Buzz
Typically, when money changes hands for goods or services, there’s supposed to be a connection between the amount you pay and what you get in return. However, the odd structure of health insurance often leads to a disconnect between the price and the value.
Here’s what happens when you receive a flu shot and you have private insurance:
You (the patient) request the flu shot.
The clinic submits a payment request to your insurance.
Your insurance pays the clinic for the shot.
Federal regulations forbid the clinic from charging you any copay, deductible, or coinsurance for the flu shot, so you end up with no bill.
The cost is absorbed by the insurance plan's general funds, which come from the premiums you pay each month.
Who benefits from this situation? As the patient, you receive a 'free' flu shot, but in reality, you're still paying for it one way or another. (At least you’re also getting protection against the flu, which is a positive outcome.) The insurance company covers the cost, but they also gain a patient who’s less likely to fall ill, thus saving them money in the long term. However, the clinic arguably gets the best deal of the three parties.
Think about it: The clinic can advertise flu shots with the pitch, 'Why not? It’s free.' Then, they can turn around and bill the insurance company for almost any price they choose.
A flu shot usually costs between $20 and $40 if you pay out of pocket, but Kaiser Health News found that Cigna paid as much as $85 for some flu shots. Why the price difference? Because the cost of a flu shot is determined solely by the agreement between the insurance company and the provider. This is the case for most medications, procedures, or any other medical charges: prices are negotiated between large companies, leaving us as consumers with little to no input or choice.
“Sutter holds significant influence in California, and insurers have no choice but to pay whatever price Sutter demands,” one health policy expert told Kaiser. (Sutter is the provider that charged Cigna $85, while advertising $25 flu shots to individuals without insurance.)
Any provider offering flu shots—whether it’s a doctor’s office, urgent care center, or a pharmacy—wants your insurance payment, but they also hope you’ll return another time. Pharmacies have additional motives as well. If you visit a CVS or a grocery store for your flu shot, you're likely to make other purchases while you’re there. And if the store gives out a coupon or gift card, you’ll almost certainly make extra purchases, often spending more than the $5 they gave you in return.
As consumers, we don’t have much influence over the behind-the-scenes workings, but at least it’s comforting to understand why everyone is eager to offer you something 'free' each fall.
