Earlier quoted context omitted.
> (Insurance was originally for catastrophic care where the cost for a major illness or surgery would get too high.) Agreed 110%. > Having prices so high that only insurers can pay them means only insurers DO pay them and since hospitals and clinics know this they can charge whatever they want. I've explained this in more detail on another recent HN thread, but basically: prices are 'so high that only insurers can pa…
[1] Medicare reimburses less than the actual costs of services provided per-patient, before accounting for any overhead Hospitals don't even know what a given service costs, so this statement seems to need a little more equivocation around it.
That's not really true. We're talking about the costs of goods sold, which means it's pretty easy to place a lower bound on the marginal costs. For example, if the lab supplies for running a certain test cost $100/unit from the vendor and Medicare pays $93, you know that the hospital is losing money off of it. We're not taking into account the overhead, infrastructure, or any of that stuff, since it doesn't factor into COGS.
Anyway, this number comes straight from Medicare's own figures, astonishingly. I can't dig it up right now, but it's in the public record, somewhere within a ~100 page PDF. I have the PDF at home and have linked to it on HN before. Medicare literally acknowledges that they reimburse less than 100% of the direct costs that they incur (in 2012 it was 93%, IIRC.)