The secrets of hospital bills

What do you call a “market” where no one chooses the services or knows the prices?

Today, the New York Times published an analysis of hospital pricing in the US, comparing prices charged to uninsured people, to Medicare, and to different insurers, revealing that these prices can vary up to 900%, often to the detriment of large insurers.

https://www.nytimes.com/interactive/2021/08/22/upshot/hospital-prices.html

This represents a marked contrast to the story we are often told about health-care pricing in America — that large insurers use their might to negotiate lower rates from price-gouging hospitals. That might be true sometimes, but often, it’s not.

And as the Times points out, it’s not necessarily the insurers who pay those inflated prices — many insurance plans are actually run by large employers, and only administered by the insurance company. So when Cigna turns down a treatment, it’s actually your boss doing it.

That may be a nice fiction for your boss to maintain in order to deflect your ire the coverage you’re denied — but it also means that when Cigna allows a hospital to gouge it for your care, it’s your boss that pays for it — not Cigna’s shareholders.