Picture it: You’re applying SPF 50 during your family’s annual beach vacation and spot a few new moles. You give them a quick once-over using the ACBDE guidelines for identifying skin cancer and notice that one seems atypical, with an irregular border, so you schedule an appointment with your dermatologist. He checks it out, and to your relief, it’s benign.
A week later, you receive a bill in the mail for $210. You haven’t met your insurance deductible yet, so you mail a check for the full amount. Then you find out that had you ponied up cash at the time of service, or even within 20 days of receiving the bill as a self-paying patient, the same visit would have cost you only $160—that’s 30% less than what you paid.
What’s the catch?
The example above is actually a conservative one. A Los Angeles Times article from 2012 reported that a patient was charged $6,707 for a CT scan of her abdomen and pelvis. After running the claim through her health insurance, the amount owed was only $2,336. But if she hadn’t used her insurance at all, she would have paid just $1,054, or 89% less than the original cost.
If it sounds like there’s a catch, there is—kind of. By paying cash, you’re not able to apply the amount towards your deducible. But if you have a very high deductible, you likely won’t meet it anyway. This knowledge can be freeing, because it means that you have no incentive to stay within network and can choose to cash-pay any provider you want.
In the not-so-distant past, the rules were reversed, and providers charged uninsured patients the highest costs. But new state and federal rules protect uninsured patients from overcharging practices, so someone else has to be left holding the burden. In order to make up the difference, hospitals pass the higher rates onto commercial insurers, and most traditional insurers then pass the costs on to you, the member.
Understanding the true cost of healthcare
All of this adds up to a broken system, with inconsistent and unfair pricing at its core. Many patients blame physicians, but as it turns out, patients aren’t the only ones who lack visibility into the actual costs of procedures. On his website, truecostofhealthcare.org, internist David Belk points out that “unlike any other business in America, almost all of the financial transactions in healthcare are hidden from the providers as well as the patients.”
In other words, the healthcare system is so shrouded in secrecy that even doctors are left in the dark. Physicians order procedures without any indication of how much they will cost the patient, or even how much their own reimbursement will be. Belk goes on to note that “most private doctor’s offices contract billing companies, who just send them a check each month from the total amount collected, leaving them no notion of the actual charge or reimbursement for an individual service they provided.”
Think about that for a moment. Can you imagine going to your car dealership for an oil change with no indication of what it will cost? You’re told that it could be $30 or $300 by the mechanic, who also has no idea what the total will be, or what he will be paid. You just accept that you’ll get a bill in a few weeks and pay it without question.
Unsurprisingly, this news is angering people who pay high premiums for their insurance plans. They trust their insurance provider to secure the best possible pricing in exchange for their payroll deductions, and instead they find out that having no insurance at all would be cheaper.
Right? Well, not if a major event occurs.
Thankfully, there’s middle ground. Having a high-deductible, HSA-based insurance plan means that you will pay a lot less in premiums while still being protected if faced with a major illness or accident. Insurers like MotivHealth empower you to take charge of your healthcare costs and help you build health savings for the future. Even better, they lift the longstanding veil and expose healthcare prices for what they really are with price transparency tools.
This is a major step in the right direction. The sooner we all have visibility into the real costs of procedures, services, medications, and supplies the sooner the broken healthcare system will have to change. As Paul Keckley, executive director of the Deloitte Center for Health Solutions, says, “It changes the game when healthcare’s secrets aren’t so secret.”