Use access key #2 to skip to page content.

Valyooo (99.63)

quick, probably obvious insurance question

Recs

8

October 17, 2011 – Comments (9)

I have until the end of this week to enroll in my health benefits.  I never undertood insurance though.  Do insurance companies make money only on the investments, or do they also make money on the spread between what they take in and what they pay out?  Because if the insurance company makes money on the spread....why the heck would I want to buy insurance?  The insurance company wins, so I lose.  I will be paying more than my expected pay out...so how does health insurance make any sense?

 

Esp considering even the cheaper plan, which i pay like $400 a year, I still have a $2500 deductible...I never go to the doctor, seems pointless, especially while I am young.

9 Comments – Post Your Own

#1) On October 17, 2011 at 2:06 AM, HarryCarysGhost (99.76) wrote:

Hey Valyooo,

They make money on the spread. It's not a huge amount but they do make money off of you.

I don't understand healthcare either. I guess its just one of those things that "when ya need it ya need it"

Still think I'm getting ripped off.

Report this comment
#2) On October 17, 2011 at 2:36 AM, portefeuille (99.56) wrote:

http://en.wikipedia.org/wiki/Insurance

Report this comment
#3) On October 17, 2011 at 8:27 AM, jwebbzor (< 20) wrote:

Insurance companies make money on the spread because they negotiate medical and pharmaceutical bills down to the point where they take in more than they pay out.

If insurance companies were to pay full price for all of their patients’ bills, they could not possibly be profitable at current insurance prices.

Report this comment
#4) On October 17, 2011 at 8:50 AM, outoffocus (23.59) wrote:

The insurance company wins, so I lose.

That pretty much sums it up...

Report this comment
#5) On October 17, 2011 at 10:02 AM, SkepticalOx (99.45) wrote:

You forget the other part of insurance: it spreads the risk over all the insurance owners. You share the risk collectively and therefore have less financial risk if something bad happens (really bad illness or accident).

So you all pay a certain premium every year, and if you get into an accident, everyone shares the cost of it, and the insurance company gets a cut for setting it all up. 

Report this comment
#6) On October 17, 2011 at 10:35 AM, Schmacko (79.83) wrote:

It's a rip off until you need it.  Same as all types of insurance. 

Report this comment
#7) On October 17, 2011 at 12:45 PM, tekennedy (71.14) wrote:

I believe its relatively rare for an insurance company to make money before factoring in the interest and that most simply break even or suffer minimal losses.  It does however give them "float" or money they can invest which more than makes up for the losses on insurance premiums. 

You may be right thought, when you're young it may make sense to go the high deductible route.

Report this comment
#8) On October 17, 2011 at 2:19 PM, miteycasey (35.10) wrote:

It's a rip off until you need it.  Same as all types of insurance. 

Get a wife, have twins that stay in the NICU for 23 days, look at the bill, and be happy you have insurance. Well into 6 figures...my part? Less than 10k.

 

Report this comment
#9) On October 24, 2011 at 4:34 PM, JaysRage (90.49) wrote:

Insurance is there because most people can't afford to cover the cost of terminal cancer, a broken bone, a car crash or a house fire out of their pocket.   While the relative risk of these events is small, it is a major problem for an individual to cover these costs.   Insurance companies spread the risk across multiple people, take a cut off the top, and everyone is happy.   You are out the cut, and if you never have an emergency, the insurance company wins on you.   But statistically, they will lose on somebody.   Overall, they win on the cut they take, plus investments.  

Report this comment

Featured Broker Partners


Advertisement