Insurance is designed for sudden expensive exposure that most of us cannot afford. If you look at those words again: sudden and expensive. It does not spell out the predictable and affordable. For years though, we had someone with the bigger purse paying the bills. Most of us had very little to pay out-of-pocket for any of our own medical expenses. At least until now.
It's common knowledge that those who have more money tend to have more to spend without question. Insurance companies are not any different; they are the ones with the bigger purse. Medical providers know this as well. Over the last 50-60 years, the providers increased their prices to see what they can get away with, at the same time the insurance companies were negotiating for bigger discounts. This is how healthcare became big business. The insurance companies fronted this cost, and now we have to cover the expense of higher premiums today.
The pricing transparency is null in the healthcare industry. Partly because we never needed to know because someone else was paying the bulk of the bill. The other reason is that no one shopped their healthcare expenses like they do other consumable items. The medical providers know this and took advantage of this. The price for something billed to the insurance company and what is the 'cash price' can be completely different. Which one are you going to pay?
It's highway robbery if you ask me. Take a typical generic medication at the local pharmacy. One could cost about twenty dollars to the insurance company, but your price if you pay the cash price could be ten dollars. Why? It is because they can.
The opposite is also true. If you ask for the cash price, it could be double what the insurance companies negotiated price. Many providers will charge the patient the billed amount versus the discounted amount. It's kind of like since you asked I'll charge you more.
Personal case study: My kid injured his hand. The specialist could not tell that it was fractured or not. They wanted to lean on the side of caution, but I wanted to know if it was just a deep bruise or a fracture. The doctor suggested that we do an MRI on his hand just to be sure. As any caring father would, I inquired how much would this cost me if I paid cash, I have a high deductible health plan. He said the insurance company approved amount is $ 350 (this was a small MRI machine). He continued and said I don't make anything from them. So if you pay cash, I would charge you $ 450.
With many policyholders having High Deductible Health Plans (HDHP) or Health Savings Account Plans (HSAs), many providers realize the patient is responsible for the initial expenses. This can be good and bad depending on the view.
First, there is the negative view. Many are expecting the first dollar coverage to be paid for by …Read more