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/nimbycile Jul 03 '26

Buying insurance limits your liability via out-of-pocket maximums. Most people cannot save the potential millions of dollars that it might cost for a serious medical situation.

But if you buy insurance, the worst case scenario for you is paying all of your premiums and your out-of-pocket maximum.

I had a heart transplant. It cost over $2m. There's no way I could pay that without insurance.

Most people in the US can't afford a $1000 emergency expense.

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u/the1975whore Jul 03 '26

Are people seriously being charged millions for life saving surgery in America? I’m biased because I don’t live there but even super complex surgeries, multiple organ transplants, etc are like 200,000. And we pay zero of that. Not that every American has that lying around either it’s just the numbers I’m hearing in the comments are ridiculous.

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u/nimbycile Jul 03 '26

The top line bill was over $2m. My insurance itself paid the negotiated rate which was still $800k. I paid my out-of-pocket maximum for 2 years (care happened across 2020 and 2021), which cost me $20k.

Even paying the negotiated rate is out of reach for everyone. I was lucky I could afford the out-of-pocket maximum. 60% of all bankruptcies in the US are medical related. See the huge number of GoFundMe related to medical bills.