We cant. Its a very complex history. One reason for this huge differential is because hospitals get paid a % of the losses in fed subsidies based on the nomin

We cant. Its a very complex history. One reason for this huge differential is because hospitals get paid a % of the losses in fed subsidies based on the nominal charge number stated on the invoices,[1] not the actual COGS. For some history; with reimbursement formulas in our prior cost-plus system, a hospital's reimbursement was partly determined by its charges (the invoice). Hospitals discovered that by manipulating the charges, they could increase their total reimbursement.[2] This was the bastard origin of the charge gaming culture at hospitals. It is hard to uproot now. This cukture found a new home with the federal loss subsidy. This subsidy was an ask by hospitals to the government when the govt was trying to get uninsured to be seen at hospitals. So now they scratch each others backs. Insurance play along with it. In theory you would think it's harmless (since the amount paid is the allowed, full stop) but it muddies the waters further. Why would insurance muddy the waters on itself on purpose? It makes them look amazing in front of employer clients. Think discount of 75% on a $200 charge vs a 50% discount on $100. 75% sounds a lot bettet to the employer. But the employer is paying the exact same. Its a marketing gimmick for insurers. Hospital makes more federal dollars on that loss. Govt pays more in healthcare subsidies. Hardworking people without Insurance... get royally screwed. [1] I cant remember now the 3-letter name of the program, but I'll link to it once i do. [2] https://www.econlib.org/library/Enc1/HealthInsurance.html https://www.econlib.org/library/Enc1/HealthInsurance.html