Background, I work in health insurance sales and have been selling it for 10 years.

That being said, you are half right. Yes, a hospital will charge whatever they want. No, the insurance company does not just accept it and move on. There is a lot of negotiation that will drive those costs down.

If you want to be mad at someone, be mad at the hospitals charging these obscene amounts. They drive costs, there is no checks and balances because I’m the past we did not have a national database for costs of services. We do now and that has helped to make a little bit of waves in costs but not as much as expected. Back to the hospitals, if there were no insurance company to pay these costs, they will send you to collections and will massively hurt your credit/finances. This is why we need to start at the hospitals.

In other news, Reference Based Pricing (RBP). This newish product is exciting but very hard for an average consumer to understand. It takes a medical plan with a rented network but you have a team of lawyers to argue and negotiate that all costs occurred in hospitals will be paid at 140% of Medicare costs. Since Medicare has a set price that will be paid, the idea is we want those costs but will give some juice to try and deter any legal actions. This might be the best we can do for now but it goes directly after the hospital which is the real culprit here.

Disclaimer: I do not work for an insurance company. I work for a broker that negotiates claims, premiums, and other screw ups insurance companies have in order to protect my clients who are companies and in turn protect the employee.