Hear me out on this, please.
Let’s say that I spend $5k on health insurance in a year, but don’t go to the doctor or have any medical issues in that year. Where does my money go? It disappears. I basically just gave away my money, and received nothing in return. However, if I took that $5k and simply put it into a personal savings account instead of giving it away to a health insurance provider - that money stays right there if and whenever I decide to use it. It even collects interest.
I realize that with a health insurance provider, you’re (supposedly) getting discounted rates on medical services - but if your money is just disappearing into thin air if you don’t happen to need those medical services in a given year, are you really saving money? It just seems like a really big scam to me - what am I missing?
In the past 3 years my father has been billed millions of dollars in healthcare. If he had a health savings instead of insurance, he would simply be dead now. The better option is public single payer healthcare. Insurance sucks, but health savings is simply worse. Pooled risk spreads out costs. If the government pools the risk then they eliminate the needs for constant financial profit growth at the expense of the insured.
Yep! Having medical costs be a “fend for yourself” system is super ableist. I had a double lung transplant in 2014 thanks to the affordable healthcare act, thanks Obama, and if my “personal savings” had been the only thing I had to pay for it I’d be dead. Lots of people, like myself, are born disabled, we deserve to exist, having a system where I still get healthcare even if it costs a couple million to put me in ICU for six months and do 12 hours of surgery is the only humane option. Some bills just can be covered by the very vast majority of us, and like you said single payer healthcare is the obvious answer, insurance sucks but it still covers a very important gap
One, as many point out, insurance is about covering the extremes. Most people won’t use as much money as the premium, but others…
For example, a relative of mine got a rare cancer, that is pretty treatable, but the medicine alone would have cost 10k a month, ignoring the frequent oncologist appointments. No amount of savings would have covered that. Even a single visit to an ER could more than wipe out a couple of years of premiums.
The other thing is the discounts are no joke. Now if you are truly uninsured, many of the providers will upon negotiation give you some severe “break”, but you have to fight every time and your results are unpredictable. The insurance companies have lots of leverage, and the providers jack up prices to make the negotiated rates look good compared to their alleged list prices.
Most people lose money to insurance. It’s a method of mitigating risk. You’re accepting a modest regular payment in exchange for not needing to build up a big reserve (or go into debt) in case something really expensive comes down the line.
Life insurance is kind of similar. If people saved the money they pay for it until they do die, on average that saved amount would be more. But having life insurance while healthy and working means that in the unlikely event of your death, your beneficiaries will be compensated for the loss of the income you provide when otherwise they would be SOL.
Congrats you just described high deductible plans with an HSA.
Two answers.
- The theory behind why insurance is supposed to exist in the first place.
I put 5k in a health insurance account every year. Most years I don’t spend it all and it slowly builds. Let’s say I have like 30k after a few years with some interest. But then I get cancer and it costs $50,000 plus $10,000 per year after that. I now am short $20,000 and I need to double my annual spending on health insurance and am no longer saving, leaving me and my family in financial trouble.
Now consider I pay 5k every year in health insurance, and most years the insurance company takes that as profit, but if I get cancer, they will cover all the expenses for just my continuing $5k/yr instead of the actual, much higher cost. The insurance company can do this and still make a profit because the vast majority of people who pay $5k/yr don’t need $5k of treatment, so it amounts to more than enough to cover the couple people who need more.
- The toxic system in the US
A lot of medical costs in the US are massively inflated because the hospital says “this is worth $10,000” and the insurance company says “well only pay you $5,000 for that” and then they tell you “we saved 50% on your bill! Aren’t we great!” But the real value of the thing is like $1000 and both the hospital and the insurance company and other parties like whoever is making “the thing” are in on the whole nonsense pricing thing.
This ultimately makes it even harder to get reasonable medical treatment without insurance in the US.
Like all insurance it deals with the possibility of a bill so large no savings could cover it. Its like life insurance does not make sense unless you die young assuming you paid into it your whole life. The savings is better right up to the point you get some catastrophic medical issue which could happen in your twenties.
So I’m not sure what is happening in this post. The premise is ludacris and the top responses are nonsense.
A five mile ambulance ride to the hospital for non emergency services is like 5k alone.
A simple conversation and basic exam by a doctor is 300 bucks on the low side. That’s just the doctor with a stethoscope checking your heart and lungs.
If you have to go to the emergency room you’re done.
That’s why we have health insurance here. It’s basically a racket.
how much is in your savings account? Colleague just got an upper endoscopy, in a hospital for some reason: $58,000.
Insurance helps if you see doctors regularly, and can hopefully keep you from, like, losing your house if you get some catastrophic illness or injury.
With OPs figure of 5k/year that would be around 8 years of saving in an ETF portfolio. How often do you need an endoscopy? Not sure if 5k is a realistic number though.
-shrug- Neighbor had a multi generational history of digestive tract cancers. She got upper endoscopies and colonoscopies every other year. (Of course, she had them done at free standing surgical centers, so the price was considerably lower than in the hospital.) Don’t know how much she had to pay to have two feet of cancerous intestine removed in the hospital, though.
You’re not missing anything, it is a giant scam.
Your money is going to the profits if the shareholders of your health insurance company.
The only part of the US economy that is actually growing substantially in terms of workforce… is the healthcare sector.
And that’s not mostly doctors and nurses.
It’s mostly paper pushers.
There are so many healthcare paper pushers now, that if you actually waved a magic wand and implemented a single payer system with much more sane pricing for everyone and a less bloated set of paper pushers… something like a million or two million peoole would lose their jobs.
This country is fucked.
You don’t want a personal savings, you want a health savings account (HSA). this is a pre-tax account that you own and can use to pay medical bills. This is usually in addition to regular insurance though.
It’s usually used to pay out of pocket medical bills. For instance, you have a surgery and need to pay 5K out of pocket and insurance pays the rest. You can use the HSA to pay your portion so nothing needs to come from your personal savings.
If you are rich, you can self insure for everything. Home insurance costs us 4k a year on average, for 25 years now. They insure up to about 300k. No claims. Do that math. If I had a half million to escrow, no way would I be paying that. I would just hold onto enough to rebuild and let it make money.
Health insurance like I carry should also cost a lot less than it does, but I guess it’s the same kind I would have if rich, high deductible but insured against very high cost events.
When I was poor, though, no health insurance and overall we paid less every year, than I pay for insurance now. Yes even the years I gave birth and even the years there was an emergency room visit, not carrying insurance was cheaper than having and using it. But the problem with that here is that unlike home insurance, the possible cost of care is essentially unlimited without any insurance. You could get some disease and end up with tens of millions of dollars of bills. It ought not be like that but it is.
US health insurance is basically a scam. Saving the money makes way more sense statistically. But A) insurance is there to minimize risk (of going bankrupt by being sick) and B) people (especially US Americans) tend to spend all the money they have, and money you already spent on health insurance is money you cant spend elsewhere.
The problem is that insurance companies negotiate lower rates than what you would get if you pay out of pocket; this coupled with the tact that jobs that provide healthcare don’t offer it as a choice, means that for the vast majority of people its a black box that is difficult to escape from, and if you do then you get screwed on price.
Insurance companies negotiate lower rates
I feel like what they actually do is negotiate higher rates for the uninsured
jobs that provide healthcare don’t offer it as a choice,
You most certainly can opt out of an employer’s healthcare plan. I don’t know how common it is, but a plausible scenario would be if someone has a spouse with a better plan.
its a risky gamble, if you suddenly get injured, or have a severe infection you will be paying OUT OF THE POCKET from a general hospital, and its many times more than paying multiple months of insurance. same goes for dental care, if you have sudden tooth pain, if you are lucky to find emergency dentists, they can charge several hundred for a limited exam w/o insurance. you can try free clinics, or universities for "healthcare’, but often time they are booked weeks to months in advanced and they take a long time to register you as a new patient, due to them being students which have priority over providing dental care.
let only prescriptions are very expensive wholesale/retail cost, even if you use a coupon for it somehow. my parents opted of not paying dental care 1-2years and they had worsening teeth issues, and they ended delaying care and it costed alot more now since it precipitated into root canals, and implants.
and yes general healthcare insurance is quite scammy. UHC being one the worst offenders out there. its also political asf since health insurance has a vested interest in discouraging any laws for universal or regulated heatlhcare cost.
the scammy part is most insurance have DEDUCTIBLE you might reach before covering some of your cost, and OOP, out of pocket maximum where you pay a certain amount each year max, then they will 100% cover all your medical costs. most people dont reach these maximums, so they pay partially or full price for certain things.
this all depends on your INSURANCE you got. dental insurance is not bundled with healthcare insurance, must be bought seperate, and they have thier whole own can of worms to deal with.
Because hospitals charge a thousands dollars for an aspirin.
Insurance only has to pay like a dollar. But YOU would be lucky to haggle it down to $40.
IOW: a racket
So pretty much: the RAM crysis situation but it can literally kill you
