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This is not true on the cash discount. Usually providers and insurers have negotiated rates that can sometimes be lower than cash pricing. Pricing is usually set high enough that there will be no undercharging and discounts can be given for cash.

With Medicaid for example you may be contracted to be paid $12 for a service, but $14 for Blue Cross and $20 for Anthem. The bill says you charge the $20, but you will only be paid what was agreed upon. The cash pricing is usually based on the highest reimbursement, but can be discounted at the providers discretion.

The models are complex, but there is more work and regulation for processing an insurance claim versus cash.