Like all insurance it deals with the possibility of a bill so large no savings could cover it. Its like life insurance does not make sense unless you die young assuming you paid into it your whole life. The savings is better right up to the point you get some catastrophic medical issue which could happen in your twenties.

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.

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.

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.

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.

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.

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)

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.

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.

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.

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.

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