I don’t have health insurance.
Does that mean I’m going to up and die tomorrow?
No. But it seems like a lot of people think that’s how it works.
Health insurance companies (like all other insurance companies) are in business to make money. A lot of money.
An insurance company will collect your premium, aim to minimize paying out on claims, and build out a float with your money. They’re taking on risk for you. And they’re charging you a nice chunk of change to do so.
Insurance in many cases is absolutely necessary. It’s even legally mandated in many instances.
It’s an ingenious business model.
In fact, it’s so ingenious that I’ve decided to open my own insurance company. Except that I’ll be my insurance company’s only client.
I’m going to collect my own premium, aim to minimize paying out on my own claims, and build my own float.
It’ll be one of the great experiments of my life, right up there with my journey toward financial freedom (which has thus far been more successful than planned) and moving abroad to become a dividend expat (which has also thus far exceeded my expectations).
If this turns out as I plan, it could literally result in hundreds of thousands of dollars of additional wealth – on top of the wealth I’ll otherwise build as I go about living, saving, and investing as I do. It’ll only add additional “float” to the portfolio I’ve already spent years of my life building.
That said, this isn’t totally about the money. It’s partly about principle.
I happen to think my current situation does not warrant the costs of health insurance. And so I’m principally against paying for it, because I’m principally against paying for anything that I feel is unnecessary and doesn’t add the appropriate amount of corresponding value to my life. Health insurance, for me, in my view, represents a poor value relative to the alternative.
I could have $1 billion in the bank, but that doesn’t mean I’d go outside and light $1 million on fire just for the fun of it. I don’t like feeling like I’m wasting money, regardless of how much of it I have.
I could easily afford health insurance. I just don’t want it.
There are three reasons why I don’t have (or want) health insurance.
An Advantageous Cost Structure
My personal view on insurance is that one should first aim to live a life that doesn’t require insurance.
For example, I don’t need home insurance because I never wanted to own a home.
I also don’t have car insurance, as I’ve spent many years now living without a car.
So on and so forth.
If one must live a lifestyle that takes on some risk, however, one should then aim to self-insure whenever and wherever possible.
An example of that would be buying a car in cash and then self-insuring a certain portion of the risk of driving.
However, it’s very difficult to institute this mindset in the United States.
Health insurance is currently mandated as part of the ACA. And even if one were to pay the fine and self-insure, or otherwise just go without health insurance in the United States, the cost structure is such that any kind of medical emergency could turn the numbers upside down fairly quickly.
Moving to a place with a much lower cost structure – including the healthcare system – is just one reason I think living as a dividend expat is such an appealing long-term lifestyle.
Well, I now live in Chiang Mai, Thailand.
A doctor visit runs roughly about $10 here. Medicine, hospital stays, and emergency surgeries are all significantly less expensive than in the States.
Due to this more advantageous cost structure, I feel far more comfortable running my own “insurance company”.
That’s because one incident isn’t likely to bankrupt me, which is unlike the situation that exists in the States. I have the available wealth and income to sustain a fairly significant medical emergency here without finding myself in extreme financial distress.
Moreover, living in the United States would have meant that I was guaranteed to pay a lot of money into healthcare every year.
A reader of mine who is of similar age, living in Florida, with a similar level of coverage that I had when I still living in Florida recently contacted me on social media to inform me that his premium was jumping from $295 to $540 per month. Seeing as how my 2017 pre-subsidy premium was pretty similar to his, it would make sense that my 2018 pre-subsidy premium would have also seen a similar jump.
And that’s on a plan that also had a rather large out-of-pocket max. So I was for sure going to pay in thousands of dollars every year. And that was purely for the privilege to potentially pay thousands more just in case some kind of medical emergency actually occurred.
If we assume I could instead otherwise invest that $540/month at a 7% annual rate of return, that would build me out a float worth almost $285,000 after 20 years (ignoring taxes and inflation for the sake of brevity) – which would then produce a nice flow of passive income all by itself, further increasing my ability to cover myself in case of emergencies.
Maybe the US fixes its healthcare issues. Maybe not. And maybe that $540/month turns into $700/month inside of five years. I have no idea. Nor do I need to care any longer. But you can see how the numbers add up pretty quickly.
Paying for insurance puts you in a situation where you’re compelled to continue paying for insurance. Likewise, not paying further increases my ability to not require health insurance. It’s pretty amazing how that works.
It’s just that the high cost structure that exists in the United States makes it difficult to jettison oneself from the gravitational pull of needing health insurance.
My Age, Health, Fitness, and Lifestyle
Even with the relative wealth I have – which makes me a millionaire where I’m living – I still probably wouldn’t feel comfortable taking on the risk involved with self-insuring my medical needs if I were a more average American.
It’s no secret that obesity, stress, and various poor lifestyle choices get the best of many Americans.
However, I’m not an average American, as evidenced by who I am, the choices I make, and where I’m now living.
At 35 years old, I’m fairly young. I’m also in excellent physical condition for my age, due in large part to the way I eat, the portions of food I eat, and the 5-6 days per week I find myself working out like an animal in the gym. I don’t smoke. I rarely drink. I don’t ordinarily engage in risky behavior. I have almost no stress in my life.
My health has checked out excellent every time I’ve had the opportunity to take a peek under the hood. Everything across the board is about as good as it gets.
I’m not sure where all of this would place me on an actuary table. But I feel pretty comfortable when I take a high-level look at my risk. I feel okay playing the odds.
I compare this to how a lot of other people live, especially back where I’m from. It’s like this perverse view on risk infects everyone.
It’s perceived to be risky to live without health insurance (even if you no longer live in the US). Yet it’s perceived to be not risky to engage in poor lifestyle habits routinely (lifestyle habits that will only serve to make expensive health insurance more necessary). I honestly don’t get it, but to each their own.
Incentivized To Make Good Choices
I live a holistic lifestyle that’s designed to both balance and maximize happiness, health, wellness, and purpose. Every facet of my life complements and/or somehow improves another facet.
I’ve aimed to become financially free so that I could have the time to live life on my terms. This additional time allows me to take my time with my food, avoid stress, get enough sleep (without waking up to an alarm clock), hit the gym, and otherwise make good choices. I have the time to be and act smart.
Likewise, making good choices allowed me to become financially free. It’s this self-fulfilling prophecy where good choices have led to an ability to make more good choices, which will naturally result in additional wherewithal to continue making more good choices. Success begets success. And investing isn’t the only area of life where snowballing works.
However, I’m even more motivated to make good choices when I don’t have the perceived “safety net” that health insurance provides.
The last thing I want to do over here is take up some kind of risky behavior that will only result in my “health insurance company” having to pay out on claims in the future.
Taking on my own risk means I’m aware of just how much it behooves me to act intelligently. I’m incentivized to do the right thing as often as possible. There’s external incentive to live in a way that’s conducive to longevity, health, and happiness, which is on top of the internal incentive I have (which is considerable in its own right).
I eat better. I work out harder. I avoid stress more than ever.
This is quite the opposite of how a lot of lives are lived in America.
The cost structure is high. Stressful jobs must be taken on. Expensive insurance is necessary. One must stress out on paying for said high costs and insurance, which only adds to poor health and poor choices, thus making it even more necessary to pay into health insurance. People lack the resources to make good choices. It’s the self-fulfilling prophecy I just spoke of, but it instead exists in a twilight zone where everything is the opposite.
I’m in a unique situation. I’m living a unique life. This article is not meant to serve as a recommendation for anyone else to do anything that I’m doing.
I’m rather just explaining my own situation, as this question (“What are you doing for health insurance?”) has come up multiple times since I decided to relocate overseas as a dividend expat. This article serves to answer that question with depth, thoughtfulness, and perspective.
I have the wealth, youth, lifestyle, awareness, health, cost structure, and will to live without health insurance. And I believe this decision will only improve my life in terms of finances, freedom, and happiness. If I thought I would be better off with health insurance, I’d buy it. But I don’t feel that way.
If I were still living in the States, the odds that I’d be spending thousands of dollars per year on healthcare would be practically 100%. But the odds of some kind of massive health concern befalling me that adds up to the same amount of money (or more) where I’m now living are very slim. Those are odds I like. And my odds of coming out ahead financially improve substantially over time as I collect my own premium to build my own float. That’s on top of the health benefits that come along with being incentivized to live correctly.
So we’ll see how it goes. But looking at things from a holistic point of view, I have a high degree of confidence that I’ll be far better off taking the path where I run a one-client health insurance company.
What do you think? Ever live without health insurance? Is health insurance costing you a lot of money?
Thanks for reading.
Image courtesy of: iosphere at FreeDigitalPhotos.net.
P.S. If you’re at all interested in becoming a dividend expat, or even just becoming financially independent, there are a number of resources that are invaluable toward that end. Definitely check them out!