If you’re interested, there is a long and sordid history behind how we got here.

In the past, insurance just paid whatever the hospital charged it was called “usual and customary”. This came about because public plans were getting ripped off and gov’t said “no, you can’t charge us whatever”.

Cycle through a series of different reimbursement systems in order to get a grasp on costs and you end up where we are now - chargemaster rates are ridiculously high (because they aren’t allowed to charge more than that) and the payers negotiate rates down as best they can so you end up with massive gross-net differentials.

It’s really a complete mess.