When I turned 18 and went out into the world on my own, my dad told me, “Son, you need to get health insurance now. It will cover the cost of any catastrophic accident or illness. Get one with a $5,000 deductible. Anything else is a huge ripoff.”

So I followed his guidance. I got health insurance with a $5,000 deductible. It cost $34 per month. It was an insurance policy. Not a huge cost or a huge item of debate… but just something that would take care of things if anything freakish ever happened to me.

A year later I got a job working for a bank. After signing multiple pages of a huge employment package that I could not have possibly read, I was informed that I was now covered by their health insurance. Hallelujah!

Over the course of working there for two years, I used it once for a doctor visit when I was sick. I had to pay only $20. Awesome. At that point I was really appreciative to have such cheap health care. That is, until my head was pulled out of my rectum in the course of quitting my job.

A few weeks after I quit that job, I got an offer in the mail for a “COBRA” health insurance plan. If I signed up for it, my health insurance through my bank employment would continue covering me. All I had to do was pay the portion of the insurance premium that the bank had been paying for me previously. What a nice offer. I scanned through the letter to the bottom line: $400 per month!!!!

I know you may be asking yourself whether that fourth exclamation mark was needed. Indeed, it was. You see… I was 20 years old at that point. Had I not had low-deductible insurance during that two year period, the financial impact would have been as follows:

  • The single doctors visit would have cost about $150 out of my pocket, instead of the $20 co-pay. Total effect: -$130
  • The money the bank was paying for insurance premiums on my behalf would have instead gone to me. Total effect: +$9,600.
  • Bottom line: $9,600 – $130 = $9,470.

I lost out on getting an extra $9,470. Do you have any idea what that means to a 20-year-old? To a spendthrift 20-year-old it means a motorcycle. A very fast motorcycle. Or a boat. Or a 2nd car. To a financially-saavy 20-year-old, it means an investment that would grow to $40,644 by the time I was 45 (assuming a 6% annualized return). Or if I were to continue working a similar job without low-deductible insurance and invest the entire would-be insurance premium, it would turn out to be $319,795 by the time I hit 45. Or $1.2 million by the time I hit 65!

Not only did I realize that my dad was right—low-deductible health insurance is a ripoff—I realized that working for any company that provides low-deductible health insurance is a ripoff. At the bank, I didn’t have a choice. I couldn’t opt-out and get a $9,400 raise. Because of laws and status quo, my employment at the bank required that part of my income be taken from me and given to an insurance company… but it’s not normally seen like that because I didn’t even know it should have been part of my income until I re-examined the situation after quitting and receiving the COBRA notice.

In fact, all low-deductible insurance is always a ripoff. How can you know? Just do the math! Get a quote for a high deductible car insurance policy and one for a low-deductible policy. Take the difference in deductible and divide it by the difference in monthly premium payments. That’s how many months you have to go without a catastrophe before the high-deductible policy saves you money. Worried about having to come up with the higher deductible in the case of an accident? Take that money you are saving with a lower deductible and put it somewhere! The math and probabilities are now on your side. Unless you are psychic or planning for insurance fraud, you are better off keeping your money in your own pocket by foregoing the high premiums that come along with a low-deductible insurance policy.

Take a step back for a moment and realize that insurance companies have to collect money from premiums and then payout money for claims. And then they have to have profit leftover. For catastrophic events that don’t happen often, they can afford to pay the claims because they don’t happen often. For ordinary and expected events, you have to pay them more than they pay you back. That’s how they stay in business. You are financing your own claims, but you are paying in more than you are getting out.

Another problem with health insurance is that when a person feels as if they aren’t paying for their own health care, they tend to try to get more of it, even if or when they don’t need it. This drives up health care demand and thus health care costs and thus health insurance premiums. And now Americans are arguing with each other about how to solve the problem of health care being too expensive. Just as more debt isn’t the cure to an economic recession cause by too much debt, more health insurance coverage isn’t a cure to health care costs that are rising due largely to health insurance coverage.

The bottom line is that anyone with a calculator and some geniune curiosity can call up any type of insurance company, get some quotes, and conclude that low-deductible insurance is a scam. It just costs the consumer more money, plain and simple.

There is no shortage of calculators, but there is a severe shortage of genuine curiosity.