You missed the whole thing. I didn’t explain well enough in the beginning.
The hospital billed me $12,500 as I was uninsured. Then it turned out I was covered. Then the hospital billed the insurance company $1500.
So the cost of the hospital care is $12500 if I pay it but only 1500 if the insurance co pays it.
Surely you guys can see something terribly wrong here.
As if the entire accounting episode is that simple.
Both hospital and insurance work together on a very large scale, involving piles of contracts and laws which must be satisfied. To you, it looks like they got a 90% discount; to them (as others indicated above), they have to play all kinds of games with those numbers, charging inordinate amounts in order to get what they need via expected discounts. If they think you’re going to get Medicare involved, they have to hike the bill so when the feds refuse to pay the full amount they’ll get what they actually want/need out of it. When your insurance got involved, they manage to negotiate discounts & suitable understandings because they’re buying services in such huge amounts (economy of scale etc.).
Your mistake (aside from trying to go without insurance!) was not going to the hospital cashier and saying “WTH?” and offering, say, $2K.
Upshot: it’s a whole lot more complicated than just a 90% discount.