> “What we’re learning from the hospital data is that insurers are really bad at negotiating” Do the insurers have any incentive to negotiate well? Since their customers are not very price-sensitive (since they aren't marketing directly to patients or doctors), I would imagine they don't have a huge incentive to do anything but apply a markup to whatever prices the hospital tells them it costs.
Well, if they can negotiate a particular incident down then they pay less for it, but in the long run big picture you're exactly right. So long as they can inject noise into the plan shopping channel and so long as they aren't doing worse than their competitors by that noise margin, they'll do fine. Which in practice means that they just pass along the costs.