Penalized for Health Insurance?

Having health insurance saves you money on your medical bills. Usually. But not all the time. Sometimes having insurance increases how much you owe.

On August 11, I accompanied my wife to Valley Regional Hospital for a prescheduled test. All went well. Valley Regional provided excellent service.

Eventually the bill arrived. For $538 – but if paid promptly, the bill gets reduced to $457. We paid promptly.

For the uninsured, Valley Regional would have billed $1,005 for the test. But our insurance led to the hospital's removing $467 from the bill.

Note that the insurance provider did not pay a penny for the test. All the money Valley Regional received came from my wife and me. But the existence of the insurance caused Valley Regional to charge a lesser price.

Dartmouth-Hitchcock Hospital also got into the action. Ever since the two hospitals joined forces, many of Valley Regional's test results get read, remotely, by Dartmouth-Hitchcock. For that service, Dartmouth-Hitchcock sent us a bill.

They asked us for $137. The full bill would have been $361, but Dartmouth-Hitchcock gave us a $224 discount because they thought we were uninsured. (We hadn't set foot there and thus hadn't presented our insurance cards to them.)

Being an honest chap, I phoned Dartmouth-Hitchcock and explained we have insurance and provided the info. They said to disregard the bill and wait for a replacement, which would be mailed out after billing had been processed through the insurer.

Eventually the replacement bill arrived. Now they asked us for $178. Yes, we ended up paying $41 more solely because we have insurance.

The original cost remained $361, but now there was no $224 discount for the uninsured. Instead, there was a $183 discount for having the insurance.

Again, the insurance company paid zero to Dartmouth-Hitchcock. Everything Dartmouth-Hitchcock received came from my wife and me. (The insurer pays nothing to a health provider until after the patient has paid the "deductible," or many thousands of dollars, to such providers.)

Having insurance merely means the hospital lowers the asking price, per its prior negotiations with the insurer, to remain on the insurance plan.

But it seems odd for the consumer to end up paying more for having and using insurance.

I'm not complaining about the prices charged. They're more or less what I had anticipated. And we should commend Dartmouth-Hitchcock's price reductions for the uninsured.

But it seems to me we should cut out the middleman – the insurance provider. Let everybody face the same pricing structure and do away with most aspects of health insurance. Clearly, Valley Regional is happy to accept $538 ($457 if paid promptly) for the test. Let them charge that amount to everyone.

Perhaps they charge $1,005 solely so they can let themselves be bargained down by the insurance provider and hence remain on the insurance plan. Heck, some of the inflated charges comes from hospitals and medical offices hiring workers just to navigate the maze of health insurance paperwork and codings. Or from hiring experts to bargain with the insurers in the first place.

Let Dartmouth-Hitchcock charge $137 or $178 (not $361) to everybody and let everybody be charged the same price.

So, fellow consumers, if you ever get a bill from Dartmouth-Hitchcock that assumes you lack health insurance, think twice before correcting their misperception. For it might cost you money.