[kronin]

The ultimate reason behind hospitals attempting to charge exorbitant prices is due to Medicare and Medicaid paying under cost for services. Hospitals need to make that difference up somewhere. Surprisingly, if you remove the profit hospitals make on ancillary services like the gift shop, parking fees and investment income, they are losing money.

[maroonblazer]

Isn't the overly-litigious nature of the U.S.A also why costs are so high?

The malpractice insurance that docs and hospitals need to carry in order to defend themselves should they be sued is passed onto consumers in the form of higher medical costs.

Or at least that's how someone once explained it to me. Is that not also a contributing factor?

[analog31]

Anybody in the entire health care system can point their finger at someone else and claim that they're the ones who are gouging us. I suspect that they're all gouging us.

One thing I've read is that states with caps on malpractice claims do not have lower medical costs.

[pshposh]

"overly-litigious" would need to be cited in my opinion. What is "overly"?

[patrickthebold]

That can't be true. They are not required to accept Medicare or Medicaid. If it was a losing offer they just wouldn't accept it.

[kronin]

"Payment rates for Medicare and Medicaid, with the exception of managed care plans, are set by law rather than through a negotiation process, as with private insurers. These payment rates are currently set below the costs of providing care, resulting in underpayment. Payments made by managed care plans contracting with the Medicare and Medicaid programs are generally negotiated with the hospital.

Hospital participation in Medicare and Medicaid is voluntary. However, as a condition for receiving federal tax exemption for providing health care to the community, not-for-profit hospitals are required to care for Medicare and Medicaid beneficiaries. Also, Medicare and Medicaid account for more than 60 percent of all care provided by hospitals. Consequently, very few hospitals can elect not to participate in Medicare and Medicaid."

Source (American Hospital Association, December 2016): http://www.aha.org/content/16/medicaremedicaidunderpmt.pdf (Sorry it's a PDF)

Edit: updated from 2010 reference to 2016 reference

[sjwright]

That quote is misleading because it implies that the cost of care is static, that it's not also heavily influenced by spending choices made by the hospital that don't affect patient outcomes. Or heavily influenced by the consequences of the broken healthcare system, like the overuse of emergency rooms by people who can't afford to see a doctor.

Hospitals could easily afford to provide care at Medicare/Medicaid rates — if they're willing to have less impressive lobbies, marketing materials, corporate facilities and shareholder profits. Citation: all other first world countries.

[klipt]

> shareholder profits

Do intelligent people ever go to for-profit hospitals? I'd group those with for-profit universities and for-profit prisons as "nope, not touching that, stay as far away as possible and hope they all disappear".

[fusiongyro]

No matter your intelligence, if you're having a heart attack, you go to the nearest hospital, whatever its tax status may be.

[klipt]

Okay, but apart from emergencies, why would anyone go to a hospital whose goal is profit when all the best research hospitals are non-profit?

[ll123]

non-profit hospitals and non-profit universities have had exorbitant price increases in the last few decades so they aren't doing any better

[klipt]

Maybe, but for the same expense I'd rather go to (non-profit) Harvard than (for-profit) Trump University.

All the best universities are non-profit, for the obvious reason that it allows them to keep massive endowments, which are spent on better education instead of being paid out to investors.

[creaghpatr]

It's because in addition to the reimbursement, hospitals are paid a bonus fee by US taxpayers called a DSH to subsidize the subsidies. This serves to incentivize providers not to drop Medicare/Medicaid patients and also covers up the losses incurred.

More info: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Paymen...

Good commentary about upcoming changes that endanger these programs: http://www.modernhealthcare.com/article/20170626/NEWS/170629...

[hockley]

The ultimate reason behind hospitals attempting to charge exorbitant prices is that you have no choice but to pay.

[isolli]

Hospitals charge high prices because they can. They are often local monopolies, and behave accordingly. And with an utter lack of price transparency, which makes the idea that patients could shop around a joke.