Austin Frakt had a very intersting blog post several months ago where he tried to argue why it is sensible to have insurance cover routine predictable expenses. He cites two principle reasons: 1. the tax subsidy, 2. Insurer's bargaining power. I am less interested in the first reason but more with the second. I think it is obvious that insurers through their bulk purchases can obtain discounts that individuals cannot. That said, what I find amusing is this ignores the fact that much of what you are paying for when you go to a provider is the overhead associated with chasing a reimbursable. If everybody paid cash (or a near substitute like the medical equivalent of a food stamp) I would imagine much of the direct and indirect costs a doctor incurs (and then passes along to you the consumer) would disappear. The question then becomes do these cost savings outweigh the bargaining discounts the insurer is able to obtain.