Who could afford a higher annual deductible who couldn't afford a higher monthly payment?
Your title question, Who could afford a higher premium who couldn't afford a higher monthly payment?, contrasts premium with monthly payment, but those are the same thing.  In the body of your question, you list monthly payment and deductible, which is entirely different. The deductible is paid only if you need that much medical care in any one year.  Most years a person in good health pays little because of the deductible.  Thus, the higher deductible options offer catastrophic health insurance without giving much in the way of reimbursement for regular medical expenses. Note - the original question has been edited since. It's simple. Most people don't spend $6000 a year in medical care. As for myself, there's probably only $400 or less, mostly in annual checkups and the like.  If you are the type to require more medical care, then you will pay more per month. I know a person with asthma, kidney stones, and inflammatory issues. This person spends probably $1000 in co-pays per year, with considerable more if you were to include the hospital visits in the likes. But if you don't think you are one of these people, then don't get the higher cost plan. I edited in the total annual out of pocket for each level to help illustrate what's going on. Your question makes sense, of course, but it's less a matter of afford vs an attempt to save. The way these plans work is to allow some choice based on your past experience. I can afford any option, but knowing the number of visits we have had in the past, the lowest cost option has the highest premium. A young couple who hardly sees a doctor may choose the highest deductible, risking the potential $3434 extra they may pay in a bad year for the savings of $1016.  Personally, I'd not be able to guess accurately enough to benefit from the middle choices, and can see the two extremes being picked most often.
Higher life insurance.  Mortgage insurance is a very expensive decreasing term life insurance policy, that pays the Lender. You can likely increase your limits for less cost, AND, the payout doesn't depreciate every month, AND, your beneficiary can use the money any way they want - to buy food, or pay property taxes, or whatever. Part of the costs to the insurance company is dealing with all those different billing parties. Reduce those costs and then more ideally goes to care.  That is the goal/promise.  That is the simplest way to see a cost savings.  There are details that most people won't ever understand. Without it, the costs will just stay high to support the extra expenses. "Hi I'm the writer thanks for the read and the comment. With the statement you quoted, I'm trying to dispute the claim that ""people these days can't afford a house because they would have to pay their entire salary just to afford the mortgage,"" which I think is quite common in some circles. The data makes no statement as to whether home ownership is more affordable or not, but simply shows that those buying property are using around the same percentage of their income to pay for it, which the data clearly shows to be true.   https://fred.stlouisfed.org/series/RHORUSQ156N  As it turns out, home ownership levels have remained within ~5% of their 1980 levels based on percentage of the total population. I think there is an major classification flaw when comparing only sales because a great deal of people inherit property with no sale ever being made." I don't have preexisting conditions. I am only speaking of how *my own personal* healthcare situation got worse because of the ACA.   I did used to use the dental and vision portions of my company-provided insurance regularly but I don't have that as part of my ACA insurance because again, it is unaffordable. There are a lot of forces at play here, one of which is addressed in your second bullet point. Housing, transportation, food, and healthcare are pretty much the staple expenses of a modern day human.  While these expenses all have a range from minimum required to function and luxurious all humans incur these costs.  The lower rung wage earners earn an amount closer to their actual costs than higher earners.  As income scales up these expenses typically also scale up with different lifestyle choices.   There reaches a breaking point though where is so much excess to your income that you begin meaningfully spending on investments; you may also begin to take a meaningful portion of your compensation in securities rather than currency.  In times where the economy is booming, folks who hold assets in securities rather than currency really win.  In 2008 people in that highest rung really took a wealth hit (and probably an income hit). "I don't know of a situation where rejecting a raise would make sense. Often, one can be in a phaseout of some benefit, so that even though you're in a certain tax bracket, the impact of the next $100 is greater than the bracket rate alone. Taxation of social security benefits is one such anomaly. It can be high, but never over 100%. Update - The Affordable Care Act contains such an anomaly - go to the Kaiser Foundation site, and see the benefit a family of three might receive. A credit for up to $4631 toward their health care insurance cost. But, increase the income to above $78120 Modified Adjusted Gross Income (MAGI) and the benefit drops to zero. The fact that the next dollar of income will cost you $4631 in the lost credit is an example of a step-function in the tax code. I'd still not turn down the raise, but I'd ask that it be deposited to my 401(k). And when reconciling my taxes each April, I'd use an IRA in case I still went over a bit. Consider, it's April, and your MAGI is $80,120. Even if you don't have to cash to deposit to the IRA, you borrow it, from a 24% credit card if need be. Because the $2000 IRA will trigger not just $300 less Federal tax, but a $4631 health care credit.  Note - the above example will apply to a limited, specific group who are funding their own health care expense and paying above a certain percent of income. It's not a criticism of ACA, just a mathematical observation appropriate to this question. For those in this situation, a close look at their projected MAGI is in order.  Another example - the deduction for college tuition and fees.  This is another ""step function."" Go a dollar over the threshold, $130K joint, and the deduction drops from $4000 to $2000. You can claim that a $2000 deduction is a difference of 'only' $500 in tax due, but the result is a quick spike in the marginal rate. For those right at this number, it would be worth it to increase their 401(k) deduction to get back under this limit." "There is an economic, a social and a psychological side to the decision whether to buy insurance or not, and if yes, which one. Economically, as you say already in your question, an insurance is on average  a net loss for the insured.  The key word here is ""average"". If you know that there are many cancer cases in your family buy health insurance by all means; it's a sound investment. If you are a reckless driver make sure you have extensive coverage on your liability insurance. But absent such extra risks: Independently of somebody's wealth insurance should be limited to covering catastrophic events.  What is often overlooked is that the insurance by all means should really cover those catastrophic events. For example the car liability minimums in many states are not sufficient. The typical upper middle class person could probably pay the 15k/30k/10k required in Arizona with a loan on their house; but a really catastrophic accident is simply not covered and would totally ruin that person and their family.  Insuring petty damage is a common mistake: economically speaking, all insurances should have deductibles which are as high as one could afford to pay without feeling too much pain.  That ""pain"" qualification has an economical and a social aspect. Of course any risk which materialized is an economical damage of some kind; perhaps now I can't buy the PS4, or the diamond ring, or the car, or the house, or the island which had caught my eye. I could probably do all these things, just perhaps without some extras, even if I had paid for insurance; so if I don't want to live with the risk to lose that possibility I better buy insurance. Another economical aspect is that the money may not be available without selling assets, possibly on short notice and hence not for the best price. Then an insurance fee takes the role of paying for a permanent  backup credit line (and should not be more expensive than that).  The social aspect is that even events which wouldn't strictly ruin a person might still force them to, say, sell their Manhattan penthouse (no more parties!) or cancel their country club membership. That is a social pain which is probably to be avoided. Another socioeconomic aspect is that you may have a relationship to the person selling you the insurance. Perhaps he buys his car at your dealership? Perhaps he is your golf buddy? Then the insurance may be a good investment. It is only borderline bad to begin with; any benefits move the line into the profit zone. The psychological aspect is that an insurance buys peace of mind, and that often seems to be the most important benefit. A dart hits the flat screen? Hey, it was insured.  Junior totals the Ferrari? Hey, it was insured. Even if the house burns down having fire insurance will be a consolation." A $250K earner might have $4M in retirement savings and $500K in available funds, but doesn't wish to spend all his liquidity on the house. In general, a house might cost 2-3 times one's annual income. It would take many years to get that saved up. They might want to have the house sooner.  It all goes back to choice, priorities, personal preference. "People's value of money is not always linear.  Consider an individual with $1000 in the bank.  I'm going to look at amounts of debt by orders of magnitude: Now its pretty easy to see a order of magnitude increase in impact from $100 to $1000, and it becomes slightly worse for the $10,000 case due to debt.  However, one more order of magnitude, going to $100,000, and suddenly it becomes hard to argue that there's a mere ""order of magnitude more hurt"" than the $10,000 case.  From the cases I've read, those sorts of situations can be far far worse than the monetary cost could convey. Insurance companies are in a good position to absorb $100,000 of debt if something happens, far better position than the individual.  They rely on the central limit theorem: in general, they don't have to pay out all at once. The insurance companies have their limits too.  When hurricane Katrina came through, the insurance companies had a tremendously difficult time dealing with so many claims all at once.  Just like the individuals, they found a sudden change in how much value they had to put on their monetary debts!" Oh it slowed the increase?  Do you mean since it was enacted compared to previous years, or since it was enacted compared to a crystal ball of what would have happened if it wasn't?  I can only assume you mean crystal ball, because the graph in this article makes it look like it was leveling off until ACA was passed.  https://www.forbes.com/sites/theapothecary/2016/09/27/health-insurance-premiums-have-continued-to-rise-faster-than-worker-wages-under-obamacare/#4bea42b6afe7 Because collective bargaining by the gov't and your employer is the only way that we've been able to combat some of the increases. An uninsured individual will be billed 4-10x what your insurance company would pay due to collective bargaining.  The largest employers (Cisco, EMC, and others) are self-insured and pay health care providers to administer their plan. SMBs get the short end of the stick and pay much higher rates for less coverage because they don't have economies of scale.   A public option would allow any uninsured individual to obtain health care at a reasonable, income-based cost. "Even though this isn't really personal finance related I still feel like there are some misconceptions here that could be addressed. I don't know where you got the phrase ""pass-through"" insurance from.  What you're describing is a self-funded plan.  In a self-funded arrangement an employer contracts a third-party-administrator (TPA), usually one of the big health insurance carriers, to use it's provider network, process and adjudicate claims, etc.  In addition to the TPA there will be some sort of stop-loss insurance coverage on each participant.  Stop-loss coverage usually provides a maximum amount of risk on a given member and on the entire population for a given month and/or year and/or lifetime.  The employer's risk is in between the plan deductible and the stop loss coverage (assuming the stop-loss doesn't have a maximum). Almost all of the claim dollars in a given plan will come from very very few people.  These costs typically arise out of very unforeseen diagnoses not chronic issues.  A cancer patient can easily cost $1,000,000 in a year.  Someone's diabetes maintenance medicine or other chronic maintenance will cost no where near what a botched surgery will in a year. If we take a step back there are really four categories of employer insurance. Small group is tightly regulated.  Usually plan premiums are filed with a state authority, there is no negotiating, your group's underwriting performance has zero impact on your premiums.   Employers have no way of obtaining any medical/claim information on employees. Mid-market is a pooled arrangement.  The overall pool has a total increase, and your particular group performs better or worse than the pool which may impact premiums.  Employers get very minor claims data, things like the few highest claims, or number of claims over a certain threshold, but no employee specific information. Large-group is a mostly unpooled arrangement.  Generally your group receives it's own rating based on its individual underwriting performance.  In general the carrier is offloading some risk to a stop-loss carrier and employer's get a fair amount of insight in to claims, though again, not with employee names. Self-funded is obviously self-contained.  The employer sets up a claims checking account.  The TPA has draft authority on the account.  The employee's typically have no idea the plan is self funded, their ID cards will have the carrier logo, and the carrier deals with them just as it would any other member.  Generally when a company is this size it has a separate benefits committee, those few people will have some level of insight in to claims performance and stop-loss activity.  This committee will have nothing to do with the hiring process. There are some new partially self-funded arrangements, which is just a really low-threshold  (and relatively expensive) stop-loss program, that's becoming somewhat popular in the mid-market group size as employers attempt to reduce medical spend.   I think when you start thinking on a micro, single employee level, you really lose sight of the big picture.  Why would an employer hire this guy who has this disease/chronic problem that costs $50,000 per year?  And logically you can get to the conclusion that with a self-funded plan it literally costs the company the money so the company has an incentive not to hire the person.  I understand the logic of the argument, but at the self funded level the plan is typically costing north of half a million dollars each month.  So a mid-level HR hiring manager 1. isn't aware of specific plan claims or costs and is not part of the benefits executive committee, 2. won't be instructed to screen for health deficiencies because it's against the law, 3. a company generally won't test the water here because $50,000 per year is less than 1% of the company's annual medical expenses, 4. $50,000 is well below the cost to litigate a discrimination law-suit.    Really the flaw in your thought process is that $50,000 in annual medical expense is a lot.  A harsh child-birth can run in the $250,000 range, so these companies never hire women?  Or never hire men who could add a spouse who's in child bearing years?  Or never hire women who might have a female spouse who could be in child bearing years?  A leukemia diagnosis will ratchet up $1,000,000 in a year.  Spend a bit of time in intensive care for $25,000 per day and you're fired?  A few thousand bucks on diabetes meds isn't anything relative to the annual cost of your average self-funded plan. The second flaw is that the hiring managers get insight in to specific claims.  They don't. Third, you don't hand over medical records on your resume anyway. I typed this out in one single draft and have no intention of editing anything.  I just wanted paint a broad picture, I'm sure things can be nit-picked or focused on." Inflation is not applicable in the said example. You are better off paying 300 every month as the balance when invested will return you income. Yes factor into your fund the cost of health insurance.  You basically have three options when facing a loss of income for 3-6 months: Pre-ACA the COBRA one was the default option many planned for because there was no need to change doctors. Of course many people were shocked how expensive it was compared to just looking at the employees share of the monthly premium. For planning you can do some research into the cost of one of the ACA approved plans in your state. Keeping in mind that the lack of income might qualify you for a subsidy. As to the coverage level, that would depend on your situation and the perceived gap. I have known many people who didn't have to pick COBRA until after the new job started so they knew exactly what they needed to cover and what their bills were during the gap. Despite the ACA offering generous deductions, a lot of small businesses still cannot afford the initial capital involved in offering health insurance plan to their employees... Therefore we cannot take advantage of these deductions...  Putting us at a disadvantage for finding low-to-mid skilled workers, to the larger corporations that are now mandated to offer the benefits..