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?
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.
Insurance is a scam, pure and simple. But the system is set up to force you into it.
For profit insurance is a scam.
If someone is profiting off any insurance system, then it’s a scam.
It shouldn’t be a service, it should be a communal safety net.
Like, insuring a 2 million super car shouldn’t be on everyone, but one of the largest parts of auto insurance is people needing healthcare after. Take that out of the equation and auto insurance becomes more sensible.
For-profit insurance for most things isn’t a scam. Insuring against the destruction of a house or car, for example is a calculated tradeoff; on average, you lose money (expected value is negative), but only a little at a time. In exchange, you get a guarantee that you won’t lose an asset you can’t afford to replace.
For-profit health insurance in the USA is a special sort of scam because they negotiate prices that aren’t available to the public, often an order of magnitude lower.
Like, insuring a 2 million super car shouldn’t be on everyone, but one of the largest parts of auto insurance is people needing healthcare after. Take that out of the equation and auto insurance becomes more sensible.
Yeah, I talked about how assets are different than things we need, like health…
because they negotiate prices that aren’t available to the public, often an order of magnitude lower.
They say they’re doing that…
But it’s a scam where insurance says without insurance it would be 20k, but they got it down to 10k. They pay 5k and put you on the hook for the other 5k.
You think you just saved 15k by having insurance, but if you didn’t and got a 20k bill, they’d offer to “discount” due to no insurance and say it’s 10k.
That “discount” is the real price, the only reason anyone mentions 20k is so insurance seems effective.
If you can’t pay the 10k, it might get lowered again, but eventually they’ll sell the 10k debt to a collector for like 5k or even less, and the collector will ask for the total, but will accept anything over they paid from day 1.
It’s a scam…
You just don’t understand it, that doesn’t mean it’s not a scam, even if that explanation wasn’t enough and you still don’t understand but I give up on replying again.
Yeah, I talked about how assets are different than things we need, like health…
The original comment references luxury assets like supercars. In the USA, the average adult needs a car of some sort to function in society, and often cannot afford the unplanned purchase of a reliable used car (let’s call that $15K). Collision insurance that will cover most of the cost of a replacement car is a reasonable value for many people, and the insurance company doesn’t have any special leverage like access to massive discounts on replacement cars (they may have access to modest discounts on repair services, but nothing like what health insurance has).
You just don’t understand it
I think I made it pretty clear I understand that for-profit health insurance is a scam because providers overcharge anyone who doesn’t have it to an extreme degree. That’s not the case for pretty much anything else.
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.
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I see two things you might be missing.
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The insurance company negotiates prices for services. Without insurance, you will likely get billed more than what the insurance would pay.
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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.
I wouldn’t call savings accounts worthless. You can still get 3-4% APY on a HYSA or CD.
From what I understand, and I’ll be honest, finance is not my department, those generally don’t allow you to pull the money out whenever you need it. They would need to have access to those funds if they intend to pay their medical bills with it.
That is not the case with mine. It’s about 3.5% variable, sometimes over 4%, plain cash savings account in the US. I can transfer from savings to checking at another bank on the same day and withdraw whatever I want. As the other reply from cattywampas said, the number of withdrawals is limited but that’s no issue for me.
Unless you’ve committed to a 5 or 10 year CD, you probably can defer the payments or split them until the CD matures so you don’t forfeit the interest. Also, for proper CD planning, it’s probably best to use a ladder strategy where you have multiple CDs and staggered so one matures every year for you to decide if you need the cash or can reinvest it.
There was a federal law called Regulation D that limited withdrawals across all of your savings accounts to 6 per month. That was suspended in 2020 due to COVID and continues to be suspended until this day, but some individual banks still enforce it privately so check your T’s and C’s of your financial institution.
Although imo 6 withdrawals from savings per month should be more than enough.
Confirming that you are simply wrong. There are a ton of high yield savings accounts, by mainstream banks, local credit unions and fintech startups, pick your preference; you can deposit and withdraw any amount any time and interest is calculated daily, paid out monthly. Rates are not fix, they have been hovering 3-5% in the past 10ish years.
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they also reimbursed doctors/ therapists abysmally low sometimes. thats why you hear doctors/ therpaists/dentist drop certain insurance patients.
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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.
Out of pocket cost of treatments internationally should be available with a bit of digging. I believe that compulsory insurance also can make things cheaper, because the insurance company can negotiate with the weight of their customers.
Of course, US health care is a corrupt scam from what I hahave heard.
But for example, for a 3h joint surgery, general anaesthesia, related lab work, an MRI and CT scan plus various bullshit like normal xrays and a couple of days of stay I paid (or would have paid, if arguing insurances didn’t agree on the blame somehow) a bit less than 10k€, maybe around 7k? Western Europe, a couple of years ago. Similar figures are probably available for standard procedures, I’m just too lazy to look them up right now
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, I’m 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.
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.
You can opt out of employer insurance. Some companies charge an arm and a leg though.
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.
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.
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.
Well yes, but our system is rigged against us. HSA accounts are kind of what you’re looking for.
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
Congrats you just described high deductible plans with an HSA.
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.
There is such a thing as a tax deductible HSA (Health Savings Account)
Had to scroll way too far for this. This is exactly what op is describing, and if it works for him, and people like him, it’s a viable choice. For most people, it’s a poor choice however.
