Can someone please explain to me why it would be a bad idea to make it illegal for hospitals to negotiate rates?
It seems like the majority of the problem here is that we let the insurance companies bargain with hospitals, so everyone pays a different rate. Just make everyone pay the same rate and let insurance worry about how to drive the costs down across the board by encouraging people to get/stay healthier and reducing the burden on the hospital.
This American Life did a story on this a while back. I don't remember all the details, but it turns out that insurance companies have very little bargaining power with hospitals in general. What ends up happening is that one or two carriers dominate a given local market and get preferential pricing, and everyone else either leaves or doesn't try hard to compete.
It seems like the majority of the problem here is that we let the insurance companies bargain with hospitals, so everyone pays a different rate. Just make everyone pay the same rate and let insurance worry about how to drive the costs down across the board by encouraging people to get/stay healthier and reducing the burden on the hospital.