An August 2013 article in WSJ describes a man in his early 60s who needed a common type of surgery for a hernia in his lower abdomen. The patient was self-employed and owned a low-cost “indemnity” type of health insurance policy (he could go anywhere for medical care). Based on the diagnosis, the policy paid a fixed amount for a surgeon (up to $2,500) and hospital bills (up to an additional $2,500). The estimated hospital charge was $23,000; the hospital wanted $20,000 upfront.
Hospitals and other providers show “list” prices as high as possible when negotiating contracts with health plans and Medicare regulators. No one is expected to pay the list price. Most people do not realize that if they do not have insurance, they can negotiate upfront cash prices substantially less than “list” price.
By telling a different hospital he was a “self-pay” (uninsured), the total bill ended up being just over $3,000, an almost $17,000 savings by not using his insurance. It appears the only way to make a significant dent in health care is to diminish or eliminate the role of third-party providers.