Cash discounts can make it cheaper to not file insurance claims


After covering health care for so many years, I don’t often come across a story that makes me say, “Wow, I didn’t know anything about that.” But Chad Terhune of the Los Angeles Times had a story on May  27 that,  for me at least, was an eye-opening account of how sometimes it is cheaper for insured people to not use their insurance.
Health Policy core topic
Sometimes, it seems, cash is still king.

We’re all used to hearing about how only the uninsured pay the “sticker” price, and how it’s usually way more than insurers negotiate on behalf of the patients they cover. Not necessarily.

Terhune found several  patients – and checked practices at a number of southern California hospitals – who got such low cash prices for tests, imaging and outpatient procedures that it was cheaper to not file a claim and pay the whole cost than it would have been to pick up the out-of-pocket costs (even if the procedure then didn’t count toward the annual deductible.)

Terhune reports:

The difference in price can be stunning. Los Alamitos Medical Center, for instance, lists a CT scan of the abdomen on a state website for $4,423. Blue Shield says its negotiated rate at the hospital is about $2,400.

When The Times called for a cash price, the hospital said it was $250.

It is not, of course, how insurance is supposed to work, and it doesn’t mean insurance isn’t worth having. Insurance covers more preventive care, drugs, hospitalization, surgery, major illnesses, etc. This cash discount is for limited services.

But more pricing information – some being disseminated by physicians – is becoming public and, relatively speaking, transparent.  Such information sheds some light on how hospitals price services, how insurers negotiate and who is shifting what costs onto patients. A new Consumer Reports piece sheds more light on the wide variance in health care costs.

Insurers argue that they need to keep big and prestigious hospitals in their networks; hospitals then have leverage to demand higher prices. A recent Health Affairs study shed some light on this. (AHCJ members can get access to full text.)

This story focused on the Los Angeles area. It would be interesting to call around and find out what hospitals are charging – and who is paying.

Joanne Kenen (@JoanneKenen) is AHCJ’s health reform topic leader. If you have questions or suggestions for future resources, please send them to

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