The Downside of Insurance Paid Therapy

Recent changes in health care have been making it much easier for people to have access to mental health services without having to pay out of pocket. This seems like a great thing because it makes counseling much more affordable and accessible to the masses. However, as with most things in life, there is a catch. As mentioned in a previous blog post about the DSM 5, our society is a long way from having an honest discussion about what it means to have a mental illness or disorder, partly because of the role insurance companies play in mental health care.

Studies and reports have been coming out for the past few years about how depression, anxiety, and a variety of other mental illnesses and disorders are reaching record-setting highs. But if you take a moment to think about what that means, you may be surprised at how meaningless it actually is. The idea of diagnosis was first conceived in order to create a language to describe categories of symptoms of mental functioning. However, in time this has evolved into a means of pathologizing people’s qualities or eccentricities, sometimes for the sake of issuing them a diagnosis that insurance companies are willing to pay for.

When one pays for therapy through their insurance, there is so much that goes on behind the scenes that clients are likely unaware of. Because of insurance company rules, if you pay for psychotherapy through insurance, you must be given a diagnosis. The reason for this is that insurance companies, like any business, do not want to pay for perceived unnecessary expenses. They require a diagnosis be made by the clinician in order to justify funding your treatment.

But what if a person looking for therapy doesn’t actually have a mental illness or disorder? What if someone is going through strenuous life or relationship challenges and needs professional guidance? What if someone loses a person dear to them and is having a hard time coping? In these situations, a counselor accepting insurance would still have to diagnose them with a billable diagnosis (meaning a diagnosis that insurance companies are willing to pay to have treated) for billing related purposes.

Insurance companies are businesses, and like any business they are trying to make money. Any services they pay for require some form of justification for their expense. So what do clinicians do? They find the most applicable and billable diagnosis possible to justify receiving payment for their services. (Note: not all diagnoses, like Asperger’s or Autism, are covered by health insurance companies. Billable diagnosis may change as the Affordable Care Act goes into full effect).


Given how diagnosis are issued in mental health care, it is worth considering the possibility of how valid or meaningful it is to have mental health diagnosis. Furthermore, because diagnosed mental illness and disorders are on the rise, their definitions are entering the common vernacular, and the meanings can become diluted. For example, people use the words “depression” so loosely today that we are changing the precise understanding of what it means, and the implications it may be having on someone’s life.

The individual wrongfully diagnosed with an illness or disorder may not really care or know about any of this. All they know is that they are getting therapy with a co-pay as their only out-of-pocket expense. It may seem trivial, but this practice devalues what it means to have a mental illness or disorder. It is for this reason that we see statistics indicating that mental illness is on the rise: because people are paying for therapy through institutions requiring that they be given a diagnosis whether they have a mental illness or not. This is in part why we see so much stigma associated with the mentally ill even though it is lessening. Some people think that those with mental illnesses are just weak, or are not trying hard enough to overcome their difficulties. People sometimes use their own growth or experiences in life or therapy to compare themselves with others, and think to themselves “I overcame those same feelings so why can’t you?” Two people may be given the same diagnosis, such as General Anxiety Disorder, but one of them may have been given that diagnosis as a default, to comply with insurance. It is dangerous to expect people with the same diagnosis to heal in the same way, or at the same pace, but many assume that a diagnosis is a formula.

While this is a larger systemic issue, and there are no clear answers or solutions as to what individual consumers or clinicians can do about this, these are there are many things to take into consideration. If a person would rather not use insurance, but may not be able to afford the full fees, most therapists offer a sliding scale rate for private pay clients. Sometime clients can feel uncomfortable asking for a reduced rate, but they should keep in mind that very few insurance companies even pay therapists their full rate.

If you decide to pay through insurance, it is important to keep in mind that your therapist will be required to issue you a diagnosis, and that the same therapist treating the same client may not issue a diagnosis if there is no insurance company involved. Therefore, consider that your for-insurance-purposes-diagnosis may not be completely accurate to you. While it is certainly unreasonable to expect those who can’t afford to pay for therapy out of pocket to do so, it is worth considering what, if anything, you can afford to pay in order to bypass insurance companies growing influence in health care.

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