In the US, why doesn't a personal savings account make more sense than health insurance?

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.

Private health insurance doesn't get involved with doctors or hospital treatments at all where I live. It's more for various outpatient goods, and dentists/eye doctors if you're too rich to qualify for the federal program.

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.

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.

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.

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.

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.

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.

So pretty much: the RAM crysis situation but it can literally kill you

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.

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.

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.