I think your parent is referring to the fact that most medical bills are not discounted until the individual haggles after the bill is already sent. The sticker shock[1] can be quite something.
You seem to already know how what to tell the billing department but I'd wager most Americans don't.
Example: some hospitals have tried taking their debt collections against low income individuals/families to court and have gotten wages garnished. Those same class of defendants have won something close to 100% of cases with the help of pro bono lawyers who help get those bills adjusted to something reasonable. The list price for medical services in the US is ridiculous, but that's because not everyone knows that hospitals don't expect almost anyone to pay list price -- and also because those hospitals get to write off the discounts as losses for tax purposes.
Yeah, but the negotiating position is "if you don't discount this significantly I won't (and probably can't) pay it and you'll get pennies when you sell my bill to a debt collection agency." It's not "I think x,y,z should are overpriced."
> and also because those hospitals get to write off the discounts as losses for tax purposes.
If they're following accrual accounting, they earned income (at list price) when they performed thr procedure. If later it turns out they accept less money for it, the discount should be subtracted from their taxable income to reconcile. Most business don't use cash accounting.
It's not rational to be excited to write off a discount; yes, it reduces your taxable income, but only because it reduced your actual income.
> It's not rational to be excited to write off a discount; yes, it reduces your taxable income, but only because it reduced your actual income.
You seem to be approaching this from a purely accounting technicals perspective.
My complaints have more to do with the massive distortions that make medical goods/services a very opaque market and creates the ability for profitable businesses to write off fake losses for tax advantages.
> My complaints have more to do with the massive distortions that make medical goods/services a very opaque market
I agree it's a mess. I didn't comment on that, because I agree with it.
> creates the ability for profitable businesses to write off fake losses for tax advantages
I disagree with this part. It's not a fake loss. It's reconciling projected (fake if you want) income with real income. Any business filing taxes with accrual accounting that invoices with full price and accepts a discounted price on payment (or sends to collections at a discount) is going to have the same thing: recognizing the full invoice as income, and then taking a deduction for the discount when settled.
Why am I picking on this technical detail? For one, this is a technical forum (I'll show myself out). But importantly, a comment lamenting a real issue (opaque market) and normal accounting practices makes a confusing argument. Switching hospitals to cash accounting isn't going to make the market less opaque.
You seem to already know how what to tell the billing department but I'd wager most Americans don't.
Example: some hospitals have tried taking their debt collections against low income individuals/families to court and have gotten wages garnished. Those same class of defendants have won something close to 100% of cases with the help of pro bono lawyers who help get those bills adjusted to something reasonable. The list price for medical services in the US is ridiculous, but that's because not everyone knows that hospitals don't expect almost anyone to pay list price -- and also because those hospitals get to write off the discounts as losses for tax purposes.
[1] https://www.vox.com/policy-and-politics/2019/1/7/18137967/er...