Insurance vs. Private Pay: An Ethical Tension in Modern Clinical Practice

The question of whether to accept insurance or operate as a private-pay practice is often framed as a business decision.

But for many clinicians, it is fundamentally an ethical one.

Recent workforce analyses indicate that a significant proportion of behavioral health clinicians in private practice do not accept insurance, with particularly low participation in Medicaid panels (Cunningham et al., 2024). Reimbursement disparities, administrative burden, and delayed payments are frequently cited as contributing factors (Cunningham et al., 2024; Bishop et al., 2014). At the same time, limited in-network provider availability contributes to reduced access for lower-income and marginalized populations (Mehrotra et al., 2023).

Both realities intersect directly with the ACA Code of Ethics (2014) and create meaningful professional tension.

Autonomy vs. Accessibility

The ACA Code affirms our primary responsibility to promote client welfare (A.1.a) and to avoid financial practices that create barriers to care (A.10.a). Simultaneously, it emphasizes counselor self-monitoring and maintaining professional effectiveness (C.2.a; C.2.g).

Choosing private pay may protect clinician autonomy by allowing:

• Control over fees and session length

• Flexibility in documentation practices

• Freedom from “medical necessity” determinations

• Greater discretion in treatment planning

However, declining insurance may reduce access for clients who depend on in-network benefits. National data show that patients seeking behavioral health care experience higher rates of out-of-network utilization than those seeking medical or surgical services, often resulting in greater out-of-pocket costs (Mehrotra et al., 2023).

Conversely, accepting insurance can increase accessibility by lowering financial barriers (Bishop et al., 2014). Yet insurance participation often requires diagnostic assignment and documentation aligned with payer criteria, which some clinicians experience as constraining (Cunningham et al., 2024).

The ethical question becomes:

How do we balance professional autonomy with the mandate to reduce barriers to care?

Sustainability vs. Equity

Burnout among mental health providers has increased significantly in recent years, particularly following the COVID-19 pandemic (Morse et al., 2022). Administrative workload and productivity pressures are well-documented contributors to clinician stress and attrition (West et al., 2018).

Insurance-based practice often includes:

• Lower reimbursement compared to market private rates (Cunningham et al., 2024)

• Time-intensive claims processing and appeals

• Documentation structured for third-party review

Private pay models may support:

• Smaller caseloads

• More time for case consultation and documentation

• Increased financial predictability

At the same time, equity considerations are central to ethical practice. ACA A.4.a addresses avoiding harm and discrimination, while A.11.b encourages pro bono and reduced-fee services when possible. Research consistently demonstrates that financial barriers are among the primary reasons individuals do not initiate or continue mental health treatment (SAMHSA, 2023).

Thus, the ethical tension:

Does sustaining the clinician protect long-term client welfare — or does opting out of insurance unintentionally widen disparities?

For many clinicians, hybrid practice models represent an attempt to reconcile this tension.

Freedom vs. System Participation

Insurance participation requires compliance with diagnostic classification systems and medical necessity standards. While diagnosis can facilitate treatment planning and reimbursement, it also introduces concerns regarding stigma, privacy, and over-medicalization of distress (Paris, 2015).

Operating privately may increase confidentiality by limiting third-party disclosure. However, ACA D.1.i emphasizes advocacy within systems, and C.6.e underscores ethical business practices and transparency.

National policy discussions increasingly highlight the shortage of in-network behavioral health providers as a systemic access problem (Mehrotra et al., 2023). When clinicians withdraw from insurance networks, access gaps may expand — particularly for Medicaid populations (Cunningham et al., 2024).

The ethical question:

Are we preserving clinical integrity — or disengaging from a flawed but necessary public system?

There Is No Ethically Pure Model

The ACA Code does not prescribe a business structure. It calls for:

• Ongoing self-reflection

• Avoidance of harm

• Promotion of client welfare

• Professional sustainability

• Social justice awareness

Insurance participation and private pay both carry ethical strengths and ethical risks.

The responsible question is not:

“Which model is correct?”

It is:

“How am I making this decision, and how am I mitigating its potential harms?”

Ethical practice requires intentionality — not perfection.

Continue the Ethical Conversation with The Clinician’s Compass Education

If this tension feels familiar, that’s because it is.

Insurance vs. private pay is not just a financial decision — it is an ethical negotiation that requires discernment, self-reflection, and a working knowledge of our professional code. And this is just one of many complex dilemmas modern clinicians face.

At The Clinician’s Compass Education, we provide continuing education experiences designed specifically around real-world ethical and professional challenges like this one — insurance participation, AI integration, documentation practices, social media boundaries, equity in access, and sustainable private practice models.

Our courses are:

• Grounded in current research

• Anchored in the ACA Code of Ethics

• Focused on practical, application-based learning

• Eligible for continuing education credit toward licensure renewal

Ethical practice isn’t static. It requires ongoing calibration.

If you want to stay informed about upcoming CE trainings and deeper dives into the ethical tensions shaping our field, sign up for our newsletter.

Your clinical compass deserves intentional alignment.

References

American Counseling Association. (2014). ACA code of ethics. Author.

Bishop, T. F., Press, M. J., Keyhani, S., & Pincus, H. A. (2014). Acceptance of insurance by psychiatrists and the implications for access to mental health care. JAMA Psychiatry, 71(2), 176–181. https://doi.org/10.1001/jamapsychiatry.2013.2862

Cunningham, P. J., Kang, Y., & Ireys, H. (2024). Insurance acceptance and cash pay rates for psychotherapy in the United States. Health Affairs Scholar, 2(1), qxae110. https://doi.org/10.1093/haschl/qxae110

Mehrotra, A., Chernew, M., & Linetsky, D. (2023). Out-of-network mental health care and disparities in access. Health Affairs, 42(4), 512–520. https://doi.org/10.1377/hlthaff.2022.01110

Morse, G., Salyers, M. P., Rollins, A. L., Monroe-DeVita, M., & Pfahler, C. (2022). Burnout in mental health services: A review of the problem and its remediation. Administration and Policy in Mental Health and Mental Health Services Research, 49(3), 389–399.

Paris, J. (2015). The intelligent clinician’s guide to the DSM-5®. Oxford University Press.

Substance Abuse and Mental Health Services Administration. (2023). Key substance use and mental health indicators in the United States: Results from the 2022 National Survey on Drug Use and Health. U.S. Department of Health and Human Services.