One of the things about the current system that makes me nuts is that the people least able to afford it--the uninsured or barely insured (people who have catastrophic coverage only) subsidize the cozy relationship between insurance companies and healthcare providers.
Here's how it works: JoeBob Health Insurance is the employer healthcare plan for 250,000 working stiffs in a metropolitan area. JoeBob goes to St. Harry's Hospital and says, if you are in our network and we list you as a preferred provider, you have a guaranteed customer base of at least 250,000. In return, you will give us a 95% discount on the services you provide. If you won't give us that, that's 250,000 customers removed from your potential pool, going to a competing hospital" St. Harry's makes the deal.
This means that if Jimbo, who has JoeBob health insurance, goes to the Emergency Room and is assessed for a $10,000 visit according to the invoice, JoeBob pays an actual payment to St. Harry's of $500.00 or thereabouts. Seriously.
But, if Bubba, who got laid off and doesn't have health insurance, goes to St. Harry's and receives the identical treatment at the $10,000 price, he is billed for the whole $10,000 by the hospital, who will work hard to collect it just as any other debtor will--letters, phone calls, referrals to collection agencies, destroying your credit if they have to write off the debt.
That's the reason why you'll look at a hospital bill and see that a bandage is priced at $75.00; the hospital knows that the actual cost of the bandage to them is 50 cents, and the labor involved in stocking and using it is around $1.00. If they bill it at $75.00, insurance plans will pay them $3.00, which gives the hospital $1.50 cushion. That either becomes profit or a subsidy for more expensive treatments where the discounted insurance plans don't cover the cost to the hospital (for, say, a major surgery with a 6-person surgical team for 3 hours).
But the shmo who has no insurance will be billed $75.00 for the bandage. This is why if you negotiate with the hospital on a bill that you have to pay yourself, they will quickly discount it 30-40 percent or more. They are still getting paid a LOT more than they get from the insurance company.
In the past the hospitals were able to make up the difference between their costs and the deep discounts given to managed care plans by having a client base who has the so called "Cadillac plans" or "fee for service" plans where the insurance just pays the hospital bill, no questions asked. However, as the cost of insurance has skyrocketed, there are fewer and fewer people on fee for service plans and more on the managed care plans. That means the hospitals have to lean even more on the people forced to pay full freight out of pocket due to lack of insurance, or lack of enough insurance.
Here's a real world example: http://andrewsullivan.theatlantic.com/the_daily_dish/2009/08/the-view-from-your-sickbed-1.html#more