The article below is written by Dr. Robert Nelson, a Direct Primary Care Physician. It is taken from The Direct Primary Care Journal. He uses some great examples of how much money people can save if they deal in cash prices directly with doctors and labs, rather than use the expensive insurance middleman. Like him, we are able to get great cash rates for our patients as well, although the numbers are not exactly the same.
He exposes the health insurance paradox. Dealing with insurance companies causes an artificial increase in prices. When people are presented with these artificially high prices, they assume that without health insurance, they would never be able to afford to pay for healthcare. In reality, people often could afford most medical treatments if given a cash discount.
The dirty secret is that insurance companies actually like it when labs, doctors, and hospitals charge a lot for their services. They never pay full price for them because of their contractual agreements, and even if they did, the money would come from subscribers through higher premiums. (The only people who pay the full price are people who don’t have insurance.) It is in the insurance company’s best interest for the charges to be as high as possible because it frightens people into buying their product. (Kind of reminds you of a mob extorting innocent people for “protection,” doesn’t it?)
I don’t suggest people go without some type of coverage, but ideally it would be true catastrophic insurance so you would not lose your house if you got cancer. It is actually less expensive to pay for the routine things out of pocket, like the labs mentioned by Dr. Nelson.
Michael A. Ciampi, M.D.
By Robert Nelson, MD, Direct Primary Care Physician | Advocate for free-market healthcare & patient-centered reforms
JULY 23, 2015 –
Billed prices of common lab tests.
- TSH test billed to health insurance by lab: range $94 – $125*
- TSH test billed directly to my practice by my lab: $4.44
- CBC test billed to health insurance by lab: range $50 – $72*
- CBC test billed directly to my practice by my lab: $3.75
- CMP test billed to health insurance: range $46 – $63*
- CMP test billed directly to my practice by my lab: $3.83
The variations in prices listed above are not because my lab is so magnanimous or because I receive a volume discount (they should actually tack on extra for my low test volume)! Nor am I incriminating the other laboratories for their pricing; they are just playing by rules of third-party billing and using the industry norms commonly accepted in this legal “scam”. Of course, the lab doesn’t usually get the entire amount they bill; unless they get a self-pay sucker like me.
But that doesn’t stop those inflated prices from having its desired effect; that of supporting over-priced insurance premiums and driving up prices which supports the manufactured myth that healthcare is SO expensive from top to bottom that we have to have expensive insurance to afford routine healthcare.
*Background: About one year ago, I called two of the larger well known clinical laboratories to get some pricing. The conversation was essentially identical in content for both labs, so I’ll just relate the outcome.
The prices listed above were quoted to me over the phone after I provided the attendant with precise CPT codes for each test. I asked them for the price they would give me vs the price they would bill the CPT code if billed to insurance (knowing they could not have two list prices for same test). They quoted me the CPT price and said I would pay that same price, even if paying cash. One last time before I hung up, I asked for discount for cash and they quoted me same CPT base price.
For anyone who is not convinced that third-party involvement in healthcare is the main driver of price inflation over the past 50 years, then please study these articles and charts below:
Abstract: A back of the envelope calculation based on the estimated impact of Medicare suggests that the overall spread of health insurance between 1950 and 1990 may be able to explain about half of the increase in real per capita health spending over this time period.