Hacker News Reader

Comment by kccqzy | Hacker News Reader

> And I have good health insurance

I think your example illustrates how low people's expectation can be when it comes to calling health insurance "good" in the U.S.

If I were asked to pay $3400 for urgent care or $250 for an ophthalmologist I would not consider the health insurance "good" for its intended purpose of insuring against medical expenses. (It might be good for other purposes like enabling you to invest without taxes.) My health plan simply asks me to pay $35 for urgent care and $25 for a specialist like an ophthalmologist. That I consider good. Your insurance isn't.

View on HN

Yeah, I wouldn't consider any HDHP (High-Deductable Healthcare Plan) to be "good insurance".

Why not? Do you expect to not pay any part of your normal, expected annual heath care costs?

Insurance is for unexpected expenses that (a) you cannot foresee and (b) would be catastrophic to your finances. Thinks like major storm or fire damage to your house. A car accident that results in a total loss or worse, liability for someone's injuries.

Your annual physical, eye exam, and dental hygiene vists, and other routine medical expenses are as predictable as your utilites or grocery expenses. You can plan and save for those in an HSA, and your HDHP can cover anything catastrophic.

Insurance is for unexpected expenses that (a) you cannot foresee and (b) would be catastrophic to your finances

I do not agree with that view, and I'm not sure that is how it is used in the US at least. In the US, for many people, health insurance is the only realistic means to obtain any healthcare, not just catastrophic care.

I get injured at least annually due to mostly-outdoor physical activities, and have a chronic health issue or two, so the prospect of paying thousands of dollars out of pocket before my insurance even kicks in, doesn't sound great (and wasn't, when I had HDHPs for years).

I think the issue is that pretty much everything which isn't preventative care is considered "catastrophic" under this logic (because it requires paying hundreds or thousands out of pocket), even non-major issues, so "catastrophic" happens a lot.

I guess the idea is that you put a deductible amount of money into the account annually, and the tax-advantaged investment makes up for any difference between the deductible and the savings you get on premiums for having a HDHP (I.E. HDHP premiums + deductible - tax savings ≈ normal premiums + deductible).

It's an insane way to run health insurance, and it just goes to show that expected value and mathematical benefit isn't the end-all be-all, but it's supposedly mathematically coherent.

It's mathematically coherent, but it's value relies upon the assumption that we are already spending thousands out of pocket (but it's not taxed).

I prefer the option of don't spend thousands out of pocket, pay taxes on the unspent income. If I'm paying 100% of my healthcare costs, what good is the health insurance?

Here I think it boils down to whether one thinks it's okay for everybody to spend tens of thousands of dollars per year on medical care, as long as they (probably) aren't bankrupted.

If so, then they are probably more likely to view "don't bankrupt me bro" as the use case for health insurance, rather than "I need affordable medical care".

It's not that people don't expect to pay. It's that plans like HDHP do not have predictability. An average person getting an average number of injuries cannot reasonably work out how much it will cost them to treat these injuries and whether the HSA is enough. The fact that there is the distinction between in-network and out-of-network means the deductible isn't a constant.

Your idea that insurance is only for things that are catastrophic to your finances is wrong. Health insurance is mandatory for the common good, even if your net worth is in the millions. You can't forgo health insurance just because you are rich enough. There have been long debates about ACA that led to mandatory health insurance that I will not rehash. And auto insurance is another example: you are still required to buy it even if covering liability for accidents and covering the loss of your car would be completely affordable for yourself.

What we have in the US is the opposite of insurance; the insurance companies tend to pay for normal health-care and then suddenly find a reason to not pay when something catastrophic happens.

It is when you take into account the tax advantages of an HSA.

If you're like me and can shake off a few grand medical expense out of pocket, suddenly it's the best plan.

I have a HDHP and paid less than $10k all year for my family's medical expenses and we had a freaking baby lol.

Right, but it's also nuts that a lot of people are on a health insurance plan that encourages avoiding medical care because it offers tax-advantaged investing. You get how that's nuts, right?

It doesn't seem nuts to me? I have a good emergency fund and a stable job and no big debts (cuz I'm good with money generally), so I can choose to use my health insurance to make a little more money.

That's only fair given all the pre-work I did to set it up for myself.

Of course it's fair, my criticism isn't with your outcome but with designing an insurance plan to work this way.

It's weird to tie your little extra money to your health insurance plan.

That's why it's not the only option. It's a benefit not a restriction. The powers that be saw an opportunity for insurers to cover less and insurees to leverage that into a different benefit. It's all just about shifting risk around and taking a little off the top.

It's a nice incremental addition to the existing system. Way more feasible than changing the system.

But the additional benefit is a tax benefit, also known as "all the other taxpayers subsidize this behavior"

They're (slightly) subsidizing the fact that I am covering more of my medical expenses out of pocket. Remember it's only tax free if I eventually spend it on health care.

Feels like the equivalent of other things we give tax benefits for. Various things for your and your dependents' well being.

Exactly. I also think conflating health insurance and investment is a terrible idea. It should just be a simple credit system for accumulating unused deductible.

> tax advantages of an HSA

The minuscule tax advantage here is that 1. you're paying for your health care costs with pre-tax dollars, but you can generally still deduct these even without an HSA, so +0 advantage there, and 2. you are allowed to invest the savings, and gains are not taxed at the federal level (but may be taxed at the state level), so the advantage here is your savings account size x your effective tax rate. The premiums for a HDHP also tend to be slightly less than PPO or other plans.

For most of us that tax advantage is tiny. I would rather have an insurance plan that actually covered my costs minus a copay, even better one without a copay, even better Medicare For All where I don't even have to worry about an insurance company or pay insurance premiums. HDHP + HSA is pretty much the worst of the bunch.

> for most of us

yeah so for most of you, don't do it?

I like that I can stuff away $7k+ I'd be stuffing away anyways tax free. And all I have to do is keep a responsible emergency fund.

So, in other words, the typical American "Hope and pray that my health costs don't outrun my savings/investment rate" philosophy. Different strokes for different folks, hope it works out for you.

My health care costs have a pretty clear soft upper bound given how HDHPs (and most plans) are structured. Deductible and out of pocket max makes it easy to be responsible and budget into an emergency fund.

In terms of non-exceptional costs, I'd say I spend about as much on medical bills every year as I do keeping my cars in good shape. Less than my house and less than I spend on hobby stuff, my cats' vet, or jewelry haha.

It's pretty good when your employer funds a good chunk of the high-deductable.

Au contraire, that is much closer to the definition of insurance. We don't want people to get bankrupt with an unforseen medical issue like cancer. Insurance should cover that.

Routine care, including shit that's a little unlucky should be paid for out of pocket.

In the US, health care and health insurance have become synonymous such that all the good bits of insurance are out the door and all the bad ones have stayed. And polluted the true cost of getting simple, routine care.

In that vain health insurance is never insurance.

Getting a kid is not an accident for most modern people, and should never be seen as an event that could bankrupt anybody.

Hence, deferring to the definition of insurance is futile.

Then again - the US is the only country I know of that insists that health is something you insure.

You need to broaden your horizons then - look at the medical plans that are on offer in India. Or the travel medical insurance that every EU country requires you to carry. They are classic insurance.

Having a kid without complications should not cost $50K. It should be a few grand at the most. If the kid now needs NICU, then yes, that's what insurance is for.

So, I exanped my horizon Besides the states there is south Africa who treat having a kid as some catastrophic event that might bankrupt you.

In EU countries the spirit of health insurance is socializing the cost / solidarity which we explicitly do not consider in the thread - please read the parents of that was not clear.

>>- look at the medical plans that are on offer in India.

The one's that companies offer are quite good, actually.

I'd have depleted my life savings, and gone bankrupt several times around COVID years with my parents health, if I didn't have company health insurance.

Good for me, because I knew people in hospital sitting in the waiting lobby literally crying because they were done financially. Like finished for life.

Having said, this in India the market for this things is still building up, and given how big India is it will take years before it reaches the US stage of profit seeking.

3k out-of-pocket for a random mishap could easily get many people bankrupt.

I did scratch an eyeball recently. The cost turned out to be €50 for drops which ain’t covered by single-payer insurance. 3k out of pocket would be pretty bad even naming nice salary. And could cause big issues to a massive portion of people.

Reply on news.ycombinator.com