The Wall Street Journal reported in a June 13th article,
  Page D1 that several major insurers (Aetna, Cigna, Humana, UnitedHealth)
  as well as Medicare are disclosing the prices they have negotiated with doctors
  and hospitals for a number of common procedures. Some are beginning to include
  quality indicators with the pricing information. This is an apparently-growing
  trend that may spell doom for companies like HealthGrades,
  but this wasn’t noted in the article. One interesting thing: apparently at least
  a few insured people have used the system, even though they’ll be well past
  the deductible. Maybe some few will note a link between the premiums they pay  and the Medical Loss Ratio their insurer experiences. On the other hand, the
  article notes that in the absence of any other quality indicator, people may
  think that more expensive implies higher quality and choose the
  high-cost provider.

The insurer’s tools are restricted to their own plan members: this means if
  you’re covered through Cigna you can’t tell what out-of-pocket costs might be
  for somebody covered by (say) United. The article goes on to detail several
  of the limitations inherent in these disclosures, well-known to readers of The
  Healthcare Blog. Tools like these might actually be useful to those with HDHP
  coverage, or the uninsured.

But there’s more. The article says states are beginning to mandate that hospitals
  disclose their charges. Charges amount to the "list price" that almost
  nobody pays, so this isn’t very helpful to prospective patients. The list includes
  South Dakota, Minnesota, and Florida. I wonder who got the states to mandate
  that instead of something useful. Some state hospital associations are evidently
  taking proactive measures, and have created their own websites to disclose hospital
  charges before being told they must. But why would they do this?

Look at this from the New Hampshire Hospital
  Association PricePoint system:

How much do government programs pay compared to other payment
sources?
In many cases, Medicare & Medicaid reimburse hospitals at rates that do not
cover the costs they incur to provide care. Payments from privately insured
patients generally subsidize the shortfalls created by Medicare and Medicaid
and therefore represent a “hidden tax” on individuals and families not
covered by government programs.

Where have we heard this before?

When you ask for prices, you get median and mean charges with no promise that
  your bill will bear any resemblance to either figure, and this editorial.
  Apparently, they expect they’ll be forced to disclose someday, and this way
  they can control the content of the disclosure. If the legislature gets involved
  the hospitals might not be allowed to put their own "spin" on things. This actually
  is brilliant strategy. They’re not disclosing very much, but they can claim
  they’re being as transparent as they can be, given the vagaries of medical treatment.
  They can lobby commercially-insured patients to lobby congress to increase Medicare
  reimbursements with an implication that the amount they pay in "hidden taxes"
  will go down. But of course it won’t. They do not mention that there are many
  cases for which Medicare & Medicaid reimburse hospitals at rates that exceed
  the costs they incur to provide care. Imagine! Finally, they offer no assurances
  that the costs they incur to provide care are reasonable.

As the premier health policy blog on the net, I am honored that Matthew has asked me to occasionally guest post here. I also am regularly impressed with
  the level of thought and knowledge of so many posters of comments.
  Every once in a while, I think it is important to review, what I would believe
  so basic myths about our healthcare system. One of the greatest myths is the
  3% overhead myth for medicare. (This is often also cited as the 2% overhead
  myth.)
  Argument one in favor of the ‘medicare for all’ expansion of government
  regulated healthcare is the disparity in overhead between Medicare and private
  insurance plans. The Medicare overhead number is stated as 2% or 3%, depending
  upon where you read it. The overhead for private insurers is stated as 15%-25%.
  The disparity is used to explain the statement that, “if we just take the
  amount spent on wasted overhead and apply it to medicare-for-all, we could easily
  pay for everyone to be covered”. Where does that math come from? Here’s
  the brief skinny:
  $2 trillion in healthcare. 50% from private sector= $1trillion. Reduce overhead
  by 15-20%= $150- $200 billion available.
  Oh, if it was so simple.
  Let’s attack the 3% myth.

Proponents say overhead should be calculated as: admin costs/ payout for services.
  However, medicare recipients use much more care, on average, than younger groups.
  So, for example (made up numbers), medicare recipients might use $5000 per year,
  while commercially insured people might use $3000 per year. If both groups consisted
  of 10,000 people, it would take the same amount of oversight, management, etc.,
  yet the perceived overhead to take care of the younger group would be much higher;
  or put the other way, medicare overhead would be much lower.Solution: calculate overhead on a ‘per enrollee’ scale. This alone
  accounts for 50% of the discrepancy in overhead between medicare and private
  payers. If you do not believe me, just check with the Kaiser Foundation research
  saying the same thing.
  Proponents focus on the low administrative costs, on the one hand, while denouncing
  the amount of fraud by hospitals, providers. This perhaps is because medicare  does not spend enough on administrative oversight of the program. This happens to be exactly what the GAO and the National Academy of Social Insurance has  said within the past 6 years. So, if medicare spent more on administration,
  the discrepancy would be decreased even further.
  Proponents fail to account that for every regulation, costs are incurred by
  providers to comply. The 100,000 plus pages of medicare regulations function
  as an unfunded mandate on providers. Currently, the coding is based on ICD-9,
  which has over 24,000 codes. ICD-10, slated to go into effect within the next
  2 years has over 207,000!!!! And does upgrading for the change count toward medicare overhead? Of course not.
  Proponents say that private insurance company rules would create as much hassle
  for providers. Perhaps, but we will never know since private insurance rules
  are based off of the medicare guidelines.
  Thus, the ‘medicare 3% myth’, is, in reality, just that: a myth.

But like most myths, true believers will never pay attention to facts.

Michael Cannon has written a response to my response to him. Even ignoring the issue about my personal HSA, we’re really talking past each other. Cannon doesn’t think our discussion is fruitful, and in truth it’s not. He wants to discuss the vast majority of his paper which looks at the role of HSAs within our current system. To me our current system is so broken, the introduction of HSAs (at least in the limited form they now exist which is all we’re likely to get for now) is pretty irrelevant, and a minor incremental change—albeit one away from the compulsory social insurance that, he correctly states, I advocate. Frankly in the next five years neither of us is going to get our way…so this argument is about what comes next.

The argument I want to have is a theoretical one about what would happen if we had essentially a completely personalized account-based system, as he advocates in his Large HSA proposal. As I explained at length before, I think that a significant number of people would take the money and by no or minimal insurance coverage. So apparently does he.

Large HSAs would give workers far greater freedom of choice. Workers could use their HSA funds (and non-HSA funds) to purchase insurance from their employer or any other source. Alternatively, they could forgo insurance to build larger HSA balances.

Now lets just assume that over say 20 years people really do build up huge HSA balances, and so when they need the money for their individual health crisis in year 20, they can pay for it all themselves. Even accepting that this would happen and that young healthies (His “students”) could buy a cheap heavily underwritten very high deductible policy for the early years, my question is what would happen in Year One? The money that would cover the sick in a compulsory social insurance pool, would have been extracted and instead be sitting in the personal accounts of the “students”. So when the sick start incurring huge health care costs, the money to pay them must come from somewhere. Unless the people who get sick had already saved up the huge amount they need or were allowed to buy into the cheap underwritten catastrophic plans, (both of which are totally unrealistic and the latter of which would destroy those plans as a profitable business), then that money must come from the taxpayer, or the providers (in the form of non-payment for services rendered).

This is the problem that I just don’t understand about the individual account theory. This is after all about the crux of insurance, which Cannon believes can work in a voluntary, HSA-based system. I just wish someone promoting those accounts would explain why I don’t understand how they overcome that issue rather than continually ignoring it.