Let's say I was paying out of pocket. (Given my HDHP, I effectively was.) Would that somehow magically change my ability to negotiate the price of those pills?

No.

It's not a "distortion". It's the inherent problem of trying to turn healthcare into a market. The dynamics of service delivery make it impossible for consumes to negotiate or compare prices in the manner necessary to have a functioning market.

I'd also note, that since I've never gone to any other healthcare institution with a broken leg, I have *no way to compare my experience to other providers. This is yet another way in that healthcare does not lend itself to market solutions.

You were paying the rate your insurance provider negotiated out of pocket. Again, all the pricing of healthcare is written up as if it were coming out of the health insurance company's pockets instead of yours.

In the midst of your one single incident, no, you would not have been able to negotiate the price of your vicodin. However, two things would change. First, they would not have offered you the vicodin without clearly informing you of the price if the norm was people paying out of pocket for most care. Second, if they charged $1k for vicodin but the urgent care down the street only charged $500, then basically no one is going to the first location. Rinse, repeat, until the prices are rational. So the cumulative effect of everyone paying out of their own pocket for most care is market-wide lower negotiated prices.

Funny, it happens that I actually tried to go to the local urgent care that day, and I was turned away because they couldn't handle an injury that serious.

Even if they did, I made my decision based on which provider I thought was doing to do the best job... I didn't know at the point I made that choice whether I would need those vicodin, so they wouldn't have been part of my decision. And once I was checked in to the SF General Hospital (after two hours of waiting) I was definitely not going to hobble down the street, trying to compare prices on vicodin.

Also my damn leg was broken. It wasn't really the right moment to break out Google Sheets and create an expected value analysis of my various healthcare provider options.

It's nice to say "if only we had more agency, prices would be lower"... but it ignores the fact you still need risk pooling (insurance) unless you expect everyone to keep savings for the worst case scenario. And pretty quickly a risk pool means someone has to decide how much that pool should pay to help treat a particular injury... and you're back to where you started.

Of course I would expect people to carry catastrophic coverage. And your case with a broken bone would qualify for a catastrophic event. But if the majority of healthcare purchases are driven by 300 million people seeking the lowest price for Vicodin, no one would be able to charge you $1,000 for vicodin even if you were going through insurance for this particular incident.

>And pretty quickly a risk pool means someone has to decide how much that pool should pay to help treat a particular injury... and you're back to where you started.

Not someone, EVERYONE. Each individual person must decide for themselves if they want to try pay a middle man insurance company some profit every time they get the sniffles or if they'd rather deal with that on their own, save money, and just get catastrophic coverage.

All of these things you're concerned about... we have an entire history of the healthcare industry before the New Deal where we saw how low healthcare prices were. We distorted the market with New Deal regulations putting caps on salaries, so companies started offering healthcare to employees. We can undo the damage done by the New Deal without getting all authoritarian about it.