You Could Pay More For Healthcare With Insurance Than Without
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Chelsi Ross was insured when she had to go to the ER for chest pain. Yet even after the “negotiated … [+]
My 34-year-old friend Chelsi Ross went to the emergency department of Methodist Hospital in Richardson, Texas four years ago for sudden onset of chest pain and shortness of breath. Fortunately, she was not diagnosed with any serious condition and her symptoms resolved. The blood tests, X-ray, EKG and CT scan during her four-hour ER visit totaled $11,300.75. She had health insurance but, paradoxically, it cost her more than she would have paid had she not been insured.
Hospital bill from Methodist for ER visit totaling $11,300.75.
We’ve all heard about massively inflated healthcare charges. In this case, though, I want to focus on how our healthcare and insurance system is built irrationally, in a way that sometimes surprisingly disadvantages patients who are insured.
But, as more than 50% of privately insured Americans now have, the Aetna insurance plan that she had was a high-deductible plan. This means until she had spent her $5,000 deductible plus her co-insurance amount, her insurance would not kick in. As a result, she was essentially a self-pay, or cash, patient until then.
Hospitals that contract with insurance companies have an “allowed amount,” or “negotiated rate,” that they accept. This means that rather than requiring insurance companies to pay the “sticker price,” hospitals give them a discount. So in this case, the “sticker price” of $11,300.75 was not what Aetna or Ross was expected to pay. Methodist Hospital gave a “discount” to Aetna of $3,503.23 for Ross’ services, so the “allowed amount” that they expected from Ross or her insurer was still almost $8,000. While Aetna paid the hospital $2,192.03, she was left with $5,605.49 to pay out of pocket.
A flowchart shows what Ross would have paid as an uninsured patient compared with her insured … [+]
Methodist does offer a “cash” discount of 45% off the sticker prices on its website. So, for example, the hospital charge of $6,229 for a CT scan of the chest is $3,426 if you want to pay in cash. That means her total bill, had she not provided her insurance information and asked to pay in cash, would have been $6,215. Given that the average annual health insurance premium is $8,345 for an individual, she would have saved over $7,700 by not having insurance with this episode.
Wait, you say, don’t you get a fine if you don’t purchase insurance? The answer is no, as Congress eliminated the tax penalty for not having insurance in 2019. But wait again, she only would have saved money if she didn’t have other healthcare costs that year, right? And that’s correct—if Ross had ended up needing a big surgery or having another expensive ER visit that year, her insurance would have kicked in after she met her deductible and co-pay.
But the fact that the average American must pay at a minimum more than $8,000 a…
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