Global Courant
Insurance is designed for sudden expensive exposures that most of us can’t afford. If you look at those words again: sudden and expensive. It doesn’t describe the predictable and affordable. But for years we had someone with a bigger wallet paying the bills. Most of us had very little to pay out of pocket for our own medical expenses. At least until now.
It is common knowledge that those who have more money no doubt have more to spend. Insurance companies are no different; they are the ones with the bigger purse. Medical providers also know this. Over the past 50-60 years, the providers have raised their prices to see what they can get away with, while the insurance companies negotiated bigger discounts. This is how healthcare became big business. The insurance companies have covered these costs and now we have to cover the costs of higher premiums today.
There is no price transparency in the healthcare sector. Partly because we never had to know because someone else paid most of the bill. The other reason is that no one has shopped their healthcare costs like other consumables. The medical providers know this and have taken advantage of it. The price for something billed to the insurance company and what the “cash price” is can be completely different. Which one will you pay?
It’s robbery if you ask me. Take a typical generic medication at the local pharmacy. One may cost the insurance company about $20, but your price if you pay cash could be $10. Why? It’s because they can.
The opposite is also true. If you ask for the cash price, it can be double the negotiated price from the insurance companies. Many providers charge the patient the billed amount instead of the discounted amount. It’s kind of like since you asked that I will charge you more.
Personal Case Study: My child injured his hand. The specialist could not say whether it was broken or not. They wanted to be careful, but I wanted to know if it was just a deep bruise or a fracture. The doctor suggested an MRI on his hand to be sure. As any caring father would, I asked how much this would cost me if I paid cash, I have health insurance with a high deductible. He said the insurance company approved amount is $350 (this was a small MRI machine). He went on and said I don’t care. So if you pay cash I would charge you $450.
Because many policyholders have High Deductible Health Plans (HDHP) or Health Savings Account Plans (HSAs), many providers realize that the patient is responsible for initial costs. This can be good and bad depending on the view.
First, there is the negative view. Many expect the first dollar of coverage to be paid by the insurance company. Any doctor visit, lab test, or prescription drug comes out of pocket first and is applied at your own risk. Some may not like this idea.
The flip side of this is that you have more control over your spending while saving on premium costs. The net profit is worth it for many. They can ask more questions about their care. Why? It’s because it’s their money. More importantly, you should be asking more questions about your health care.
In the end it is your concern and your money. Finding that happy middle ground between the cost of coverage and what you get for it can be overwhelming and expensive. Figuring out what’s important to you and asking enough questions so you can make informed decisions will save you thousands of dollars over the years. After all, it’s your money.
Healthcare billing problems: sudden and expensive
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