|
Insurance companies have a built-in asymmetry of information and bargaining power compare to you, and most areas have a monopoly or near monopoly of health care services, such that it is possible to pay more out of pocket than if you had insurance, even if you had the float. Consider two populations: insurance companies which can negotiate effectively because they know the true cost, and uninsured people who do not know the true cost. Let's suppose the true cost is $10, but the hospital charges $30. The insurance companies negotiate beforehand to only pay $11, allowing 10% profit. The hospital likes this. The insurance company takes in enough to cover those costs, so it's also happy. Think also of the person with insurance, who gets the "bill" for $30 and the note that it's been paid by the insurance company. Looks great, yes? But now think of the person without insurance, who gets a bill for $30. Do they accept the price, or negotiate to lower it? Some will just pay. Others might negotiate it down to, say, $25 - a 33% savings! But to the hospital, that's $10 in profit. And if the bill uses medical codes and abbreviations that you don't know, then that's more wasted time trying to get up to speed to understand what it is you are negotiating. While the insurance company has an economy of scale. |