A real driver for the inflated price is so that they can cover the marginal loss they're taking on every Medicare patient. That loss is only going to get worse as the program expands.
The whole joke about it is that they aren't taking a loss they are just not profiting as much, which is a completely different thing. It's like me saying I don't have a drinking problem because I only drank 2 bottles of vodka before lunch, instead of the 3 I could've drank.
In any other industry the practice of inflating the value would be illegal, specially when done in the cartelesque way it's done in health insurance/healthcare. 'Luckily' the health insurance industries has managed to lobby its way into getting all kind of exceptions, and our representatives are hard at work to keep it that way.
A close friend of mine is an ophthalmologist. The Medicare reimbursement rate for a cataract surgery is a little over $300. This is surgery that restores eyesight. How much would you pay to have your eyesight restored? It's clearly not market rate.
I guarantee that at least in this situation his practice is not turning a profit on these surgeries. $300 certainly doesn't cover the labor expense.
This story is, of course, anecdotal. I'd be eager to hear of similar stories of Medicare reimbursing appropriately.
