Paying Less … Without Health Insurance

(Photo: Zdenko Zivkovic)

(Photo: Zdenko Zivkovic)

Writing for the Wall Street Journal, Jeffrey Singer describes a patient who came in for a “simple outpatient surgical procedure” and discovered it was cheaper to just ignore his “low-cost ‘indemnity’ type of health insurance policy.”  The patient’s estimated costs had he used his health insurance plan: approximately $20,000 (out of the estimated hospital charge of $23,000).  After speaking to the patient, Singer realized that he wasn’t bound by a “preferred provider” contractual arrangement and offered the patient a solution that saved him $17,000:

I explained that just because he had health insurance didn’t mean he had to use it in every situation. After all, when people have a minor fender-bender, they often settle it privately rather than file an insurance claim. Because of the nature of this man’s policy, he could do the same thing for his medical procedure. However, had I been bound by a preferred-provider contract or by Medicare, I wouldn’t have been able to enlighten him….

Most people are unaware that if they don’t use insurance, they can negotiate upfront cash prices with hospitals and providers substantially below the “list” price. Doctors are happy to do this. We get paid promptly, without paying office staff to wade through the insurance-payment morass.

So we canceled the surgery and started the scheduling process all over again, this time classifying my patient as a “self-pay” (or uninsured) patient. I quoted him a reasonable upfront cash price, as did the anesthesiologist. We contacted a different hospital and they quoted him a reasonable upfront cash price for the outpatient surgical/nursing services. He underwent his operation the very next day, with a total bill of just a little over $3,000, including doctor and hospital fees. He ended up saving $17,000 by not using insurance.

(HT: Jason Hirschhorn)

Abhay Padgaonkar

That’s like saying, “I saved $17,000 by not buying a Rolex I didn't need.” It is a wrong-headed cure for reducing healthcare costs. If the hospitals and providers accepted and published what Medicare pays as the “standard” price, instead of marking it up 5-7 times, it would automatically diminish the role of third-party payers. The payers will no longer have to play the game of chicken with the hospitals. And the unsuspecting patients—insured, underinsured, or uninsured—will no longer be caught in the crossfire. Read more...

Dr. Dave

I'm a young physician recently beginning practice. People must understand that it takes more time to prove to the payers (Medicare/private insurer) that I provided a medical service than it actually takes to provide the service. Hence overhead expenses are ridiculous.

Steve Nations

The last paragraph of the article:

"Sadly, we are heading in the exact opposite direction. ObamaCare expands the role of the third party and practically eliminates the role—and the say—of the patient in the delivery of health care. Will they ever learn?"

I have no strong feelings either way about ObamaCare, but I do have strong feelings about large committees creating solutions to complex problems. It rarely works out well.


Does anyone else notice the similarity to paying college tuition? No one pays the sticker price, but you are charged according to your perceived ability to pay. Have good insurance - your insurance company will be charged more so that you are subsidizing other patients.

If you want another example of the unexpected consequences of our US health system talk to any doctor who prescribes biologic drugs. Let's say you want to use Humira to treat a patient with rheumatoid arthritis. If your patient has Medicare or Medicaid then this will be fairly straightforward. Try to prescribe it for a patient with private insurance and you will be in a nightmare of page after page of forms and documentation to show that you have met the strict rules about other treatment options before finally it will be allowed. I'm sure that this ultimately discourages physicians from prescribing the best treatment options to many patients with private health insurance.



Medicare A and B doesn't cover prescriptions; D is actually private insurance.


You're right. When I wrote Medicare I was really referring to the Medicaid supplementary coverage received by Medicare patients. About 4 million Medicare patients have their prescriptions covered under Medicaid not part D. Obviously this is because they have low incomes, but I'm just pointing out the irony that they actually have better access to expensive drugs than those that are paying for private insurance. Hardly an incentive to buy insurance.


This worked out well for this patient, but what if there had been complications during the surgery? What if he had found himself hospitalized for several days, or needing additional care or more expensive procedures? When things go south medically, they go south very quickly. How would a health insurance company treat a claim for complications from a surgery that they did not cover in the first place? Even if something could be worked out, it probably be far more complicated than submitting the initial claim for the entire procedure.


We might learn a lot about which medical expenses are really necessary, and which not, by doing a cost comparison to similar large-animal veterinary medicine.


That whole story is a sign of an entirely idiotic health system. There should be no need for someone who requires an operation to have to go around and negotiate prices with the various caregivers who are the components of his operation. What if he had needed a more urgent operation and had no opportunity to go around and shop for the best price? This just tells me you really need a single-payer system.


Hardly so, as a single payer system pretty much guarantees that no one can ever shop around to get the best price, and therefore everyone will be paying much more than necessary. (Even if it is often not the sick person paying, but millions of perfectly healthy taxpayers.)

Perhaps it would work if someone could invent a way to incentivize the single payer to reduce costs, but unfortunately all the incentives seem to work the other way in practice.


Might want to check out this podcast on health care costs


Really poor reporting. Doesn't point out that no-one is going to paying anywhere close to the face value they quote in the US. For the hip surgery case they mention you can look up the Medicare fees; surgeon gets paid less than 2k, the device costs about the same and the total reimbursement is about $20000. The remaining difference with the price in Belgium can easily be explained by (a) the cost of malpractice insurance in the US, and (b) price controls in Europe that leave the US subsidizing product costs for the rest of the world.