Price difference for insured vs. uninsured?

Question

Is it standard practice for there to be a price difference
in auto repair, health care, and the like? How is this policed?
Seems vaguely like a tax on those paying for insurance?

I've seen discounts for uninsured
in both health care and auto repair
for as much as 50%. Maybe the billing
is just to make the customer feel good in
both insured and uninsured cases.

However, these are just one time things
for most individual consumers, so we don't really know unless someone looks
at it.

Answer 1

This is unfortunately quite common. I see this quite often with auto glass repair shops. If you ever see an ad for a glass shop offering to pay your deductible, now you know how they do it, they just tack it on to the bill to the insurer as a labour or part charge. However if you were to walk into one of these shops and state you want to pay for the replacement yourself, obviously an individual cannot afford to pay what they charge an insurer, so the rate is way lower, although you'll be lucky to get a company to admit what they would truthfully charge an insurer for the same job. Unfortunately these claims are too small in value and too numerous to be worth the time of the insurer to investigate. The same goes for physiotherapists (notorious!), body shops, etc. Unless they get greedy and charge the company something that's way out to lunch or they submit fraudulent claims that would be picked up by a company's fraud prevention measures, pretty much all companies accept it as a cost of doing business. Of course you know who has to pay for those costs!
Some insurers have preferred shops (usually auto body shops)where they can trust that the company is being somewhat honest and consistent, however you are not obliged to use these shops.

Answer 2

Actually, insurance companies can usually bargain for significant discounts for the services that they cover. That's especially true in health care.

An example: I recently went to the ER with what was originally thought to be a heart attack. It wasn't, thankfully, but the total bill was close to $5,000 for 4 hours in the ER, 48 hours on a Holter monitor, and the doctor's fee. When I got my EOB, the provider discounts totalled over $3,000.00! Since I had insurance, the total bill was slashed to a bit under $2,000.00. If I didn't have insurance, I would have had to pay the entire $5,000.00.

Insurance company discounts on prescription drugs can exceed 80% in some cases and are almost always at least 40% - 50%.

Auto collision repairs are similar though the discounts aren't nearly as generous. It's one of the reasons that some auto insurance companies can charge much lower rates than others do. They negotiate discounts on repairs with preferred repair shops and then require the insured to use the preferred shop in exchange for a lifetime guarantee on the repair job. You're generally free to go elsewhere but you might not get enough money to pay for the repair job or will have to forego the guarantee.

It's not policed, and there's no real need to. It's standard business practice to give discounts to your best customers. The insurance business is no different. If the insurance companies didn't get those discounts, your insurance costs would be MUCH higher.

If anything it works out to be a tax on those who DON'T have insurance, not the other way around.

Answer 3

Yes, it's real. Or rather, wholesale users of services, like insurance companies, usually negotiate price breaks for services like health and car repair services. If you spend a million dollars, you can negotiate a lower per hour rate than if you just spend a couple thousand a year.

It's not policed at all - it's purely market driven. Those with insurance are actually receiving the lower price, so it's REALLY a tax on the UNINSURED.