This is the same as the used car problem. Flexibility in pricing and negotiation increases prices overall, because the base price now needs to be set higher tha

This is the same as the used car problem. Flexibility in pricing and negotiation increases prices overall, because the base price now needs to be set higher than the objective price of the good. Plus the seller will be much more skilled at negotiating. In the current model, people without insurance see their prices increase compare to people without insurance. Hospitals charge double to these people because they expect to recover 10% of the bill, so they compensate for that in the model. The way to capture needs-based payments is an across the board discount. Charge everyone $100 for the treatment, and then offer 90% off for people in need for the entire bill. This will clarify the real costs and discounts being provided, and reduce ambiguity.