It's surreal that the government pays LESS for these services. "Cost plus" is a common practice for government contracts and often people point at it to explain

It's surreal that the government pays LESS for these services. "Cost plus" is a common practice for government contracts and often people point at it to explain why the military pays so much for a simple product. The contractor gets a fixed profit over whatever the costs end up being, which obviously provides no incentive to reduce costs, subverting market pressures to innovate or increase efficiency. Medicare is essentially paying cost plus, yet that is less than everyone else pays. How is this even possible?