it's actually quite challenging to figure out what would happen if EVERYONE paid cash, i.e., if there were no insurance (nor any government help).

the big reason the cash price is so low is that people who can pay generally have insurance, so the cash price is mostly for people who have a tough time paying anything at all. for that "market segment", $250 for a ct scan is better than zero.

but if hospitals operated like other industries (no insurance, no issues with turning poor people away, etc.) then they'd set a uniform price much higher than $250.

in short, the insured are subsidizing the price for the uninsured. although perhaps a few extremely rich self-insured people get to benefit from this as well.


that said, i do think that insurance companies don't have enough incentive or competition to keep prices down. that mechanism appears to be one of the many things broken about our health care / insurance system.

it's also a cautionary tale for single-payer. while i'm a fan, and think it would be far better than what we have now, some thought needs to be given to eventual corruption in this very process -- eventually, the medical business will get their people in a position to determine the payouts and the single-payer will start paying higher and higher prices. that might take 20 years, but the business side will be relentless.

With the new loss ratio limits, an insurance company's profits are limited to a fixed percentage of the dollar amount of total claims they pay. The higher the claims the higher their profits. They have no incentive to negotiate down prices of services but rather the opposite, under the new law.

As an ex-Deloitte employee, I am disappointed their representative has such little understanding of how cost accounting works. Clearly, the hospital realizes most people who are paying with cash have little to no resources. If charged to true cost, they could never pay, so they come up with something. You are 100% correct when you state that this with insurance are subsidizing the rest, as it has always been.

Imagine if the article claimed that homeless people got free care at hospitals, so we should all get free care as that was the true cost. Everyone would laugh at the author for claiming such BS. However, by assigning a small dollar amount, people suddenly believe it. The reality is that there is no way any hospital would stay in business if everyone paid those amounts for those procedures.

What we as a nation need is an HONEST discussion about medical costs. The reality is that the middle class with insurance is subsidizing the medical care of the poor and the elderly. As those populations grow and the middle class with insurance shrinks, the cost of subsidizing, per person, begins to shoot up. Not until people truly understand what is happening will they get motivated enough to drive the change needed. Sadly, I truly believe many politicians are not interested in educating the public or fixing the problem. They are just happy to have their wedge issue to keep getting votes handing them power over all of us.