Hospitals set their prices above what most insurance companies will pay to make sure they get the maximum amount from the insurance company.
When you come in without insurance, you appear to get screwed because the prices are extra high just in case some new fancy insurance comes along willing to pay more. Luckily, in many cases it's not terribly difficult to negotiate a lower payment.
I'm not advocating for this system, I think it's terrible, but I understand how it came to be.
Tis is generally not as simple. There are two prices that matter to this conversation: the hospital chargemaster and the usual and customary rate (UCR). The two are not functionally intertwined. The chargemaster exists in the hospital back office as a legal fiction and has little to no relationship to anything the insurance companies do although yes, sometimes chargemasters may be used as part of the rate negotiation with insurers. UCR is governed by what it says on the tin, it is what the market is paying in the specific geography.
The shenanigans kick in when the hospital tries to do something with the fictional difference between their chargemaster and the UCR, or, worse, tries to charge the fictional price to uninsured and under-insured individuals.
I keep a short explainer here: https://jaz.co.uk/2015/10/15/hospital-retail-pricing-for-dum...
If a hospital wants to set their prices high to be able to price discriminate, that is the hospital’s choice.
No one is stopping the hospital from offering the same low flat price to everyone.
> So when you do pay out of pocket, you're paying what the insurance company pays and the hospital billing department is most likely very apathetic to that.
This has nothing to do with a health insurance company.
> Since they operate as non-profits, they often are willing to negotiate. Which is most likely why they can get away with this as opposed to a for profit entity.
This has nothing to do with non profit tax status. Car dealerships negotiate too.