Ge Bai, Contributor I am a professor of accounting and health policy at Johns Hopkins.
Growing evidence demonstrates a counterintuitive phenomenon in healthcare: the cash price is often cheaper than insurance prices for the same service or product. Cash prices are unilaterally determined by a provider, while insurance prices are bilaterally negotiated between a provider and an insurance company. Don’t insurance companies presumably possess more bargaining power than individual patients?
Our study found that among common shoppable services—such as lab tests, imaging, and joint replacements—half of U.S. hospitals set cash prices lower than their median insurance negotiated prices. About 20% of hospitals even set cash prices equal to or lower than their …