What is the Actual Cost of Procedures & Health Care in USA?

Investment Analysis Clubs Macro Economic Trends and Risks
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https://www.nakedcapitalism.com/2026/03/even-patients-are-shocked-by-the-prices-their-insurers-will-pay-and-it-costs-all-of-us.html
When researchers at the Johns Hopkins Bloomberg School of Public Health looked at the data, they discovered that the price different insurers pay for the same billed charges “can be three or more times different at the same hospital,” said Ge Bai, a professor of health care accounting who was among the researchers.

Samantha Smith of Harrisburg, Pennsylvania, went into the operating room for emergency removal of an ectopic pregnancy. “I’m grateful I didn’t die,” she said, but she was shocked to see that the outpatient surgery was billed to her insurer for about $100,000.

Jamie Estrada of Albuquerque, New Mexico, twice received injections of lidocaine in his upper spine to test if a permanent nerve ablation would treat his chronic neck pain. His pain vanished — until the numbing agent wore off about six hours later. The real zinger: His insurer was billed $28,000 for each 10-minute procedure.

Mark McCullick of Longmont, Colorado, was sent for a whole-body PET scan to find out whether his prostate cancer was back. The two-hour scan showed no evidence of cancer, but the $77,000 bill sent to the company that administered his insurance alarmed him.

Smith, Estrada, and McCullick’s cases are all “chargemaster” bills, calculated from the master price list that health providers place on services. Patients who have insurance don’t generally pay them. But they matter because they are often the starting point for the negotiated price the insurer agrees is reasonable to pay for the services. Patients are typically responsible for 10% to 20% of the negotiated price, their coinsurance — and when prices are this high, that can be a big number. What’s more, those negotiated rates are difficult for patients to access (until they get the bill) and seemingly arbitrary.

In the cases of Smith and Estrada, their insurers paid the majority without questions. Penn State’s Hershey Medical Center, which treated Smith, received $61,000, or 62% of what it charged. New Mexico Surgery Center Orthopaedics, which treated Estrada, received $46,000, or 82%.

McCullick’s insurer, on the other hand, said it would pay Intermountain Health just 28% of his $77,000 bill. Then came another curveball: The hospital, which said it had gotten preauthorization, discovered after the fact that his scan was not covered. So it billed McCullick the full chargemaster rate of $77,000 — or, it offered, he could pay the cash rate of $14,259.

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This is so entirely screwed up, I wonder if there is any way to bring it back to normal?

I recall that when the telephone system was as bad (and we were entering WWI) the government took the whole thing over and handed it to the Post Office, which made it - about the same - and then took it back and handed it to AT&T as a quasi-monopoly, from which descended what became known as “the best telephone system in the world.”

We had the same issue when railroads were built with different standards of rail gauge. I don’t know how that one worked, but eventually everybody could run everywhere and it changed the country.

I’m trying to even imagine how you would take a system that is so opaque with pricing, with so many “vendors” charging wildly different amounts for the same procedure, and with so many fingers in the pot, and change it for something better. I suppose that at some point other countries now with universal health care systems must have done something to rationalize everything, but I haven’t ever read about it.

Anybody know? Or have an idea of what might work? It seems stomping in with a single price list for everything would be far too heavy handed, but I don’t know what else you could do. Anybody?

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Billing health insurance is the only business I am aware of where you WANT to get paid less than you billed.

Insurance companies have a ceiling of what they will pay for every medical procedure code. Say code #123 has a ceiling of $1,000. If you bill $2,000, they will only pay you $1,000. If you bill $500, you only get $500.

If you’re getting paid what you billed, there’s a good chance you haven’t maximized your billing.

So we train billers (at least the smart ones) to increase billing for medical procedure codes when you get paid what you billed. Otherwise, you’re potentially leaving money on the table.

Of course, that’s a simple explanation. It’s more complex than that. For example, you need documentation of your costs. Then again, we’re talking about accountants.

Which reminds me of an old joke:

A company needed to hire someone and the final interviews came down to 3 qualified candidates; an engineer, a scientist, and an accountant.

The boss asked the engineer “How wide is my desk?” The engineer got out his laser ruler and stated the desk was 48.225 inches wide.

The boss asked the scientist “How wide is my desk?” The scientist determined that the desk was supposed to be 48” wide, but then took into account what type of wood the desk was made of and the current temperature and humidity, and carefully calculated that the desk was 48.232 inches wide.

The boss asked the accountant “How wide is my desk?” The accountant just looked at him and asked “How wide do you want it to be?”

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It’s actually pretty easy. Use the Medicare reimbursement as the pricing standard. Then let doctors and hospitals charge what they want, but they have to post a sign on the front door with the cash price as a ratio of the Medicare reimbrsement. If you accept Medicare, the sign says “100”. If you’re charging triple the Medicare rate it’s “300”.

Same thing with health insurers, they have to disclose the pricing they get from the vendors so that the customers can see whose screwing them upfront.

And if there is any cheating, the customer gets the Medicare rate, plus $250/hour for the time spent on the phone with the insurer or vendor trying to clear it up.

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How does that help at all for someone not on Medicare? Plus, your PCP probably has access to over 1000 codes from which they could bill. Posting all that on the front door wouldn’t be very helpful.

An Aetna, BC/BS, UHC, and a Humana insured customer all walk into the facility. What is posted on the board for them? How massive of a chart would one have to see on the front door to cover everyone - and at what point does it all simply become utter noise?

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For hospitals, this is already required. Since 2021, they’ve had to post all their prices. These are massive amounts of information, so the information is done online - publicly available for anyone to look at.

It doesn’t work:

So far, “there’s no evidence that patients use this information,” said Zack Cooper, a health economist at Yale University.

In 2021, Cooper co-authored a paper based on data from a large commercial insurer. The researchers found that, on average, patients who need an MRI pass six lower-priced imaging providers on the way from their homes to an appointment for a scan. That’s because they follow their physician’s advice about where to receive care, the study showed.

Executives and researchers interviewed by KFF Health News also didn’t think opening the data would change prices in a big way. Research shows that transparency policies can have mixed effects on prices, with one 2024 study of a New York initiative finding a marginal increase in billed charges.

Trump Required Hospitals To Post Their Prices for Patients. Mostly It’s the Industry Using the Data. - KFF Health News

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Healthcare is a hustle.

“In 2024, the pharmaceuticals and health product industries spent $293.7 million lobbying lawmakers. Health insurances spent $117.14 million. Hospitals and nursing homes spent $131.6 million. This money directly influences legislation that protects corporate profits at the expense of patients and providers. Health insurance CEOs make $20–30 million annually. Our elected officials, with a salary of $174,000 annually, are multimillionaires. Yet, our health care system continues to collapse, our colleagues leave, and our patients delay expensive care.”

2025 was a banger year for healthcare lobbying!

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Companies making shat tons of money from inflated healthcare costs are spending tons of money to influence politicians who are in charge of creating policies that affect healthcare costs. It’s not very complicated.

The system is working as intended, just not for consumers.

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The problem right now is that no one knows what medical services should cost. I would expect that people with private insurance would pay more than Medicare – maybe 30% more if they’re getting competitive pricing in a non-rigged local market. (There a fewer and fewer of them.)

The doctor would just apply his global multiplier to the Medicare code for the procedure. We’re not going to let him charge 10% more on one code and 300% more on the next. He’d have to develop some average based on the mix of codes his practice typically bills.

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Hospitals are posting their charge-master rate (the unlimited price gouging price that no one pays).

They need to be telling you up front what they get reimbursed by your health insurer. And your health insurer needs to be telling you what they’re reimbursing the dpctors and hospitals that are in-network in your health plan. Under the current, completely crooked system, you don’t get to know the cost until your get the bill weeks after the procedure.

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How about at least 10 years ago? Resulting from over two decades of expensive carefully planned and implemented NOISE making, e.g. Harry and Louise.

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Yep. That’s the main reason that I (for one) am so skeptical of claims that single payer will reduce costs.

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Why? As the patient, I don’t care what my health insurance pays for the service. I only care what I have to pay for the service. They’re not unrelated, since some copays are a percentage of the service cost - but if they tell me the one, I’ll know the other.

And of course, you find out after the fact when you get your EOB, which breaks it down.

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I understand that and it’s reflected in your posts on the subject.

On the other hand, I’m very interested in what my health insurer is paying for a service, because over the years I’ve seen them paying as much as 500% of the Medicare reimbursement. If they’re paying more for a service, presumably my insurance premium is higher.

Thus my strategy of selecting a high deductible health plan where it’s unlikely that I’ll use enough health care services over the calender year to meet the deductible, and then pay out of pocket for those items where the health insurance price is more than the cash price I can get on my own.

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Almost certainly not. At least, not in any material sense. It almost certainly makes no measurable difference to your premium whether you, as a single patient in a large insurance pool, take any action in choosing your service provider based on reimbursement rates. Especially if, as you say, you’re not consuming enough health care services to get over your deductible - so your expenses are going to be disproportionately low relative to the pool to begin with. If insurance is going to be covering the service, you’re better off picking the provider that is the best fit for you, rather than making choices based on insurance reimbursement rates.

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You keep saying that, but that’s not been my experience over the past 25 years. Getting an MRI is a commodity. I’m not going to pay my health insurer 5x the cash price, just so that the expenditure counts towards my deductible. If you’re likely to be a minimal user of health insurance, the smart play is to choose the highest deductible plan and give the health insurer a smaller pot of your money to skim from.

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I said if the procedure is covered by insurance. If it’s not, because you haven’t met the deductible, then of course the price matters to you. But in that case, you still only care about what it costs you. If the insurer is paying for it, you shouldn’t really pay much attention to what the insurance company is paying for the service.

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Yes, in the one year out of ten when I breach my deductible, I don’t care what the insurance company is paying for a procedure, But in the other 9 years I do, and it’s saved me $200,000 to $300,000 dollars over the past 25 years, versus just assuming that my health insurer is beating the bushes to get me the best price on medical services.

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No one would disagree. If you are paying for a medical service out of pocket you are always better off doing some price comparisons. Though if you’ve saved more than $10K per year in insurable health expenses over 25 years, you’re a very heavy user of health care. At least $20k per year, probably more. Someone with such heavy medical expenses might be better off running more of their costs through insurance.

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Most of the savings was on an expensive immunosuppressant drug I started taking for lupus nephritis in 2000. I switched to a high deductible policy and started buying the drug from Canada. (Today the cash price for a year’s supply is $260, not $10,000 to $15,000.) I also found that I could get the lab tests required to monitor my condition for about the Medicare reimbursement plus 10% if I ordered the tests myself online, rather than have to doctor’s office do it and bill me at double or triple the Medicare rate. I’ve been fortunate that the lupus has remained in remission for 25 years and that I’ve suffered no complications from the relatively toxic medication. So I had no hospitalizations or anything that caused me to breech my high deductible.

So even if you’re heavy user of health care (at unlimited price gouging pricing), the skim, scam and fraud in the system may still make paying cash the best bet.

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Most times consumers are unaware. Let’s say someone goes to an ER for a shoulder injury. They receive treatment from a physician that is billed differently, through a third-party provider. They also receive a sling that is billed directly from the manufacturer. This is on top of the things that are billed directly from the hospital.

How is anyone supposed to price check this visit before treatment? It’s a racket.

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