Why is the full visit charge so expensive?

Short answer: 

Healthcare is very complex. One reason is that we provide care for elderly and indigent–even when insurances don't pay enough to cover the cost of service. The cost of caring for these patients is shifted to everyone else.

Long answer:

Health care providers usually set a single charge for all patients for different services. However, the amount collected changes based on the patient's insurance. For instance, a doctor’s office might list the cost of a visit as $200. But, if they have an agreement with a certain private insurance company, they might only collect $100 from a patient with that insurance. These negotiated rates are less than the charged price. Negotiated rates are different for every insurance company. In some cases, the negotiated rates don't even cover the cost of care. How does that work?

Public programs Medicare and Medicaid help the elderly and people with low incomes get medical care. These government programs usually pay doctors and hospitals less than private insurance companies do. For many services, the amount these programs pay doesn't fully cover the cost of providing the service. Payments from Medicare to physicians have not increased since 1998 (yes, really). Since 1998, costs have increased by nearly 2x. A lot of people in the U.S. — about one-third of the population — use these public programs. This means that the lower payments from Medicare and Medicaid add up to a lot of lost money for doctors. Please note–physician, not hospital income, has been frozen for some time. Hospitals have been receiving increasing Medicare payments.

All medical practices want to treat every patient, no matter how much money they have. But to handle the lower payments from Medicare and Medicaid, they often collect more to patients with private insurance for the same services. This practice is known as cost-shifting. It's like the extra money they get from patients with private insurance helps pay for treating patients who are covered by government health programs. This way, the practices can keep providing care to everyone, even if some payments are lower than others.

So, to summarize: The full charge for medical services is often high because healthcare providers need to cover the lower payments they receive from government programs like Medicare and Medicaid. It also has to compensate for negotiated discounts with private insurance companies.

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