Who pays how much for health care? This is what you should know about charges and payments. Hint, it’s crazy.

Here is one good argument for a universal health insurance system – pricing and paying. (The other argument is universal insurance coverage).

Prices aren’t real because fees paid are not real. And all this maneuvering leads to higher administrative costs for everyone. Just image trying to run a medical practice and deal with all this.

From hospitals on down, fees are manipulated to account for different payment schedules.

Medicaid pays the least, Medicare pays a moderate fixed amount, and private insurance pays the most because it negotiates rates directly with providers. Self-paying patients pick up the slack.

Self paying patients 💵💵💵💵💵

Employer/private insurance 💵💵💵💵

Medicare💵💵

Medicaid💵

Some states allow Medicaid fees as little at 50–70% of Medicare rates for many services

Private insurance often pays 150–300% of Medicare rates, but this can vary massively.

Insurers develop networks and negotiate fees in part based on the number of patients who will use those providers. The larger number of potential patients, the more negotiating leverage. That is why more insurance company competition in an area is counterproductive-negotiating leverage is reduced.

So, how much does a service actually cost and what is a fair profit or at least fair payment to cover costs?

This is why an MRI can be billed at (cost) $4,000 on paper, but:

• Medicaid pays $200
• Medicare pays $400
• Private insurer might pay $1,500
• Uninsured person might get billed $4,000, unless negotiated down.

Wouldn’t it make sense to have one allowed fee for each service varying only by geographical area to reflect cost of living?

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Consider these statistics. Imagine trying to run a business and deal with these variables. Tell me this isn’t crazy and a big part in what health care costs.

Real-world benchmarks (2023–2025 data)

• Medical Group Management Association (MGMA) surveys: the median physician practice is contracted with ∼25–35 different payers.

• A 2024 Cain Brothers (KeyBanc) report showed independent practices averaged ∼28 commercial + government contracts.

• A 2024 Athenahealth analysis of its client base found the average primary-care practice submitted claims to 32 unique payers in the prior 12 months.

• Large academic medical centers and health systems often exceed 100–200 distinct payer contracts when you count every Medicare Advantage, Medicaid MCO, and niche plan separately.