Office Hours: Why Scott Doesn’t Have Health Insurance, How Gen Z and Millenials Can Accrue Wealth, and What Scott Does to Stay Healthy

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1:06Welcome to the PropG Pod's Office Hours. This is the part of the show where we answer questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question, please email a voice recording to officehours at propgmedia.com. Again, that's officehours at propgmedia.com. First question. Hi, Scott. I work in the product team of a major healthcare company and we're exploring a shift in how employees receive health benefits. There's a growing trend suggesting that employers might opt to provide employees with cash directly, allowing them to navigate and manage their own healthcare costs instead of traditional health benefits.

1:41This move is driven by the escalating premiums set by health insurers, prompting companies to rethink their approach. The idea is to allow employees to choose and manage their own health insurance independently. The goal of this strategy, I suspect, is to curb expenses for companies in the long run, keeping the health insurance allocation the same as premiums continue to rise. I find myself at odds with this approach. I'm skeptical about the implications and potential drawbacks of such a shift given that this approach asks those that already rely on health insurance to bear more of the burden for health costs, an already astronomical expense for many, while employers continue to reduce operating expenses.

2:21What's your take on allowing employees to navigate their own health insurance choices, and do you foresee any challenges or benefits in this strategy? Thanks, Anonymous from Undisclosed. So according to federal data, U.S. healthcare spending in 2022 was$4.5 trillion. Jesus Christ, think about that,$4.5 trillion. We spend more on our military than the next 10 nations combined, and that's at$800 billion. 4.5, these numbers are so big, they're just hard to wrap your head around. That's about 17 or 18 percent of our economy, and that's up 4 percent or 4.1 percent year on year. The increase was driven largely by spending on Medicaid and private health insurance.

3:00According to data from the U.S. Center for Medicare and Medicaid Services, the insured share of the population reached an all-time high of 92 percent in 2022. In 2022, the estimated health care spending per person stood at about$13 ,493. That same year, private businesses spent six percent more on health care, slightly less than the 7.6 percent increase in 2021. Think about that. Wow, that's crazy they're spending that much. The biggest chunk of this spending, 75 percent, went to premiums for employer-sponsored health insurance, which grew by 5.9 percent in 2022, less than the 7.2 percent growth in 2021.

3:36So, look, I want to acknowledge, first off, that this does seem like sleight of hand where companies are just trying to reduce their costs such that they can grow shareholder value. And I'm sure there's going to be a lot of instances where this isn't good for their employees. Having said that, having said that, I like this. I have some personal experience here as an entrepreneur who has grown small businesses. I just noticed that every year our health insurance provider would raise their rates three or four points greater than inflation. If you want to look at stocks that have outperformed the market, just look at anything in insurance or health care.

4:07This is the biggest fucking racket in the West. Now, granted, it's not all bad. Like everything in America, the health care system is optimized for the top 10%. If you're in the top decile of income earning Americans, you have access to the best health care in the world, full stop. If you're in the bottom 90, you don't. The insurance industrial complex has done a great job of instilling this basic notion in the zeitgeist One, you're irresponsible if you don't have health insurance. And two, a big point of differentiation for companies is how gold-plated their insurance program is. And once they have you locked in, they just raise rates consistently fast in inflation.

4:42You might think, well, that's not bad. I remember my rates were going up about 8 % a year. That means every nine years, your rates are doubling as a small business owner. So one of the problems here is we don't have a consumer mentality to health care. It should either be free, right, and you deal with the problems there, but you start 45 cents on the dollar ahead of the game because you're not going through this middleman called insurance that pays for administration and profits. You go straight to the health care provider, even if it's the government organizing it. As inefficient as the government might be, it's not that inefficient.

5:14But what I've done, and this everyone seizes up, is I don't have health insurance. What? What? You don't have health insurance? Yeah. Why? Because health insurance is yet another transfer of wealth from the poor and the middle class to the rich. And once I had enough money to absorb any health care expenditure, which I do, I decided to cancel insurance. If it were up to me, I'd have no insurance on any property I own. Why? When you look at the insurance for wind, fire, all this shit, you find out that, okay, this is a ripoff. Unless this house pulls a Wizard of Oz and flies away, we're overpaying when you look at the actual odds here.

5:52That's the business that insurance is. It's scaring the shit out of you and offering you protection from the unthinkable. I was spending$55 ,000 a year on health insurance. Over six years, I have saved$330 ,000. That is not that unusual. So over six years, a family of four can save a third of a million dollars in health care costs. Now, I can do this because if I get hit with a really unfortunate, unforeseen illness, I can absorb it. Most people can't. What do we need to do? What do we need to do? We need to consumerize it such that people become more thoughtful consumers and they start asking their doctors, how much is this going to cost?

6:33Is it worth it? And quite frankly, young people may decide to go naked because another dirty secret of the insurance industry is we over charge young people such that they can subsidize old people. It's old people that need health care. Until people have a baby up until the age of 40, quite frankly, they really don't need health care. They need to eat well. They need to exercise. If you want true health care as opposed to sick care, you would give them the money such that they weren't in food deserts, such that they weren't obese, and you got them working out. What do we need to do long-term? Medicaid, who the majority of people are satisfied with needs to be lowered a year every year.

7:11Right now, I think you have to be 65. Next year, it should be 64. Let's think long-term like the Chinese. And then what do you know? In 65 years, we have nationalized healthcare and a more efficient system. Something needs to be done. We need to start innovating. We need to start holding these companies more accountable. We need to bring more of a consumer mentality into this. We need to start thinking out of the box. And we need to kick the healthcare industry in the nuts over and over and over. Thanks for the question. Question number two. Hey, Prof G, long time listener all the way back to the L2 days, never miss an episode.

7:40In a recent episode, you had mentioned setting aside one to$2 ,000 per month to put into your retirement and savings and investments. And my jaw hit the table. I don't think I've ever heard you share that specific figure before. To give you some perspective, I'm born in 82, elder millennial. I bring home right at six figures a year. And I'm telling you, man, that is just enough. That is just enough to live, to have a mortgage and a car and a child and have a couple nice things and to travel occasionally. That's all. And I'm doing well against the landscape of my generation, especially people younger than me.

8:20I'm curious what you would say to a generation of people who would desperately love to save, but have never been given an opportunity to have two nickels to rub together. What are those people to do for a long-term strategy? And, you know, do they even have an icicle's chance in hell at accruing any wealth in their lifetime? Thank you for your insights. Very much appreciate you. Take care. Anonymous from Undisclosed, thanks for the thoughtful question and the kind words. So some thoughts and some data. A, quote-unquote, soft saving trend has emerged among young people. According to a prosperity index study by Intuit, Gen Z is spending more money on experiences than saving for the future.

9:01Two in three Gen Z members say they're not sure if they'll ever have enough money to be able to retire. 52 % of Gen Z versus 58 % of millennials think that being able to save for retirement is necessary to feel financially secure. According to a report by BlackRock, only about half, 56 % of workers, believe they are on track to retire with the lifestyle they want. According to a survey conducted by New York Life, millennials were the highest savers of any generational cohort, saving an average of$6 ,000 in 2022, which is pretty impressive. So, look, people don't feel sorry for people making a good living like yourself.

9:35But what they don't recognize is that typically to make a good living, you have to live in an urban center in a blue state where the taxes are high. If you're making$200 ,000 or$300 ,000 in San Francisco or in New York, you're probably paying somewhere between 40 % and 45%. If you're really killing it and making kind of over a million dollars, which sounds like a lot of money, and it is a lot of money, you might be paying over 50 % in taxes. And then you roll in the expenses of living in those cities, whether it's private school or maybe you have an ex-wife, whatever it might be, or the cost of real estate in those major metros.

10:11pros, a lot of these people I would deem as the poor rich, and that is they make a lot of money. They don't have a lot of money because it kind of goes in one door and out the other. Now, there is an algebra to long-term wealth creation. One, find your focus. Find something you're good at that has over 90 % employment. Don't start a club, a restaurant, a fashion brand. Be a model, be in sports. Be in something that has a 90-plus percent employment rate that you think you can be in the top 10%, ideally the top 1%. If you're in the top 10%, or even the top quartile, much less the top median of an industry that's got a 90 plus percent employment rate, you're going to make a decent living.

10:52The next thing, what we're kind of talking about here is stoicism. And this is the hard part. And that is wealth isn't about how much you make, it's about how much you save. So trying to figure out ways to save more than you spend, this requires real discipline. This is where a lot of things come into it. One, your approach to spending and saving. Two, the partner you pick. I've seen a lot of couples end up in divorce because they have a differing view on who is responsible for making the money, what their approach to spending is. I think it's important to figure that shit out early. Having a sober conversation around where you should live and cost of living.

11:27Remote work opens up a lot of opportunities as you get a little bit older and start collecting dogs and kids to move to a lower cost environment. And then three, diversification. and then four, letting time take over. But there's no doubt about it. As you are, let me see, you're 41. You need to start saving. So you need to do a few things. One, think about forced savings plans. A house can be a forced savings plan, right? Finding the money for a down and building up equity in your house. A lot of people who retire end up with the majority or a great deal of their savings built into the equity, into their house.

12:00Real estate over the long term almost always goes up. It's a form of forced savings. Any sort of tax-advantaged vehicle at your employer, max out. And some are offered even if you're self-employed. See if you can get equity. If you work for a company that has a public stock, when you're negotiating for a salary raise, instead of pushing hard for the salary, always try and get more options and more equity. Probably the best way to grow wealth is through tax-deferred appreciation in stock. What do I mean by that? Every year that you're, you're a stock. Every year you make$100 ,000, this stock, it spends off, it increases in value by$100 ,000, you the stock, right?

12:38Anonymous.inc. You get taxed 40 or 50 % on it. If you buy$100 ,000 in Apple stock and it grows and it doubles, you don't get taxed on it until you sell it. So trying to find tax-deferred vehicles and figure out a way, figure out a way, even if it's 100 bucks, 200 bucks, 300 bucks to start deploying an army of capital that works in your sleep, low-cost index funds, ETFs. Don't convince yourself, don't delude yourself that you think you can pick stocks better than anyone else. You can't. You want to find someone great at it who's really cheap. That's called an index fund or an ETF. But my brother, there is no easy solution here.

13:13It's a sober conversation with your partner about the trade-offs required to try and figure out a way to either build equity in your house, start a forced savings plan and figure out vehicles that are tax deferred such that that wealth can accrue over time. But it all comes back to the same place, my brother. It's not what you make. It's what you keep, specifically what you save. Thanks so much for the question. We have one quick break before our final question. Stay with us.

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15:33This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best I do win! On brand with Jimmy Fallon. Series premiere tonight on NBC. Welcome back. Question number three. Hi, Scott. It's Paulo talking from Brazil. I'd like to know a little bit more about your health habits like exercise and food. Could you tell us, please? Thank you very much and congrats for the great work. Paolo from Brazil. So first off, I don't know where you live in Brazil. I think Brazil is one of my favorite countries in the world. I go to Floripa every year and go surfing.

16:12I call it surfing. It's basically me with a bunch of young people holding onto a piece of fiberglass for dear life so I can say at the end of the day that I was surfing. It's more like kind of like modest drowning or incompetent drowning. I love Floripa. I absolutely love Sao Paulo. I love the new Rosewood Hotel there. I think the food's amazing. I think Rio is arguably the most beautiful city in the world with those jagged cliffs diving into the ocean and the color and the people. Jesus Christ, could the people be any hotter? Oh, my God. Anyways, love Brazil. Okay, my health habits. I am super into this and getting more into it as I get older.

16:45I see there are three legs of the stool in terms of health. The first is your sleep. The second is your nutrition. And the third is your exercise. In terms of my sleep, I'm really good. I try not to sacrifice sleep. I did it when I was younger for work. I would go on these kind of all-in trips, business trips, where I would sleep five or six hours a night and just work 18 hours and try and bang out a bunch of shit. But for the most part, once I turned, I don't know, 35 or 40, I kind of demand that I'll get at least seven or eight hours. So right now, if I'm, and this is a position of privilege, but if I can't get to sleep, I'm kind of a night person, I will cancel my 9 or 10 a.m.

17:23call the next morning so I can sleep. I have very odd sleeping hours. Right now in London, I'm going to bed somewhere between two and three, and I'm getting up to get my kid off to school at about seven. So that's, what is that, about four or five hours. And then I get him off to school around 7.45, and then I go back to sleep for about another 60 minutes. Or who am I kidding? It's probably another two hours. So I try and get at least seven hours now. So my sleep hygiene is pretty good. And I have a nice bed and nice linens and a nice environment. So I get pretty good sleep and I prioritize it.

17:53Supposedly, you have to have good sleep or nothing else matters. The second is nutrition. This is sort of where I fall down. I would put my nutrition at average. I have money so I can eat well and I buy organic stuff. I have people cooking for me that are very good cooks. I have a woman who drops off food. My partner's a fantastic cook. When I eat out, I eat at great places. The problem is with eating out, there's more butter and salt than there should be. So I call it sort of, I don't know, kind of a wash. Where my nutrition falls down, simply put, is I love alcohol. And I drink probably somewhere between six, a half a dozen, should I just say this, somewhere between half a dozen and a dozen drinks a week.

18:40And it is not an addiction for me. It is something that enhances my life. It buttresses and cements my relationships. I use it as a weapon professionally. I'm good at drinking and I'm a little bit better version of myself, a little bit fucked up. And it's kind of worth the toll it has taken on me. So I would put my nutrition as just sort of average. So sleep above average, nutrition average, where I excel and where the data supports how important it is and where you're seeing increasing bodies of evidence that is really key is exercise. I've been working out four times a week for 40 years. It's something my father got me into.

19:20My father took me into the garage and showed me this weird Royal Navy exercise handbook. And it was burpees, pull-ups, push-ups. And he and I started doing that together when I was like 11. I'm getting my 16-year-old is into it. My 16-year-old's at boarding school. Every night at 9 p.m. He calls me or he FaceTimes me and I take him through a series of gymnastic workouts using body weights. And last weekend, I had him take an eight kilogram weight with him to work. And he does just like a little 10 minute workout on FaceTime, or I do an eight or 10 minute FaceTime workout with him. And it's really nice.

19:55It reminds me of my father and I think it makes us feel closer. Anyways, exercise for me is everything. It's my antidepressant. And there's so much good information now or research showing that literally exercise kind of has your muscles secrete proteins and enzymes that attacks some of the enzymes and bad shit that happens as a result of my alcohol intake. In other words, I'm working out so I can drink, so I can indulge a little bit. It goes after, it literally sends happy signals to your brain. I feel better about myself because I look better. I feel better about walking up the stairs. I feel better about having sex with my partner.

20:30I feel better about, I don't know, looking good, feeling strong. I think every young man should be able to walk in any room and think if shit gets real, I can kill and eat everybody or outrun them. I think you're going to be kinder. You're going to be more successful. You're going to feel better about yourself, less prone to depression. So I'm sort of all in on exercise. I have a gym in my office. I pay a personal trainer. There are a ton of great apps where you can get a similar type of personal training off an app. There is nothing more important. Your key asset, your key asset is your relationships.

21:08A close second is your relationship with the only temple you're going to have. You have no choice. This is your temple. Make the best of it, your body. Thanks so much for the question. That's all for this episode. Again, if you'd like to submit a question, please email a voice recording to officehours at profgmedia.com.

21:38This episode was produced by Caroline Shagrin, Jennifer Sanchez is our associate producer, and Drew Burroughs is our technical director. Thank you for listening to the Prof G Pod from the Box Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn, and on Monday with our weekly market show.