Why don’t insurance companies pay what hospitals and physicians charge for their services?
There are many reasons insurance companies do not pay full charges. In many instances, charges do not reflect actual costs of the physician or hospital. Charges also may vary dramatically among health care providers that provide the same service. For example, one hospital may charge double what another one does for the same service. In that same example one insurance carrier may pay less than another for the same service. Health insurers negotiate with health care providers to determine what they will pay for health care services. Carriers often obtain discounts from health care providers because of the volume of business that they bring to that provider. The important thing to remember is that if you have insurance, you are receiving a better price than if you do not have insurance.
