With the cost of health insurance set to rise, some Americans are asking a surprising question: Is it actually cheaper to get medical care without it?
The short answer: Sometimes. But not often. And it may require a little — or a lot — of homework.
Some hospitals and clinics offer self-pay or cash only discounts for patients who pay without insurance, skipping the paperwork and administrative fees that come with having coverage. Hospitals are required by federal law to make their discounted cash prices publicly available online. An allergy test or an X-ray, for example, may be a few hundred dollars cheaper this way, especially for people with high deductible plans. Nonprofit hospitals must provide charity care, which is free or discounted, to people who can’t afford it, even for those with insurance.
But paying outside of health insurance means that cost doesn’t count toward your deductible or out-of-pocket limit — and if you end up needing more medical visits than expected, you could wind up worse off financially.
“You have to be really careful,” said Stacie Dusetzina, a health policy professor at Vanderbilt University in Nashville, Tennessee. “The price that you pay with cash, even if they give you some sort of advertised discount, can be more than what you might actually pay through health insurance overall.”
The question of whether to opt out of insurance and pay in cash is surfacing as many Americans are expected to face higher premiums next year. Enhanced subsidies, which kept Affordable Care Act premiums lower for many middle-class people, are set to expire at the end of the year without action from Congress. Premiums for people who get their health insurance through their jobs or outside the ACA are also expected to rise next year.
Some ACA enrollees are debating whether to drop their coverage entirely — a decision that experts warn could leave them exposed to major medical bills if an unexpected emergency hits.
“If you like Russian roulette, then you’ll like to approach health care this way,” said Michele Johnson, executive director of the Tennessee Justice Center, a law firm and nonprofit advocacy group that helps people dispute medical bills.
Johnson said “part of the fallacy is that as American consumers, we’re all about, ‘How do I bargain the best deal?’”
“Health care is not this way,” she said. “If you’re healthy, you’re basically pushing all the chips out onto the table in hopes that you basically will mostly be healthy.”
Losing benefits
Insurance, for all its frustrations, can provide crucial protections: caps on out-of-pocket costs, access to negotiated rates and free preventive care, such as cancer screenings, annual physicals and routine vaccinations.
For non-emergency care, a doctor or hospital may require the patient who isn’t using insurance to pay the entire cost upfront or see a different provider, said Erin Duffy, director of research training at the USC Schaeffer Center for Health Policy and Economics.
“It does seem risky,” Duffy said. “If you were thinking that you could keep going to the primary care doctor that you’d go to when you were insured, you might find that there’s different financial obstacles.”
For those who are healthy, paying in cash can be a smart move for predictable, lower cost-services — such as an X-ray or CT scan, Dusetzina said.
“This comes up all the time in the prescription drug world,” Dusetzina said. “People will often fill generic drugs out of pocket because it happens for them to be cheaper to do that than paying with health insurance in some cases.”
But patients wouldn’t have access to their insurer’s negotiated rate — the amount an insurance company agrees to pay for a medical service, Dusetzina said. Even if people haven’t reached their deductibles, they still get the negotiated rate, which might be cheaper than paying cash. And whatever they pay wouldn’t go toward their deductible or out-of-pocket limit.
“What has historically happened is, if you went to a medical site and you wanted to pay in cash, the price that they start with is often twice as high or more than what the health insurance price would be,” she said. “So, you do lose the benefit of having a negotiated rate going without health insurance.”
A person’s savings can disappear fast if something unexpected happens, Johnson said. Emergency room visits, hospital stays or surgeries — even at discounted rates — can cost tens of thousands of dollars. Uninsured patients are billed the full amount. It’s generally not possible to sign up for health coverage after an emergency has already happened, she said. There’s also a narrow period to enroll; in most states, ACA enrollment is Nov. 1 through Jan. 15. Open enrollment for people who get health insurance through their jobs is generally around the same time.
“That’s the only time you can sign up until the next year, so essentially, you’re left holding the bag, not just for emergency visits, but for all the follow-up care,” she said.
Johnson said that before people even think about negotiating care with a doctor or provider, they must first check if they have a federally qualified health center nearby. The health clinics receive federal grants to provide low-cost care to underserved populations, including the underinsured and the uninsured.
“If you need primary care, you can often get primary care at a federally qualified health center,” she said.
If specialty care is needed, doctors may negotiate, but they often require people to pay the full amount upfront, Johnson said. If you want to get an idea of how much you could pay, websites like Turquoise Health show the average cash price hospitals may charge for certain medical procedures.
If you do get a lower rate from a doctor, the process might not end there, Johnson said. Depending on how complicated the medical procedure is, you may need to get an agreement with the entire health care team involved.
“Even if you have a doctor who says, ‘I will do this for you,’ then somehow you have to get an anesthesiologist to do it, and you have to get labs to do it, and you have to get nurses doing it as well,” she said.
Duffy said to call the billing office and “ask really specific questions about when you would have to pay, what are the full range of options for both assistance and payment plans that could be helpful to someone who’s uninsured or lower income or just facing a bill you might not be able to pay all at once.”
For those in need of emergency care or hospital care, Duffy noted, there is a federal law — the Emergency Medical Treatment and Labor Act — which requires Medicare-participating hospitals to provide care to anyone who comes to the emergency department, regardless of their ability to pay.
After that, the person may be able to negotiate with the hospital or provider, or get a payment plan.
None of these strategies are particularly useful for people who are not healthy and are likely to use a high amount of health care, said Lawrence Gostin, director of the O’Neill Institute for National and Global Health Law at Georgetown University.
“The self-pay option will be most attractive to the healthy and well-off patient, who may forgo adequate health insurance,” he said.
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