There’s a growing trend in the US when it comes to paying cash for health care vs using insurance. Many patients are now finding they can get much better deals at their hospitals and imaging centers by paying cash instead of running the charges through their insurance. According to an article by the Wall Street Journal (http://www.wsj.com/articles/how-to-cut-your-health-care-bill-pay-cash-1455592277) you can often save hundreds if not thousands just by pay the offered cash rate and bypassing the insurance company completely. This presents an opportunity, an education and sometimes a difficult choice if you have insurance. The patient has the option to pay less out of pocket, but the cash rate can’t be applied toward the deductible which is sometimes important. However, that knowledge now educates the patient that insurance isn’t always the amazing deal they were led to believe. Insurance is supposed to contract a better/lower rate vs paying cash. So why now is everything upside down?
The headaches and delays associated with running charges through insurance are expensive for health care providers. Many of them are waking up to the fact that they can get their own accounts receivables up and frustrations down if they make the billing easier on their customers. With huge deductibles through insurance the hospital will not only wait for all the paperwork to run through the insurance system, but they may never get paid anyway because the rate is so high and the patient’s massive deductible leaves them to pay everything on their own…and it’s just too much. Why take the risk? If they offer an incentive for quick cash pay up front, those headaches go away and the hospital has money in hand. Insurance customers aren’t required to use their policy every time, but that information isn’t always offered up front.
The articles referenced above indicates that the ACA includes a piece in the law saying tax exempt hospitals cannot charge the financially challenged patient much more than what medicare would pay. It’s aimed at preventing price gouging of cash patients. (note to self: find out if the hospital is tax exempt). I read that to mean private hospitals aren’t subject to that ruling and can charge whatever they want. So do your homework in non-emergency situations and pick somewhere affordable.
All of this means good news for healthcare sharing ministry members. While insurance customers have to make a difficult choice between paying less in cash or paying more and having something go toward their deductible, Samaritan Ministries members get the best of both worlds. They pay the cheaper cash rate, and get that cash amount reimbursed by Samaritan members. And the cash pay discount they got reduces their own personal responsibility with Samaritan so it’s possible for a Samaritan member to actually pay nothing out of pocket when it’s all said and done. The member covers the initial cash bill, but the reimbursement would pay back all of it as long as the discount was big enough (a $300 discount wipes out the members $300 responsibility, $200 wipes out $200, and so forth).
I enjoy reading articles like this and hearing that maybe, just maybe, health care is getting back on track. Yes, care is expensive. But the insurance boondoggle has made a mess of it for everyone. Greed and corruption play a part, but there are bright shining moments in this mess and cash patients can come out far better on the other side. Being part of a sharing ministry is icing on the cake, whether the charge is a $500 ER bill or a million dollar crisis, the ministry is there to help and the cash status allows for reasonable rates. Win-win!
2 thoughts on “Cash patients getting better deals than insurance customers”
Thanks for putting together and maintaining this site! It is very informative.
My wife and I are exploring healthcare options for when we go to Utah as missionaries and lose coverage through my employer. We’re considering Samaritan Ministries. Our current plan allows us to contribute to an HSA before taxes. Would we be able to continue making pre-tax contributions to an HSA if we joined Samaritan Ministries? I saw that this topic was brought up in your Tax Details post, but was awaiting the results of then-pending legislation. I cannot comment on that post for some reason.
Thanks Ned! The legislation is still pending. Considering the political environment right now, I’m guessing it could be at least until next year before it gets much attention. Until then, no, you wouldn’t be able to continue making pre-tax contributions to the HSA if you join a health care sharing ministry. There is some thought that you’d probably be able to use the money already in it, but not make future contributions until that legislation goes through. Check with your tax professional to be sure.