Top hospitals charging patients up to 1,800% more for services than they actually cost: study : Health

This is misleading. Hospitals do not control what they are reimbursed, either by insurance, government, or the patient. “Charges” are basically arbitrary considering insurance and Medicare decide what they will be paid for any given service, and the hospital never sees most of those ‘charged’ dollars. Payments, on the other hand, are completely controlled by the top private insurance companies on what services they will reimburse, when, and how much of it. This can be contracted as a % of what Medicare sets as its reimbursement and differs across all specialties/departments.

The insurance companies have both the patients and the hospitals by the balls. Insurance companies contract with hospitals at agreed upon levels (essentially using their large customer pools as leverage to threaten making the hospital ‘out of network’) where they basically just run those rates as low as possible. Say they used to reimburse for open heart surgery at 150% of Medicare, but now they decided they’ll only pay 50%. What does the hospital do? They’re not going to get less or accept less open heart surgeries. They can’t just cut out one of the surgeons to cut costs or downgrade their surgical equipment. They also hear that Medicare will be lower it’s reimbursement by 5% next year. WTF do they do now???

Meanwhile, some of the least ‘profitable’ parts of a hospital are the most necessary. There’s some departments that will never, ever, ever make up what it costs to run itself, which is why having all departments (both unprofitable and profitable) under one roof is beneficial for everyone. So the easy stuff at the hospital, like a flu shot, gets ‘charged’ as way more % of its cost in order to help cut the losses from those essential but ‘money draining’ departments/units.

For insurance companies, it’s essentially a race to the bottom for who can cut the lowest coverage deals, making their customers pay larger portions, while still increasing premiums, and taking the difference as profit. Both hospitals and patients are getting the brunt end. With insurance companies covering less and less (in amount, frequency, and scenarios) patients are forced to foot the bill way more often. With less reimbursements coming in, hospitals are constantly cutting already short staff, making ancillary service closures in order to afford keeping hospital lights, machines, and staff going 24/7 (spoiler: that is expensive).

TL;DR “Charges” don’t really mean anything in terms of what actually gets paid. The private insurance companies have almost all control over what’s actually reimbursed healthcare, which is often a % of Medicare, and they’re aggressively cutting reimbursements/coverage everywhere, leaving both hospitals and patients shit out of luck.