> why does an IV bag cost $500?

It doesn't outside of the US.

Doesn't at Kaiser either. You just get all that stuff under a single line item "Emergency Room visit Level 2: $650". Funny how that happens when the hospital and the insurance are the same company.

Indeed. In the US, it does because manufacturers have gamed the system. Through bundled contracting with hospitals etc, for example.

Hospitals pay a couple dollars for IV saline.

In fact, manufacturers are required to report such prices annually to the federal government, which bases Medicare payments on the average national price plus 6 percent. The limit for one liter of normal saline (a little more than a quart) went to $1.07 this year from 46 cents in 2010, an increase manufacturers linked to the cost of raw materials, fuel and transportation.

http://www.nytimes.com/2013/08/27/health/exploring-salines-s...

(which implies that manufacturers aren't the primary beneficiaries of the price that the hospitals charge)

Thanks. It does seem that, in this case, it's hospitals that are inflating costs. But even so, this is the Medicare reimbursement price. Maybe hospitals are "paying" cash price for saline, with a rebate on some product bundle, which doesn't get allocated properly to their cost basis for saline.

It doesn't but what you are charged for a medical service/medical supply has very, very little to do with what your service/supply actually costs.

It is around $2 USD here.

"Hartmanns IV Solution AU$2.73 ex GST

Baxter 0.18% SODIUM CHLORIDE & 4% GLUCOSE IV SOLN 500ML AU$3.72 ex GST " https://www.medshop.com.au/consumables/intravenous-solutions...

Because you're buying a lot of insurance and debt.

The lack of quality health insurance means that a substantial number of people finance healthcare via bankruptcy. That's all priced in. As an insured person or private payer, you pay dramatically more as a result -- it's a hidden tax.