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?
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.