Ask Lemmy

Well yes, but our system is rigged against us. HSA accounts are kind of what you're looking for.

I see two things you might be missing.

1. The insurance company negotiates prices for services. Without insurance, you will likely get billed more than what the insurance would pay.

2. Liquid savings accounts are worthless anymore. Unless you're investing that money, you won't see any significant interest on it. Maybe a few pennies a year.

This is what I do. It's far cheaper then any level of insurance i can purchase, especially since no matter what i can't cover my significant other.

In broad terms, you don't buy insurance because it has a positive expected return.

You buy it to hedge against risk, to spread risk out.

Let's say

completely pulling numbers out of the air

that there are 10,000 houses in a town. On average, one of them burns down each year.

What the insurer does is take money from all of those people, pool it, and pay out to the one person who gets impacted.

You buy insurance and pay maybe, I don't know, 1/5000th the price of the house per year. In the long run, you'd expect to come out behind on that, since that's more than 1/10,000th the price of the house.

But...people don't necessarily value things linearly.

In the absence of insurance, the person whose house burns down is out a house, which he may consider to be really bad. He may not consider 1/10,000th the price of a house a year or 1 in 10,000 possibility of losing his housing entirely to be equivalent.

If you'd rather have a predictable expense that you can plan around, that's what insurance provides for.

There can be some other benefits

like, an insurer has time to evaluate relevant factors, like to determine things that might reduce fire risk and to say that you have lower rates if you do X, Y, and Z. An individual probably doesn't have the data or time to do that. But it's really the risk mitigation that's the driving force behind insurance.

In general, you want to take the highest deductible you can afford to take on insurance. If you can afford to cover a $5k unexpected expense, then you want a $5k deductible, so that in the event of an incident where insurance pays out, you pay the first $5k. That way, you're not paying for risk mitigation that you don't care about, on that first $5k. Your rates will be lower.

If you can afford to cover an unexpected expense at any level, then you may well not want insurance at all, since you don't need risk mitigation.

There is such a thing as a tax deductible HSA (Health Savings Account)

Insurance is (partly) in case you have a huge expense, exceeding the amount you could save. Like getting hit by a bus could mean millions in expenses. Insurance spreads that risk around. Unfortunately it's dysfunctional in many ways, but that's separate.

Here's an honest answer from someone with a chronic illness. In the US, we don't have real health insurance, so it's more like you're paying into a racket for some discounts and peace of mind in case you have a sudden acute condition. If you're lucky enough to be able to work, you will (hopefully) have an option between the ~~cartels~~ insurance providers. If you're a betting man, you should pick the lowest premium plan with an HSA, which is essentially what you're describing, plus you don't get taxed on the money.

But people will say, what if you get cancer the first year? You're screwed anyway, because it's not like the insurance just goes "oh I'm so sorry you got cancer, don't you worry, we'll cover all the costs." No, of course not. They'll fight you every step of the way, so at that point you are just better off going to another country and paying for treatment out of pocket.

But wait, other countries don't have the same new or experimental treatment options as we do. Well, insurance often doesn't cover those anyway, so if you are pretty desperate and you truly need those, you either fight for coverage, and I hope you haven't lost too much of your support system from the isolation of poor health because the stress of doing it alone may kill you regardless, or you pay out of pocket until you go broke.

There is also sometimes the option of medicaid or going on disability. You may go on medicaid anyway because good luck keeping a job and managing doctors appointments (oh my specialist can't see me for another 6 months? Yeah put me on the wait list for cancellations), medications, and fighting the aforementioned insurance denials. Medicaid at least is actual state sponsored insurance, but remember Cs get degrees and As get high pay. As don't typically accept medicaid pay rates unless you live near a big research hospital and can get their attention. Regarding disability, you shouldn't really consider it unless you're hitting rock bottom because it takes years to get on it only to have your savings capped to an insulting level that keeps you perpetually impoverished.

So you're not really missing anything because it is one big racket.

That money went into the care of others who got sick, administrative costs, and because everything is for profit, you helped pay for someone's vacation home. Eventually, if you get sick, the premiums of other people pay are used for your care. Insurance operates because not everyone needs to use it at the same time. If everyone needed to use the insurance at the same time, the insurance company would not be able to pay for care and would go bankrupt.

The same thing happened during the sub-prime mortgage crisis of 2008. Banks lent people money with variable interest rates to purchase homes. (These were predatory loans, and they were being given to people with questionable credit who otherwise would not be able to get a home loan.) The banks then turned all of those variable rate home loans into housing related securities, which let investors in those programs earn interest on buying a tiny slice of the mortgages. When banks raised the interest rates on the people with those home loans, suddenly people couldn't afford their mortgage payments and defaulted. Many of those variable rate loans were required to get mortgage insurance to protect the lender against the loan takers defaulting on the loan. Those mortgage insurance companies were flooded with claims. AIG, one such company, faced billions in losses from credit default swaps and its securities lending program, pushing the firm to the brink of bankruptcy.

Back to health insurance talk. As a consumer, the nice thing about medical insurance is it caps your costs due to a catastrophic event via something called a maximum out-of-pocket, (Max OOP.) Assuming you have a deductible, the money you spend to meet the deductible, and copays you pay after that count towards the Max OOP. When you hit the max OOP, you're covered in full, for the rest of the calendar year. I don't have a deductible; my max OOP is $6,350. If I spend $6,350 on co-payments, my co-payments stop until December 31, and it resets when it rolls over to the next calendar year. Without insurance, a catastrophic health event would cost hundreds of thousands of dollars and would absolutely bankrupt me. $6,350 would also put me under financial strain, but it's something I could recover from financially, and probably wouldn't have to file bankruptcy over.

Insurance is a scam, pure and simple. But the system is set up to force you into it.

It all comes down to the dreaded ER visit that could be deep into 6 figures+. That's honestly the only reason I have insurance. I actually needed it a couple weeks ago too.

Your money goes to all people that got sick and needed that money for treatment that year. And when you get sick their money goes to cover your expenses. If you never need it, congratulations, you're a very lucky and/or healthy person and you can feel good about the fact that you helped a lot of people get treated. If you do need it, there's money to cover your expenses, even if the cost is more than what you ever paid in total.

From what I understand, aside from what everyone is saying, the insurance companies end up not lowering prices but raising them. The hospital essentially makes up inflated pricing (the $600 aspirin joke) and then the insurance company fights for a discount of that price. It's scumbags ripping off scumbags at that point, but I'd almost be convinced that prices would be lower if there was no fat cow insurance company to scam out of as much money as possible.

Health insurance is a scam, yes, it's part of the bigger scam called capitalism, which is the privatization of profits and socialization of losses. A private "savings account" is not escaping the scam, it is at best side-stepping it, into a different method, even less efficient, where everyone in society just does (and pays for) every little thing on their own. Why don't we all just pay individually for each unit of oxygen we breathe?

Something better would be simply that we find a way to efficiently pay for everyone, as much as possible, to have healthcare (among a number of other things). Until something better can exist, this is "public insurance."

You can do that, and if you're young and healthy it works great if you're disciplined enough not to touch the savings account.

Guess how many people are all three of healthy, young, and disciplined.

Insurance is a scam. But to be fair you can actually have both, with a high deductible HSA compatible insurance plan you get to pay for both insurance you never use as well as put other money aside into an HSA account that earns interest and gains for you. It's a good idea to have an HSA and max it out if possible.

But beyond that I don't disagree with most of your points. It's insane having a system where you're paying thousands of dollars, and worse if you actually do need health care you get the privilege of paying even more thousands of dollars extra until you meet your so called "out-of-pocket' expenses before the insurance provider starts covering things on their own.

With my own health insurance I would actually need to pay out about $12000 (premiums + out-of-pocket) in a given year before the so-called health insurance actually starts covering expenses themselves... and this is assuming they don't decide to deny any treatment and refuse payment. Like sure I guess that's better than paying for a one-off surgery or major health emergency directly.. But I doubt I could afford that every year if I was actually needing regular treatment for an ongoing health issue.