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?
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.
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.
Ok so I hear you, but where do I get to deny claims and make $638,384,274,836.67 for myself while you die of a completely treatable disease? It’s not a fair system to me so I’m going to
bribelobby Congress and get my way.The fix is clearly to have a group of non-medical people in charge of that pooled pot of money who can deny payments for arbitrary reasons.
I think this is the most sane solutionMost sane seems a bit of a stretch, but I will grant you that given the current system sane-er definitely works.
Lol well we have video from last year that showed what we should do with you in that case.
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
You could have my problem where my prescription costs $190 for 3 months with insurance and $40 for 3 months without.
You have the option of not going through insurance. I do have that situation, almost …. The reason we goto the pharmacy we do is they have a list of common medicines they decided are at their cost. My insurance may decide a medicine is worthy of a $30 copay, but they say “cash price $6”
Yeah I know, but the situation is absurd.
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.
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.
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.
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.
Until we get to the total plan limits. They don’t cover costs to infinity, you know. And for something like cancer treatment, most plans don’t actually offer enough coverage to sustain it for years, so you’re still on the hook for tens or hundreds of thousands of dollars after all is said and done.
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.
Spend the savings account on a sweet funeral?
Unfortunately, $5k doesn’t buy you a sweet funeral. You’re lucky to be cremated and remains in a plain plastic coated cardboard box for $5k.
$5k might cover the costs of moving a country with proper healthcare though.
Sounds very expensive there… Pretty sure funerals relatives of mine have had were priced in 2-3 digits.
That is an extremely foreign concept to my indoctrinated american brain… My grandmother pre-paid for her entire funeral, casket and burial plot included, back in the early 1980s and didn’t pass until 2005. It cost her like $3000 in 1980s money and we were told at the time the same arrangements would have cost about $25000 in 2005. Another family member died that same year and was cremated and that cost about $4000 just for the basic plain box mentioned above. I’m sure today it is at least double that… (guessing based on how much more EVERYTHING else costs vs 20 years ago).
Jeez just haul me out to the woods and plant a tree overtop of me, I need nothing but to return my borrowed stardust back to nature
You can spend a few thousand here, but at that point you are getting a fairly large service and feeding everyone too. Burial is also another way to add a lot to the cost.
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.
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
cartelsinsurance 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.
My cancer surgery this year and my wife’s hospitalization combined to hit $600,000.
You aren’t paying that with a savings account.
I am also not paying that with insurance. My rattlesnake bite cost $43,000. Insurance covered almost $3,000.
Our out of pocket maximum for the year is $6,500. We hit that instantly.
Well yes, but our system is rigged against us. HSA accounts are kind of what you’re looking for.
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.
