An expensive COVID test

Kaiser Health News published an article about a COVID test being priced over $56,000. This happened in the summer of 2020, after Congress passed legislation to require insurers to pay for COVID tests so that they would not cost patients anything directly. The amount seems outrageous (for a test that was later listed as $175), and ultimately was deemed a billing error.

Fortunately, the patient never had reason to think that he had to pay a very large surprise bill, but this incident still shows what can happen in a power imbalance such as when insurers are required to pay whatever price the providers set. The imbalance of power can come through legislation (as in this case), or through consolidation of provider networks (so that all insurers must do business with that network) or by a lack of insurer networks (if no other insurers operate in a given region). Healthier markets will have multiple buyers and sellers, and no requirement to buy at any cost.