Posted by Bill Sandweg on 17 October 2022.
I recently wrote a post about how our health insurance system is making the delivery of health care worse than it should be. Here is another horror story for your files.
There are two variables in health insurance plans that can greatly impact what you pay for medical care. They are the deductible and the co-pay. The deductible is the amount of medical bills that you must personally pay each year before your health insurance plan will even begin to pay. A plan with a low monthly premium but a large deductible may prove to be very expensive in the long run. The co-pay is the amount of each bill, after you have met your annual deductible, that you must pay. It is expressed as a percentage, for example, 80-20 means that you must pay 20% of each bill after the deductible has been satisfied.
The poor patient in our horror story had a $6,000 annual deductible, of which only a small portion had been satisfied by the time she felt a lump in her breast. She had a family history of breast cancer and was justifiably concerned about the lump. After a mammogram, she was told she needed a biopsy, which was scheduled to be performed at a local for-profit hospital.
Our patient attempted to find out in advance how much she was going to have to personally pay but no one at the hospital would tell her. They claimed that the price would depend upon what size biopsy needle they needed to use when they got in there and a number of other factors that could not be predicted in advance of the procedure.
She went to the hospital’s patient payment estimator and found that the average price of a breast biopsy for people with no insurance was $1,400. She then did a Google search, which suggested the price might be as much as $3,000. She was reassured by both of those prices and figured she would pay less because she had insurance. Poor, naive patient.
After the biopsy, she got both good news and bad news. The good news was that the lump was not cancerous. The bad news was that the hospital billed the biopsy and related charges at very close to $18,000. Her insurance paid a negotiated price of almost $8,500. The patient was required to pay over $5,000, which was the balance of her deductible.
So how does a price vary from $1,400 for those with no insurance to $18,000 for those with insurance? The price should be the price, unless your insurance plan can get a lower price for its customers. It should never be more for insured patients. The idea that you should have to pay a huge premium because you have insurance is ludicrous. Welcome to the fun house of American hospital pricing.
Under a fairly new rule, hospitals are required to disclose their prices for a number of routine services they provide. Hospitals fought to prevent the creation of this rule for years. They don’t want the public or the health insurance companies to know how much they are charging others. Now that the rule is finally here, many hospitals are just ignoring it. Even among those who have disclosed some prices, they have refused to disclose the prices for their most expensive procedures.
Using the available data from those who have made the disclosures, a group of researchers compared prices for both insured patients and uninsured or cash paying patients. They published their results in one of the journals of the American Medical Association. They discovered that what happened to our poor patient was not unusual and that very often hospitals gave a better price to uninsured patients than they did to patients who had health insurance. The important takeaway from all this is that, if you have a high deductible health insurance plan and may have to pay much of a hospital bill out of your own pocket, ask about the hospital’s cash price before letting your insurance company pay. You may save yourself quite a bit of money.