Paying Cash for Medical , Cheaper than using your Insurance ?

[Frank Drew]

Would we be talking this way if the subject was how to pay for woodworking services? "My wife and I want some custom-made library built-ins, preferably out of a classy hardwood like cherry or mahogany; what's the best way to beat the cabinet maker down on the price?" Or, "I bought a very nice turned salad bowl for my daughter's wedding gift. The turner's lives near me and let me pay on time; I still owe him $100... what if I tell him I'm only willing to pay is $50? What's he gonna do, sue me for the remaining $50?"

I've got no sympathy for most health insurance companies, an maybe I'll throw most hospitals in there, too, but many doctors in private practice have a hard enough time making it. I know that transparency is an issue, and it would help to know upfront how much any individual procedure will cost, but if that's known, and if you agree to the price, isn't the right thing to do to pay in full if you can?

[Andrew Joiner]

Good point Frank.
If it's a turner or a Doctor that let me pay on time and I still owe him $100 I'd never tell him I'm only willing to pay $50. I may ask"are you willing to accept $50". If the answer is no I'll accept it or suggest $75. All things are open to negotiation. For me the best negotiation skills are through honest communication. Whether I'm the buyer or seller.

Over the years I've been a seller of goods and services. While I was never happy to be beaten down in price, many times I was happy to just make a little money and move on.

[David Weaver]

Would we be talking this way if the subject was how to pay for woodworking services? "My wife and I want some custom-made library built-ins, preferably out of a classy hardwood like cherry or mahogany; what's the best way to beat the cabinet maker down on the price?" Or, "I bought a very nice turned salad bowl for my daughter's wedding gift. The turner's lives near me and let me pay on time; I still owe him $100... what if I tell him I'm only willing to pay is $50? What's he gonna do, sue me for the remaining $50?"

I've got no sympathy for most health insurance companies, an maybe I'll throw most hospitals in there, too, but many doctors in private practice have a hard enough time making it. I know that transparency is an issue, and it would help to know upfront how much any individual procedure will cost, but if that's known, and if you agree to the price, isn't the right thing to do to pay in full if you can?

You've got it the wrong way around. Most health insurers are doing OK, most doctors are doing very well with the exception of a few who are not fit to run businesses and aren't smart enough to realize they should be drawing a salary from those who are. Most hospitals as organizations are doing very poorly and their non-doctor employees are suffering as a result.

If anything, they are tied up in low margin high capital games because patients aren't willing to go into a hospital that look like it was redone 20 years ago.

Doctors influence where the patients go, they do better than the rest of the health system in general, and not just in absolute dollars, but in priority in terms of who really gets to call the shots. You don't cross the doctors if you're running any kind of health system, because your patient flow will dry up. Health insurers generally spend greater than 85% of the premiums they collect on paying claims and administering health care. Some much greater than that, and some less, but it will soon be bad for business to have loss ratios less than 85%.

(that said, don't confuse my comments with "doctors shouldn't be paid as well as they are" or anything like that. Just making the point that the sob stories you hear on the news about some doctors not making enough to pay back their loans are nowhere close to being the norm or average doctor, it's more a matter of trying to make a news story out of the bottom 5%. Now, the orderlies, the techs, the assistants (nursing assistants, PT assistants, and the rank and file workers at the insurance companies, that's another story. The money flies around all around them, and very little of it lands in their laps).

[Jeremy Hamaker]

Keep in mind that all the particulars of this discussion drastically change on January 1 2014 when the insurance coverage requirements of Obamacare kick in, as well as the penalty tax provisions for those who do not have insurance that meets Obamacare requirements (not counting specific waivered exceptions...).

[Andrew Joiner]

Yes, that will be interesting Jeremy. It changes the insurance requirements for many people. My gut feeling is cash will still be king. Especially if medical providers have MORE paper work to get paid by non- cash paying clients.

[David Weaver]

There will still be uninsured individuals. The excise taxes aren't that punitive, esp. at first, and even later on, if you want to bear the risk and even assuming you're not eligible for subsidy credits to go to the exchanges, it grades from $95 (for the year) in 2014 to $695 in 2016.

I'd imagine there will still be a lot of people who are paying cash because it's still much cheaper to risk being uninsured than it is to be insured.

[Rod Sheridan]

Hi, I have a really dumb question, why would a provider take cash at a discount as opposed to being paid by cheque?

I doubt a hospital or doctor could do work "under the table" so what would be the benefit to them?

regards, Rod.

[ray hampton]

Yes, that will be interesting Jeremy. It changes the insurance requirements for many people. My gut feeling is cash will still be king. Especially if medical providers have MORE paper work to get paid by non- cash paying clients.

will we need a good lawyer to help the average citizen to advise us on what insurance to choose

[David Weaver]

will we need a good lawyer to help the average citizen to advise us on what insurance to choose

I don't think you'll get much help from a lawyer. If the bill doesn't make provisions advisors on the government's payroll, there will be businesses popping up that will make a recommendation for a fee.

[David Weaver]

Hi, I have a really dumb question, why would a provider take cash at a discount as opposed to being paid by cheque?

I doubt a hospital or doctor could do work "under the table" so what would be the benefit to them?

regards, Rod.

If they don't know you have insurance, and you pay them cash, they know they'll get paid. I'd imagine that the uncollectable accounts that doctors and med groups have cause them a lot of headaches and cost money to deal with.

[Rod Sheridan]

Well David, that's certainly a possibility, I have to admit I hadn't considered uncollected receivables..........Thanks, Rod.

[David Weaver]

About 2 years ago, I went to the ER with metal in my eye. As I was checking out, I had to pay $50. The lady seemed very surprised that I was paying it while I was there. The guy next to me in line looked like a regular, he opened his wallet with ID or something and she asked him if he wanted to pay....he looked, and then he said, "no".

I would assume based on the crew that was in there, that quite a lot of people keep their cash in their pockets because they don't intend to pay (late at night, I was the only "regular" person, the rest were people either high on drugs or with obvious mental illness, to the point that the triage nurse didn't believe me when I said I had metal in my eye. I had to tell her three times that you could see it with your naked eye if you just looked, and she said "oh ..you do! I can actually see it!").

[Andrew Joiner]

Hi, I have a really dumb question, why would a provider take cash at a discount as opposed to being paid by cheque?

I doubt a hospital or doctor could do work "under the table" so what would be the benefit to them?

regards, Rod.

Most of the time a cash discount for medical means they give you a lower price for paying at the time of service. Some do it if paid on the first billing. You have to ask. The actual payment can be with a credit card or check. I've never actually used cash. My dentist is the only one who gives a discount for a personal check or actual cash and not a credit card.
I assume it's more valuable to the medical office to be payed sooner. Sending it to an insurance company takes lots of time and clerical work. My Dr. friend says it takes at least 30% more office work to get paid by insurance than by cash or card, thus a 30% discount makes sense.

[Frank Drew]

You've got it the wrong way around. Most health insurers are doing OK, most doctors are doing very well with the exception of a few who are not fit to run businesses and aren't smart enough to realize they should be drawing a salary from those who are. Most hospitals as organizations are doing very poorly and their non-doctor employees are suffering as a result.

If anything, they are tied up in low margin high capital games because patients aren't willing to go into a hospital that look like it was redone 20 years ago.

Doctors influence where the patients go, they do better than the rest of the health system in general, and not just in absolute dollars, but in priority in terms of who really gets to call the shots. You don't cross the doctors if you're running any kind of health system, because your patient flow will dry up. Health insurers generally spend greater than 85% of the premiums they collect on paying claims and administering health care. Some much greater than that, and some less, but it will soon be bad for business to have loss ratios less than 85%.

(that said, don't confuse my comments with "doctors shouldn't be paid as well as they are" or anything like that. Just making the point that the sob stories you hear on the news about some doctors not making enough to pay back their loans are nowhere close to being the norm or average doctor, it's more a matter of trying to make a news story out of the bottom 5%. Now, the orderlies, the techs, the assistants (nursing assistants, PT assistants, and the rank and file workers at the insurance companies, that's another story. The money flies around all around them, and very little of it lands in their laps).

David,

I think you exaggerate the influence, and probably the earnings, of many, if not most, doctors. They need admitting privileges as much as hospitals need patients; there are certain specialties that are considered cash cows for hospitals, such as orthopedics or thoracic surgery, but that has a lot to do with the earnings from the OR, not necessarily from inpatient admissions. Doctors in such fields as emergency medicine, anaesthesia, radiology,etc., usually belong to practices which contract their services to hospitals, and they have little influence on hospitals and have no guarantee that their contract with any particular hospital will be renewed, and if those contracts are, in fact, terminated, that leaves those practices scrambling to place their docs.

You're absolutely right, though, on how little money trickles down to the cannon fodder on the front lines (those of us wiping the butts.) I think most people would be shocked at how little some of us are paid for what we do.