Health Care Billing Problems: Sudden and Expensive

Insurance is designed for a sudden costly exposure that most of us can’t afford. If you look at those words again: sudden and expensive. It does not explain the predictable and affordable. Yet for years we had someone with the biggest wallet paying the bills. Most of us had very little money to pay for our medical expenses. At least until now.

It is well known that those who have more money tend to have more to spend without hesitation. Insurance companies are no different; they are the ones with the biggest bag. Medical providers know this too. For the last 50 to 60 years, providers have raised their prices to see what they can do, at the same time that insurance companies negotiated deeper discounts. This is how healthcare became big business. The insurance companies bore this cost, and now we have to cover the expense of higher premiums today.

Price transparency is nil in the healthcare industry. Partly because we never needed to know because someone else was footing most of the bill. The other reason is that nobody compared their health care expenses like they do with other consumable items. Medical providers know this and they took advantage of it. The price of something billed to the insurance company and the ‘cash price’ can be completely different. What are you going to pay?

It’s highway robbery if you ask me. Pick up a typical generic drug at the local pharmacy. One might cost about twenty dollars to the insurance company, but your price if you pay the cash price might be ten dollars. Because? It’s because they can.

The opposite is also true. If you ask for the price in cash, it could be twice what the insurance companies negotiated. Many providers will charge the patient the billed amount versus the discounted amount. It is as if since you asked for it I will charge you more.

Personal case study: My son hurt his hand. The specialist couldn’t tell if he was fractured or not. They wanted to err on the side of caution, but I wanted to know if it was just a deep bruise or a fracture. The doctor suggested we do an MRI on her hand to be sure. Like any caring parent would, I asked how much this would cost me if I paid cash, I have a high deductible health plan. He said the amount approved by the insurance company is $350 (this was a small MRI machine). He went on and said I don’t earn anything from them. So if he pays cash, he would charge you $450.

Since many policyholders have High Deductible Health Plans (HDHP) or Health Savings Account (HSA) plans, many providers realize that the patient is responsible for the initial costs. This can be good and bad depending on the view.

First, there is the negative view. Many expect the insurance company to pay first dollar coverage. Each doctor visit, lab test, or prescription drug is out-of-pocket first and is applied toward your deductible. 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 gain is worth it for many. They can ask more questions about your health care. Because? It’s because it’s your money. More importantly, you should ask more questions about your health care.

At the end of the day, it’s your health care and your money. Finding that happy medium between the cost of coverage and what you get for it can be overwhelming and expensive. Finding out what’s important to you and asking enough questions so you can make more informed decisions will save you thousands of dollars over the years. After all, it is your money.