Can't Find a Psychologist Who Accepts Insurance? Here's Why

Prospective clients often tell me that they had a very hard time finding a therapist who accepts payments from their insurance, or that their family members and friends cannot find a therapist who accepts insurance. Many therapists only see patients who pay “out of pocket.”

Why? The discrepancy between insurance payments and self-pay is huge. Psychologists in private practice tend to work about 50 hours per week, no matter how many of those hours are paid direct service. Each clinician will have limits to the number of hours they can see clients while maintaining a high level of care, attention, humanity, and application of professional expertise. Reserving a few hours for pro bono activities—such as supervising students, speaking to community groups, writing educational blogs, collecting data, and so on, most clinicians will likely see between 20 and 30 paying clients per week, for one session each. While fixed professional expenses, such as health insurance, malpractice insurance, office rent, etc., do not change, the income discrepancy between therapists who accept insurance payment and those who bill clients directly grows wider with each additional client.

At $80/session (about the average paid by commercial or government insurance) working 20 hours per week, psychologists’ gross income is $76,800/year. But remember, private practitioners are part of the gig economy. We do not get any benefits such as health insurance, paid vacation, or sick time—and no perks. Plus, we have plenty of expenses. Conservatively estimated: $1000/month for office rent; $1100/year for malpractice insurance, $6000/year for health insurance; $900/year for internet services; $900/year for phone service; $500/year for CE classes; $5000/year for billing service. (This list does not include any professional memberships, travel expenses for CE courses, office supplies, cleaning services, paper, pens, laptops, postage, printing or even license renewal fees.) I calculated income based on 48 weeks work per year, allowing two weeks vacation, and 10 days that could be used for holidays or sick days. Then I subtracted office expenses. That’s why the actual income for therapists seeing 20 clients per week is $50,400. Compared to $80/hour paid by insurance, self-pay fees are around $200-$250/hour. I calculated based on $200/hour, and the annual income for a clinician who accepts self-pay clients came to $192,000 (after necessary expenses, that would be $165,600).*

At 25 hours of direct service per week, clinicians accepting insurance end up with an annual income, after necessary expenses, of just under $70,000, still a far cry from the average income in the San Francisco Bay Area, where I work—about $88,000—or the median of $96,000. Those who accept only direct payment and see 25 client hours per week have an income of about $214,000.

For those clinicians who spend 30 hours per week in direct service, seeing clients, the income for those accepting insurance is just at the average level, $88,000/year. For those accepting only fees for service, the income for a psychologist seeing 30 clients/week is $261,600.

As psychologists who are trying to provide a decent life for their families switch from accepting insurance to accepting only self-pay clients, it leaves even fewer psychologists available to provide therapy to those who cannot afford $200/week (or close to $10,000 per year), for their therapy. What would constitute an answer that would meet the basic needs of psychologists, while also allowing more people to access services through their insurance? Here are three possibilities:

1. Communities could subsidize community mental health centers, where clinicians could have real jobs, rather than be part of the gig economy. Those real jobs could start at the median income for the area and go up with experience. Full-time clinicians could be expected to do 30 hours of some sort of service, which might include supervision, seminars, community outreach, and clinical direct service, with 5-10 hours reserved for phone calls, notes, and consultation with peers.
2. Another possible answer would be for insurance companies (or perhaps, ultimately, a national single-payer system such as Medicare for All), to increase payment rates. In order for a clinician providing 25 hours of direct clinical service per week to approach the San Francisco median income of $96,000, to give an example, such payments would have to be a minimum of $100/hour for those practicing in that metropolitan area. That would provide an income, after basic expenses, of $93,600, a decent income for a clinician, particularly one who is just starting out. But those rates would have to rise, at least pegged to the rising cost of living in any particular area.
3. There could be a combination of these options, with community centers offering jobs to therapists while demanding decent reimbursement to defray the costs of maintaining the centers.