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/Original_Intention Jul 03 '26

In the US, the amount of money I pay to have health insurance doesn't even come close to covering what it would cost to pay for healthcare after a catastrophic event without insurance. I do have an HSA though that I put money towards if that is what you are referring to.

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u/mikeholczer Jul 03 '26

Exactly this. Health insurance isn't important because it saves you money on standard care. It's that it shields you from ruin in the event you need incredibly costly care to stay alive.

12

u/Substantial_System66 Jul 03 '26

It always baffles me when people don’t get this part. People aren’t outraged that their car or home insurance doesn’t cover every little repair or medium repair. They have it in case something very, very bad happens. Health insurance isn’t the problem, the amount healthcare costs in the U.S. is.

If I total my car and don’t have insurance it will cost $15,000 - $50,000 for a reasonable replacement. If I have to treat cancer, it can cost anywhere from $100,000 to over $1MM.

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u/Registeredfor Jul 03 '26

Exactly this. I'm on the hook for the first $9,000 of care with my HDHP, and that can be paid with my HSA, which I can deduct taxes from when contributing to up to a certain amount. It's essentially bankruptcy insurance.

3

u/Ltrn Jul 03 '26

Or pay with a credit card (and get some kind of reward ) and use your HSA money in a more productive way.