But I agree with you, if the engineering management can't budget and prioritize work to get done, that's a larger issue.
The $500k was just a random number I came up with. Budgets wildly vary based on whether they get allocated weekly/quarterly/yearly/etc. And also it's never "one engineer's estimate", it's usually a project manager who works with N number of engineers to come up with an estimate.
But keep in mind that if a developer is in a sprint, he might start adding tickets to the epic because of technical/organizational issues. Suddenly the epic might look 3x more work than was originally planned. Note this is not theoretical, as it's happened 3 times to our team already this year.
But meanwhile in the example I gave, the developer gets held accountable still for not making the correct estimate. Management just passes it up the chain rather than trying to increase the confidence around the estimate.