this is probably one of those line items that is less not budgeted for, but it's not, as I guess, a conscious line item for a lot of people. You know, you don't get to choose when you have health expenses, but there are ways in which you can position yourselves, I guess, to be covered as best as you can and to reduce those costs as best you can. 

Alec: [00:14:15] Yeah, it's not a it's not a discretionary purchase. Health care. But yeah, I think there's just some simple things to do to make sure you're making the most out of what you're already paying for, especially with health insurance charges. Well, Bryce, that does bring us to the end of our five part series. We've covered a number of areas that make up the Consumer price index. Yeah, furnishings and household equipment, transport, food and non-alcoholic beverages, insurance and financial services, health. I guess my overriding takeaway is that all of the categories we've spoken about and in fact most of the categories we didn't speak about have seen cost increases over the past 12 months. So it's hard. 

Bryce: [00:15:00] It is hard. 

Alec: [00:15:01] It does mean that anything that you do is like whatever category you're focussed on. It makes a difference. 

Bryce: [00:15:07] You've just got to be actively conscious with all your spending decisions because as we've seen through this, there are opportunities to make small changes across all of it in some way, shape or form. Not for everything, not for everyone. But there are opportunities. But, you know, finding the deals, finding the vouchers, finding different insurers, finding different banks and financial service providers all takes time. And you just need to be, I guess, conscious. It obviously adds up if you combine it all together. 

Alec: [00:15:35] Yeah. And hopefully what we've sort of illustrated with these $100 challenge episodes that we're doing on Get Started Investing is making those small changes, finding those small savings and putting that money to work, even if it's a tiny little bit to begin with over time, that can make a massive difference. We looked at the last 40 years in Australia, $100 invested every month into the All Ordinaries, the US, the full Australian share market with dividends reinvested. Hundred dollars, just $100 invest every month for 40 years, worked out to be $485,000. So keep that in mind when you're thinking about this and thinking about, you know, potentially how insurmountable cost of living challenges are at the moment, that it is just those small things that you do today that will make a big difference. 

Bryce: [00:16:25] Absolutely. Well, join us in the Facebook discussion group, Equity Mates Discussion Group to continue the conversation and let us know how you're making small changes in your budgets to help with the cost of living pressures. But otherwise, we will pick it up and we'll be back next week.