[manfredo]

A terrorist attack is an extremely low frequency event to the point is being nearly non-existent. The same cannot be said of birth complications. Baggage handler rates don't change on a dime. Labor rates do affect ticket prices, but they're drastically more predictable.

[SilasX]

Yes, but the same logic applies: you either negotiate prices out with a network in advance, or insure against the major complications. None of that is different for a health care operation.

[manfredo]

No. The same logic does not apply, as the two situations are drastically different. The regularity of airline costs is drastically greater than the regularity of healthcare costs. Airlines can set ticket prices upfront because they predict their expenses on a given flight with a reasonable degree of accuracy. Hospitals, subject to extreme and frequent irregularities between what patients may need, cannot. At least not with individual patients. Insurance companies are very different types of customers as compared to individuals. Because the negotiated price applies to a large group of people, the question isn't "how much do we have to charge to break even on X procedure?" The question becomes, "How much do I have to charge for X procedure, *averaged over hundreds or thousands of patients?". Each patient is effectively a slot machine for the hospital. Insurance companies negotiate on behalf of a large number of patients so that the aggregate cost becomes something that is predictable enough to negotiate.