It's fun to speculate about the reason for grotesquely high health-care prices, and to look for a scapegoat (greedy doctors, lawyers pushing malpractice suits, defensive medicine, patients demanding unnecessary care, what have you).
Actually identifying the cause is rather trickier, given that health-care accounting is even crookeder than music-business accounting, and actual costs are like performers' royalties.
This article, however, has a glaring Clue:
Medicare requires that you charge their price which is grossly inflated. Then they pay about 10 to 20% of the price. If a doctor member charges a cash patient less, and Medicare learns about it, they will reduce his “profile” price to the cash price and pay 20% of that. You simply cannot go to cash medicine and stay enrolled as a Medicare provider.
Aha!
So. We have government price-fixing, which forces providers who accept Medicare to inflate their prices by a factor of 5 to 10, which is exactly consistent with the overpricing we see when comparing list prices for medical care with a naive notion of "what it ought to cost." The Medicare bureaucrats look like heroes for saving the taxpayers 80-90% off the list price, which sounds like a huge win as long as you don't look too closely.
Private "insurance" (third-party payment) companies will happily go along with this, as they get billed at the same or higher rate while presumably getting about the same deal as to actual payment rates, and the high list prices (which the companies never really pay, but which cash customers are expected to pay) come in handy for scaring the public into believing that comprehensive health plans are essential.
(Via DRJ @ Patterico.)
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