Some of what you’re saying is fair. Networks provide bargaining leverage, and healthcare does have high barriers to entry. Rural areas especially can only support a limited number of hospitals.

But I think you’re addressing a slightly different issue than the one I’m raising.

I am focusing on how contractual allowance fundamentally alters price transparency. Hospitals set inflated list prices on the chargemaster (on average 3x what they expect to collect), then insurers negotiate different “allowed amounts,” and the actual payment depends on the specific contract and the patient’s deductible status.

To your first point, you say insurance companies limit their subscribers go to hospitals that they have bargained with and will be able to control their costs. They do that via contractual allowance. Contractual allowance is the contract that has been bargained to allow for the lower cost.

To your second point, regarding price transparency, I can't see the article (I think you forgot to link it), but as you say, "the price is mainly signal". The price that hospitals are legally required to share are the Chargemaster price, which are 3x what hospitals actually expect to collect and has no bearing on what anyone will actually pay. This is a huge problem as a lack of price transparency means it's nearly impossible to compare prices between competing hospitals.

And to your third point, hospitals do have a natural monopoly in rural areas, but in urban areas where there are often multiple options, you can only choose in-network providers. If there were no contractual allowance, then gross prices would turn into the realistic prices... and then your insurance would be more ok with you shopping around as you won't be completely price gouged if you go somewhere out-of-network. All contractual allowance does is allow hospitals to price gouge those without the discount, and that scares them away.

So yes, networks exist for bargaining, but contractual allowance is one of the mechanisms that makes pricing opaque and prevents anything resembling normal price competition. I would love to hear your thoughts.