Ask Lemmy

Congrats you just described high deductible plans with an HSA.

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.

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.

Two answers.

1. 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.

2. 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.

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.

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.

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.

Everyone trying to explain to you how the concept of insurance works is giving you a needlessly complex explanation.

There are many countries that have public health care that works better and costs less, some that even have private insurance options that are no where near as insanely price gauging as the US system.

Our system is a giant, legal, fraud/scam, that intentionally makes things as expensive as they possibly can be, and delivers as little service as it possibly can, all that corporate c suite and shareholders can quite profit off of your misery.

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.

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.

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.

Because you probably won't get a multi-million-dollar cancer, but might. Or, looked at another way, someone will get cancer, and with insurance everyone is just a little less well off, instead of a few people being absolutely ruined.

I know little about American healthcare, but that's how insurance in general works. (From what I've heard, there's also a premium that just goes to anticompetitive bullshit in that specific case)

So being Canadian I have a different outlook. My province used to charge $1500 per year for health coverage so that everything was "free" at point of service. Then we changed political parties and they dropped it to $750 per year, years later to $0 per year. (The idea being if you are struggling then any monthly payment could would be a hardship).

So now we pay nothing for healthcare and my income taxes went up $270 on first 50K, but at least I'm not paying $1500 or $750.

So cheap health care and still save 5K for retirement

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.

Let try this, why don't we pool our money into a big savings account of pretax dollars for everyone in the entire country and add a supervising org that works with hospital networks to keep cost low through collective bargaining. At some point we the hospital networks become a single national network.

I have Acute Myloid Leukemia.

In the State of Oregon, to treat that with a side trip through "lets get a bone marrow transplant land" it costs $2 million dollars.

I had a doctor state that they don't know what causes Leukemia, but it's not genetic, so there is nothing I could have done to prevent it and my family didn't give it to me.

Are you going to save up $2 million dollars in case you get diagnosed with something that does not have any symptoms? Because I didn't have any. One month I was fine, and the next I couldn't get to from my car to my desk at work without stopping somewhere along the way to rest.

To a certain degree, I see your point about paying for something that you are not really using. It sucks. But if you need it, it is really nice that you already have it.

There is a reason why some people literally go bankrupt with medical bills. Even with insurance, it can still get pretty costly.

Insurance is always a technical gamble. If you need it for something moderate to big you'll easily run up a much higher bill than 5k. Could even be enough to eat the years of savings you had.

If you had paid that 5k that year, you'd still have your savings.

I don’t see this in other replies, even though it’s incredibly obvious, so: insurance for most people comes as a benefit from work or from the government. So you get something, you take it. Your question only applies to those who are not eligible for any kind of subsidized health insurance, which is rare for those who could otherwise afford one.

A single complex surgery can have billed charges approaching $1,000,000, and that's if they will even perform the surgery if you're ininsured. Your $5,000 a year won't even cover the interest charges and your only way out if the hospital won't reduce the debt is bankruptcy.

Because everything costs more than you think. Having a child without insurance is often over $100,000. Any visit to the ER for an emergency? $25,000 to get in the door and often millions of dollars if you need lots of interventions. Heck, even with insurance, chronic conditions often cost thousands of dollars per year. Even simple procedures like my daughter's tympanostomy tubes have self-pay prices in the tens of thousands of dollars.

Ask yourself what happens if you get diagnosed with cancer in that first year instead of staying healthy.

Your idea is to not have insurance. This makes sense for expenses you can cover from your own savings. It makes less sense for expenses you can't cover from savings. This is why insurance was created, it is a way to pool catastrophic risks where the majority who won't need it (as much) cover the costs of the minority that does.

For health insurance specifically, it doesn't make economic sense to not cover the entire population, which is why top economies implement such a system in various ways.

The problem is it's not 5k, it's like 500k and you won't save that in time. Some people do what you say and as long as it's checkups and colds they're fine, but if they get in an accident and need surgery, they can't pay the whole bill. Insurance doesn't pay it either, they negotiate. But the hospital won't negotiate with you like they will with them. You get full bill.

As others have said, insurance is for covering the catastrophe that you can’t, but also …..

My teen recently had a paperwork issue refilling a prescription. Originally they couldn’t find our insurance info and tried to charge $335. However they eventually did, and it was just $30 copay

My cancer surgery this year and my wife's hospitalization combined to hit $600,000.

You aren't paying that with a savings account.