[lotsofpulp]

The provider entered an agreement to give the health insurer the lowest publicly available price, which is usually how all insurance companies operate.

How would it work if the insurance company’s vendors charged the insurance company more than they charged random people off the street?

[TheJoeMan]

I can tell you haven’t ever received a self-pay bill, waited a month, and unrequested a cheaper bill shows up and mysteriously Dr. Popped-in-for-5-minutes got dropped from billing. Sure it’s the “cheapest rate” but they’re billing for every tiny thing.

[lotsofpulp]

No, I have seen that. I have even called and asked why I was charged $15 for a towel to wipe the ultrasound gel off my wife's belly, when it was just paper towel, and if I knew it was going to cost me $15 I would have done it myself. And I was told to ignore it.

But that seems irrelevant to my point. If you worked at an insurance company (not just health), and were tasked with contracting vendors (such as doctors or mechanics or construction), would you not want to stipulate that your vendor is giving you the lowest price publicly available from that vendor to avoid paying more than necessary, which would then allow you to offer your customers lower insurance premiums and compete with other insurance companies?

[amluto]

Health insurance companies have weird incentives. For one thing, they are not permitted to charge more in premiums than what they pay out times a small multiplier. So health care being expensive is good for insurers.

[lotsofpulp]

This is tempered by the fact that they have to compete with each other on pricing of premiums.

And if they had such amazing power to unilaterally increase healthcare costs, there would not be many people complaining about healthcare not being covered.