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PaperclipPerfector  10d ago (text post)   2004 thread views

Wellness Wednesday for February 12, 2025

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Is it worth it to buy health insurance in the USA if you make a decent middle class income and have decent savings but don't have insurance through your employer?

It's so expensive and I've seen contrarian takes to the effect that you can get a better deal on basically everything by not being insured and in the event of something truly catastrophic you're probably going to be declaring bankruptcy either way.

But that's just Internet anons so I wanna hear from some other Internet anons to get a more balanced opinion.

I've been passively thinking about this for a few years now after a conversation with my parents. They actually kept the receipts and did the math - they would've been better off paying out of pocket for the last 40 years of medical expenses than having insurance (which they did have for everyday of their working lives without exception). At ours was not a family of indestructables; a sibling had four major surgeries over about an 8 year span, and both Mom and Dad have been on a variety of not-so-cheap prescriptions for 20+ years.

Especially considering the surgeries (which had approx 10 day hospital stays after, each time), I was totally blown away that the numbers still came out against the insurance. As a side note: To note let the insurance companies weasel out of some of the major costs for the surgeries, my Mom was spending up to 20 hours a week painstakingly collecting documentation from all necessary parties.

That's some background. Here are some numbers. This is better than back of envelope, but not perfect and, as usual, normal caveats; what's your risk tolerance? What's your family medical history etc.

Liquid assets: You should have $1m in liquid assets beyond your home. Income: 250-300k for an individual, 500k+ for a family of the usual size (1-3 kids)

With some smart negotiating, you can survive even the most catastrophic events so long as they don't cluster in an insanely unlikely scenario (i.e. you get into a car wreck driving home from your chemo appointment and the ambulance taking you to the hospital T-bones your poor spouse who is speeding to meet you there).

But, take a look at those numbers again. With that kind of wealth and income, you can afford to pay for a "cadillac" insurance plan. So, why not?

And here we confront the real decision about healthcare. It isn't so much about the cost - if you're rich, you don't need it and if you're rich you can pay for it. If you're not rich, you basically throw your money away for multiple decades a little bit at a time so that in the low probability change you need it, you do have it.

The real decision is; how do you feel about subsidizing a system that works BEST for people with horrible habits and defectors in the system? We've created a situation in which doing the "right thing" with health insurance and personal health habits makes you the sucker. The game theoretic optimal path of behavior is to smoke, drink, never workout, and then walkout on all of your medical bills.

Short of the Government mandating we inject ourselves with an untested substance lest we lose our basic rights (WAIT WHAT?!), I don't see how you could make a worse healthcare scenario.

Income: 250-300k for an individual

To make sure I understand this, you're saying if you make less (say, 100k/year), in the US, you should be putting your income into health insurance?

If you're full time employed by a single employer at a company over 50 people, by law they are required to provide some level of health insurance. You might still have to pay some level of premiums out of pocket (in fact, most people do) but the cost is heavily deferred by the employer.

If you're making 100k or so per year on your own (self employed) you will have to pay out of pocket one way or another. I believe there are some small biz health insurance co-ops but it's still going to be painful.

To answer your question directly - I am not saying you should do anything. Personal choice is important! I'm say that, from a median financial expected return and risk perspective, at about 100k / year, yes, you should be buying health insurance.

Returning to the conclusion of my original post; Health Insurance in America is fucked up. Its cost only becomes reasonable once you're already a top 20% earner or if you have an generous employer who can afford to cover most of your premiums for you (and, perhaps, provides some sort of HSA for deductibles). But, by definition, this means that the big majority of Americans aren't in this position. So, the bottom 30% or so just defect. They don't buy insurance and when they need medical treatment they either skip out on the bill or (kind of) use government subsidies to get in the door...and then skip out on the bill anyway. For the middle ~30% percent, they pay crazy premiums, still get hit with deductibles that don't square with their savings capability, and receive substandard care. They lose in nearly all cases except for that rare medical emergency that happens in just the right way so that insurance does, in fact, pick it all up.

In this system, the people who "win" are those who don't need the system in the first place (the wealthy) or those who actively corrupt it (the non-insurance-having non-payers).

How's American insurance complex so fucked up. India isn't good but you can get antibiotics after paying a decent enough doctor 4 dollars for your same day consultation.

Just an aside, how can people have a million in liquid assets and an income of half a million? A 0% savings rate?

That's $300k after tax. Put 180k of that into PITI and you're on your way to not saving much.

Sorry, I realize I made a very unclear presentation there.

It's either/or. You have $1m in liquid assets at an income of any level. Well, probably not poverty wages. Let's say any income at or above median household for your local area.

-OR-

You have approx $500k in annual income for your household. And it's a reliable and consistent income - betting big on a commission only sales role, or your crypto day trading does not count.

As an aside to your aside: You'd be surprised how many people in super high COL areas (NYC, SF, LA) have > $500k annual incomes with low single digit savings. Private schools and even modest "keeping up with the joneses" are wild.

I have considered switching to Medishare and they would be much cheaper -- https://www.medishare.com The catch is you have to be part of some sort of Christian parish, you need the sign-off of your minister, and have to agree to live a Christian lifestyle (no sex out of marriage, no abusing drugs or alcohol). The second catch is there is no contractual guarantee that they will cover your bills, it's basically on their honor and reputation. The third catch is that they do not have deals with a lot of providers, so you have to self-pay as uninsured and then they will reimburse up to Medicare negotiated rates. They have higher deductible plans, and save money because they don't cover "sin" diseases (eg STD's), drunk-driving accidents, certain pre-existing conditions, etc. I have one friend who likes them, but I do not know anyone who has really tested them with some super expensive treatment.

I use a high deductible Sedera plan. They're not legally allowed to be called insurance even though they're more like the textbook definition of the word.

Basically I pay out of pocket for everything but if I have a medical "event" that costs more than $5,000 they'll cover the overage. Premiums for my family of 4 are about $4800/y instead of like $22k for normalfag insurance (which also has high deductibles).

My waifu and I are in our 40s though and don't have too many events. Might be different if we had chronic illnesses.

's so expensive and I've seen contrarian takes to the effect that you can get a better deal on basically everything by not being insured

Yes. This part has been eye opening. You can basically pay 20-40% of billed prices if you shop around.

This is awesome and cool to see in the "grey" market.

The only thing that's better is the Cigna Expat plan. The properties are as follows

  • You must be domiciled in the US
  • Your US based employer must be having you work abroad
  • The premiums are low, like $500/mo
  • You pay out of pocket
  • You submit expenses and they reimburse you 100%

Turns out if you're high value and healthy enough to send abroad, insuring you is really cheap

There's probably also

  • There's a decent chance that any medical event they would be on the hook for happens at a foreign hospital, which, on average, is going to be a whole lot cheaper than a US hospital.

For reference, $500/mo for health insurance is very expensive even in HCOL and high-GDP-p.c. countries like Switzerland, Liechtenstein or Norway.

Yeah I dunno man. After UK NHS told my (then) wife it would be a year wait to see a psychiatrist (to continue her mood meds she was on in the US), we found some Covent Garden psychiatrist that charged £300 for her once monthly sessions and it was all no problem and reimbursed at 100%

I don't think it's normal for a health insurance plan to let you just see any specialist with zero triaging and cover 100%

I really have no idea what their limits were. I went to a private GP to get a health certificate to run the Paris marathon, and it cost £100, and that was reimbursed. A years worth of sports physical therapy was also reimbursed 100%

I could only conclude the cohort was so healthy that even our splurging didn't matter.

I don't know how the US market is, but is there some sort of catastrophic product (High deductible and specific coverage) you can purchase?

Unfortunately this is how insurance used to work. Now for a plan to be legal and widely available, it has to cover a huge swath of services, including preventative and elective stuff.

Some things I know:

  • You can find a GP and dentist who will let you pay a flat rate per visit or year to cover preventative healthcare.
  • You can use sites like mdsave.com to get massive discounts on things like MRIs etc. - basically by paying upfront you can get an MRI for $600 that would be a $2,500 walk-in.
  • Catastrophic health plans are only available if you're under 30 or poor. Even then they're required to cover preventative junk.

My opinion is that you're better off being uncovered and negotiating that ER visit if you get in a car wreck, but if the hospital comes after ya and you have a fat savings account maybe they're going to take it all anyway.

Very frustrating that a DIY approach is so barely viable.

I don't think that they can go after your savings account. Medical debt doesn't even affect your credit score.

If the hospital plays hardball you can wait until it goes to collections and then settle for pennies on the dollar.

Disclaimer: I've never tried this but report back if you do.

They can go after your savings account and put liens on your property. Depending on the state, they may be able to garnish wages.

Yeah this is the sort of stuff the anons were talking about but I was trying to verify

Note that I can't see why you'd need to enter bankruptcy to deal with medical debt. I don't think bankruptcy even discharges medical debt.

Bankruptcy discharges medical debt. When I was doing bankruptcies it was a pretty common reason for filing.

You're right, I misremembered.

You can still get a lower premium with a high deductible, right?

Yes, and an HSA. If you get lucky it's fine I guess, though premiums are outrageous. If you get unlucky you get super-fucked. Almost all of your money gets vaporized through premiums and creative deductible accounting to make you hit OOP maxes, even if you make 6-figures.

Yes, but the minimum premium is very high and doesn't cover much.

Premiums for a family on a Bronze Plan might be $15,000/year for example. Then your deductible might be like $8,000 per person, or $16,000 per family.

Then of course you have co-pays even once you meet your deductible. And, depending on the service rendered, the co-pay might be higher than simply paying out of pocket.

So, yeah, unless you are getting subsidies or are in terrible health, insurance sucks. Obamacare actually made insurance illegal, and all you get is this ridiculous other thing. My family is going to drop it next year most likely. I'm sick of paying for other people's bad habits.

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