Is it Rational to Skip Health Insurance if You're Young and Healthy?

[kyphysics]

Just wondering about this (as I have a ridiculous $7,000 health insurance deductible - I basically have a non-employer catastrophic plan):

Say you are a young, healthy person, who makes $50,000/year (assume an average American city COL) and you have to buy your health insurance on your own. Assume it costs $5,500/year in premiums. You see a doctor 2-3x a year (as I do). I've had years where I never went (except dental - I could have even skipped that as well, as I'm a disciplined flosser/brusher, but do it just in case). You have no major diseases or illnesses - nothing currently and nothing chronic. The typical doctor's visit is just when you have like a weird rash or food poisoning, etc. You don't have diabetes, HIV, etc.

Given that:

a.) doctors offer uninsured discounts - sometimes 50-60% off bills
b.) you rarely ever see them
c.) hospitals also offer uninsured discounts
d.) you can always buy health insurance later if you come upon some major illness (granted, you have to wait until the next open enrollment period, but that is at worst just ONE year away)
e.) you still have to pay up to your deductible before coverage begins

Is it ever rational/reasonable for someone to just skip it and go without it? Could you see this being a reasonable financial risk and where you would likely come out ahead from saved premiums/deductible payments?

And, what's the worst that could happen. Say, you found out you got HIV the day after open enrollment ended. You now have to wait a year before you can get enrolled again. Could you just rack up a bunch of medical bills and declare bankruptcy and then enroll next year? Doctors would still have to treat you, right?

_____ETA_____: Feel free to plug in whatever number there. I was just playing around with a number that might make sense for taking a calculated risk. Looking back, maybe $40,000/year would have been a better example.

 

[Vanadium 50]

you can always buy health insurance later if you come upon some major illness

And you wonder why your insurance is so expensive and your deductibles are so high.

 

[Tom.G]

Yup, worked for me. Even with a couple long-term situations. However the meds were available as generics, and when my income was down I had a lot of paperwork to get free meds from the manufacturers.

I was lucky though, worst Emergency Room visit was a motorcycle accident with just some scraped skin and a cracked tooth.

After retirement there was four days in the hospital with an intestinal infection, but by then I was on Medicare (government medical insurance). That would have been a good size hit on the ol' bank account!

Make sure you have a good cushion of savings, interest can double a debt amazingly fast.

Another thing I do that may or may not work. On those Agreement to Pay forms that all the doctors, etc want you to sign, I add a statement "Payment shall not exceed the amount that would be received if Medicare paid." Then initial and date the statement. Fortunately the clerks never seem to look at the paperwork. Medicare gets a HUGE discount and that statement at least gives you an arguing point with a Judge or Bill Collector.

Cheers,
Tom

 

[Torbert]

It would be 'profitable' for just about everyone to skip insurance. The system is dependent on the majority of clients not using the service. The ability to pay for catastrophic medical bills is entirely funded by the premiums paid by the healthy.

I always had insurance that I have been lucky enough not to need. The one time I did have a problem the insurance covered a very small portion and I still lost everything. House, property, car, tools, pretty much an entire life's accumulation.

I could have skipped health insurance completely for the past fifty years and still be exactly where I am now, a dry rental cabin miles from town.

Most countries do not set up health care as a for profit business, sickness and calamity can strike anyone.
But that is another topic

 

[Dr Transport]

go without, get into a catastrophic situation. The medical community will come after you, take everything and bankruptcy won't get you out of it. you pay, one way or another.

 

[Dr. Courtney]

I've been uninsured a couple times when between jobs. Basically over the summer when between teaching jobs. Old insurance ends before new insurance begins. Covering the gap was just waaaay too expensive, so I skipped it. Saved a lot of money by accepting the risks. But as a long term plan, can't say I recommend it.

 

[kyphysics]

go without, get into a catastrophic situation. The medical community will come after you, take everything and bankruptcy won't get you out of it. you pay, one way or another.

Why wouldn't bankruptcy clear you?

 

[Dr Transport]

Why wouldn't bankruptcy clear you?

their lawyers will get to court to put liens on everything and garnish your wages long before you get into bankruptcy court for the final adjudication. The court decides on whether or not you don't have to pay and sets up a payment schedule. The medical industry may not get everything they are owed, but you'll have nothing but the clothes on your back and may still have to pay monthly payments based off the judges decision. Is it worth the chance?, just chalk it up to another tax you have to pay.

 

[Vanadium 50]

you can always buy health insurance later if you come upon some major illness

And from the coronavirus thread:

By the way, it's not death I'm worried about. :) It's more like hospitalization for a few weeks and massive bills.

I hope this answers your question.

 

[StatGuy2000]

[To moderators: please let me know if my post here is allowed as per PF rules]

Personally, it always amazes me how so many Americans simply accept the fact that they would have to pay such a high deductible from insurance companies to have access to health care.

In Canada (where I live), basic health care, including visits to the family physician, hospital visits and visits to walk-in clinics, are free at the point of service (of course, they are not "free" in the sense that no one pays for them -- they are paid for by taxpayer money, much like Medicare and Medicaid in the US). Private health insurance offered through employers (or paid for individually) cover supplemental health, which includes prescription drugs, dental, vision care, visits to physiotherapists, etc. For that, I pay only $65 per month, and that is not unusual among other Canadians with private health coverage.

The situation is broadly similar in European countries (UK, Germany, France, Switzerland, Norway, Sweden, Denmark, etc.), Australia, New Zealand, Japan, etc. If anything, from what I've read, health care coverage in those countries are more generous than it is in Canada (PF members in these countries, please step into offer other perspectives on this).

 

[hutchphd]

If you cannot (reasonably) cover your costs, you (and those who care about you) will be suffering long after you have recovered. That is the reason for insurance. So I do not think it a tenable option

One might be inclined to say the answer is obvious: if everyone self-insured, the money now going to insurance executives would remain with Average Jane and and on average Jane would be better off. So don't do insurance, right? Even this seemingly straightforward calculation not correct because the negotiated fee charged to the insurer is less (often far less) than the customary charge to patient. So the insurer can make a profit and the patient benefit (of course the provider loses): the MD's are complicit in this either by choice or competition for patients. Somehow the insurer always wins OF COURSE THE HEALTH CARE SYSTEM IN THE USA IS COMPLETELY INSANE. Not even worth discussing until we again have a government.

A cautionary tale: At age 64, always in seeming perfect health, I lost the ability to walk and see over a period of ~two weeks. No warning. Pretty interesting interval of time. I received extraordinary care at a local public hospital. ( Bickerstaff's Brainstem Encephalitis was the diagnosis...I am fully recovered, thanks). Thanks to Mr.Obama and the ACA my 5-day $67k hospital stay cost me about $100 out of pocket. So don't be fooled by robust good health...it is almost certainly temporary! And thank you for your efforts Barack Obama for the quality insurance coverage.