I find MMM's posts about health care perplexing because some of his major assumptions - that all Mustachians already have a huge stache that can withstand super high deductibles on everything combined - don't apply. Not all Mustachians make six figures and save 90% of their salary with cash to burn. Not all Mustachians have had time to grow their pot, whether from age or previous debts.
What I find interesting and what many people seem to be missing in the article write-up is the total out-of-pocket costs per year under the worst case scenario between the high deductible and low deductible plans when you factor in premiums:
| Old Plan | | New Plan |
| Annual cost (including base premiums) if everything is maxed out for one individual | $18,616.72 + copays | | | $15,841.72 |
| Annual cost if everything is maxed out for family | $23,616.72 + copays | | | $31,841.72 |
I noticed that at least for the single person scenario, if the insurance truly had to be used to the point of it kicking in under either policy, the policy with the
higher deductible would actually be
$2775 cheaper that year than with the low deductible policy. Granted, the
family maxed out cost for the year is $8225 higher than the low deductible policy, but what are the odds of all three members needing so much medical care all in the span of one year that they hit that out of pocket cap unless a scenario occurred where other forms of insurance aren't already going to be involved? (natural catastrophe, car wreck, etc.)
Remember, the base cost just paying the necessary premiums without
any medical claims at all on the lower deductible policy is $14,616.72 a year. The out of pocket just on
premiums costs near as much as the worst case scenario just for
one person on their high deductible plan!
Given these numbers and the savings differential between the two policies per month is $981.25 if no medical care is used
at all, even paying upwards of $4000 out of pocket each year with the cheaper policy more than offsets the cost of that eight grand differential down the road, and is
still cheaper per year than the lower deductible policy by itself. Given the added perk of the deductible being halved after three years without claims, paying that out of pocket will actually make it even
cheaper when that catastrophic family-wide health year might come in the future than the low deductible policy costs.
If you're self insuring, FIRE or not, a lot of these numbers make sense and back up higher deductible policies as a good idea to at least run the numbers on before investing in. Something I've noticed about insurance over the years: it doesn't matter how much you're paying in per month in premiums, at the end of the year if you have to file a claim, you're nearly out of pocket the same amount when you factor all costs and this post backs that observation up. Lower deductibles at higher rates are basically there for the convenience of paying less at point of claim at the cost of spending far more per month to do so.
