That windshield is pretty pricey. Depending on options (rain sensor, solar tinting, it can run higher than even the part quoted on the second invoice.

I digress… it’s not uncommon for insurance prices to be higher than cash prices, but as mentioned previously, the pricing is probably much different. My guess is they’re offering steep discounts over the amount on the invoice; perhaps even lower than their “cash” price.

I had a similar experience with my doctor. I requested a copy of the results from my recent physical, to which my Doctor’s nurse said that was confidential. The only way they would mail me the results would be if I filled out a waiver.

I did so, and 2 weeks later I received results from the last 5 years, or about 50 pages of info. How nice of them, or so I thought.

Shortly after I received an explanation of benefits. My doctor had charged my insurance carrier $200! Never fear, the insurance company “negotiated” the rate down to $90, which they payed in full.

This is an outrageous charge, and way more than what I requested! But since the charge to me was $0, I had very little incentive to protest.

If they make more money by steering you to Safelite, or spend less with some sort of performance guarantee contract – “If you have less than 1% complaint record for the claim period, you get a bonus of $XXX ..”
Insurance companies are competitive, well sort of, and having ‘no problem’ glass repair is a selling point, no?

tom

The medical industry works the same way. Medicaid has had more of an effect on costs than any other factor. Say your Doctor needs to make $25.00 on each patient to keep his door open so he sets his office visit fee at $35.00. Along comes Medicaid and with it a large number of patients covered by it. Say Medicaid only reimburses 33%. To make that $25.00 the Doctor has to charge $75.00 per visit. So he has to change his office visit rate to $75.00 and the guy who comes in without insurance has to pay the $75.00. Back in the 80′s there were Doctors who would charge the guy without insurance $35.00 and charge Medicaid $75.00. Remember them, they were the ones in the news on trial for Medicaid fraud?

I see sandman’s logic about it possibly being illegal to charge less because of price setting by the government (for ex., the guy who did my windshield mentioned something about how all insurance policies in PA must cover glass replacement by law). But I’d disagree that “your insurance company doesn’t have much incentive to bargain down a standard price “. I think they absolutely do, just like my health insurance company does.

So what’s really going on then? Are auto insurance companies stuck with these laws? Does the health insurance industry just have better lobbyists?

Being a reader of this site, you can surmise that my first question is, “What government regulation causes this to happen?” Which isn’t to say that it couldn’t just be bad business decisions, but it seems odd in the case of auto insurance, which strikes me as incredibly competitive and cost-conscious.

So, off I go to the internet. I didn’t want to make this a project for the night, so this is probably just a starting point for more research, but there seem to be state requirements that say that an insurance company cannot limit where you get your car repaired. In fact, they mostly can’t even recommend a shop to get it repaired at unless you ask for it.

Well of course that leads shops to charge whatever they want, so it appears as though states started creating rules and guidelines for what insurers are required to pay shops. Government setting prices… what could go wrong?

In your case, Coyote, I would imagine that the payment rules for glass replacement are out of sync with reality, and glass shops can charge insurance companies much more than the market price. Thus, your insurance company doesn’t have much incentive to bargain down a standard price (and heck, it might even be illegal for them to do so), since so many of their customers are coming from non-affiliated glass shops that can charge a much higher rate to the insurance company and offer incentives to customers.

All of this should be part of the discussion with health insurance, as I’m guessing many of the same issues are in play.

Thanks for your post… it motivated me to learn a little something I didn’t know. You might also guess that I’ve never had a major wreck with my car, so really haven’t had to deal with this stuff directly.

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A small percentage of physicians have been lobbying unsuccessfully for years for the return of an out-of-pocket health care system coupled with catastrophic health insurance. Gross receipts for health care providers would fall, but overhead expenses also would fall because we wouldn’t have to deal with all the insurers. There’s also a medical benefit to this system: studies have shown that when a person pays for care and for medicines, he is more likely to follow his physician’s orders, more likely to take the medicines as directed, and more likely to get better, faster. A small co-payment doesn’t provide this benefit.

Can’t believe a free market advocate like you made this slip of the keyboard. I think you have no deductible windshield replacement.

Tag: There ain’t no free lunch.