When Is It Rational to Pay for Health Insurance?

Health insurance is a valuable tool for protecting your health, but also a considerable expense for most people who buy it. The decision of whether to pay for health insurance or go without it is complicated by a number of factors. However, you can make a rational argument to pay for health insurance under most conditions.

When You Face High Health Risks

• A decision about whether to pay for health insurance requires consideration of the cost of purchasing a policy vs. the risks of not doing so. The higher your likelihood of making a claim or needing care, the more rational it is to pay for health insurance. For example, young people with healthy lifestyles may not be able to justify the cost given their low incomes and low level of health risks. Older individuals who require periodic disease screening or treatment stand to save more money by purchasing a basic health insurance policy. The elderly and chronically ill, who are particularly likely to need expensive care, have the most rational incentive to pay for health insurance.

When Your Employer Contributes

• Employers who offer subsidized health insurance as employee benefits present an opportunity for a rational argument that eligible employees should pay for the coverage. Even if employees still pay a significant percentage of the cost of health insurance, they are able to take advantage of savings that wouldn't be available otherwise. Employers who offer health insurance may pay lower wages or provide few additional benefits, expecting the health insurance instead to attract skilled employees and compensate them for their work. This makes it irrational for an employee to forgo contributing to earn this benefit.

If You Have a Family

• Even though a rational model for decision making rejects emotional responses, family obligations make it easier to pose a rational argument for paying for health insurance. The greater the number of people in your household the greater overall risk that someone will need care. Young children also need more care in the form of vaccinations, pediatrician checkups and early disease and development screening. These risks make it rational to purchase health insurance that covers your entire family despite costs that are higher than coverage for an individual.

At All Times

• The high cost of medical care for individuals without insurance, combined with the fact that everyone is at some level of health risk due to accidents, provides a rational basis for paying for health insurance at all times. Gaps in coverage may result in higher rates in the future when paying for health insurance becomes a rational decision for other reasons. The availability of different types of insurance, including group insurance through an employer, high-deductible insurance for emergencies and individual health insurance plans for families, support the rational argument that everyone should always have health insurance.