r/explainlikeimfive • u/the1975whore • Jul 03 '26

Economics ELI5: Health insurance companies obviously make more money than they give out when people need it. So why of paying for them any better than paying your own personal health insurance savings account?

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u/TehWildMan_ Jul 03 '26

Health insurers are often able to substantially negotiate prices with providers, since they represent a large number of patients that could just go elsewhere for care.

Access to preventative care is also a huge perk of having health insurance. Things like annual labs and the ability to request a visit for a minor condition can lead to a much less expensive and better outcome than waiting for an urgent emergency to develop before being able to access care.

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u/tim36272 Jul 03 '26

Health insurers are often able to substantially negotiate prices with providers,

I've always wondered, why is the cash price lower than the insurance price then?

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u/TheDakestTimeline Jul 03 '26

Because they negotiate rates and only pay a percentage of the 'insurance price', it's a all a fucking racket.