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For the majority of Americans with no significant health problems, not smoking or drinking excessively, eating well, not obese, and not involved in really dangerous activities (e.g. reckless driving), with savings above $50K, having health insurance is a very bad choice, in terms of ROI.

This actually applies to the self-employed or employees not receiving health insurance from their employer. For these people, not having health insurance is a good decision, from a risk management point of view. Here's why:

  • Insurance companies have to pay salaries to their employees (including expensive actuaries) and have other high overhead costs such as real estate and compliance. These costs are factored in your premium.
  • Put it differently, if an insurer manages to be profitable despite all these costs, it's because they charge you indecent premiums. But it could make sense to get a policy from a company that is not profitable - their losses could be your gain.
  • Insurers do not very smartly manage your money, you can do a much better job at that if you have an analytic mind, by saving / investing money every month for your future health expenditures, rather than paying insurance premiums.
  • It can make sense to have an health insurance policy with an extremely high deductible (> $25K) if the premium is below $50/month.
  • The money you save can be used to grow your business, and gives you an advantage over competitors. This is particularly true when you launch a start-up: in my case it helped me launch my start-up without borrowing money.
  • Not having health insurance is particularly attractive if you focus on prevention rather than curing problems, go as little as possible to the doctor, and use alternate cheaper medicines (or drug purchased in India) whenever possible, and don't need coverage for pregnancy.
  • You might be able to leverage medical advice provided online, at no cost, if you can discriminate between bad and good information. This is called crowd-sourcing diagnosis and treatment.
  • There are many insurance products that are more important than health insurance for the population segment in question, but that don't exist: insurance against unemployment, bankruptcy, divorce, discrimination, lawsuits, tax audits, excessive bureaucracy, burn-out, etc.

With the new Obamacare individual mandate, how can we avoid this inneficient, ill-designed system? What about passing for a very expensive patient that will be rejected by all insurers (you claim that you smoke four packs a day, drink three bottles of brandy a day, do drugs, practice unsafe sex, and have very severe mental problems). In my case, I've joined mathematology, since you can refuse health insurance based on religion principles.

And there's some sort of mild religious belief in my decision: preference to natural solutions, antibiotic avoidance, mistrust in doctors (their incentive is to keep you sick, not to cure you), costs are three times above than what they should be (due to poor analytics and other issues), unecessary costly medical exams, refusal to do business with companies that are very poorly run, gigantic bureaucracy, and frankly even if I wanted to be insured - I don't even know how to find a good doctor or obtain a legit health insurance policy.

What about you (especially if you are self-employed, e.g. a statistical consultant)? What do you think?

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If health insurance premiums cost you $2,000/month and you only make $1,000/month, you can not be insured. If insurance is $5/month, everybody would be insured but it would not work. So where's the threshold where it makes sense to be insured? That's a very difficult question to answer, and it will be different for even 2 analytic people with exactly the same salary, age, health condition, premium, and risk level, based on the personality of these two individuals: there's a micro-economic / behavioral dimension / utility function to optimize, proper to each individual. One might decide that it is better to save for your kid's college education and forego health insurance, while another person with identical profile might decide the other way around.



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