> Medical providers effectively just send arbitrarily large numbers to insurers knowing they're never going to see much of it, but they also know they're not getting it from the customers if insurance denies it, either.

This isn't true. These things are pre-negotiated; insurance companies, however, typically mandate that cash prices are higher than what they pay. Partially because they can (due to economy of scale) and partially because with how bad billing and insurance is, a significant portion of people would likely choose to pay out of pocket if they could pay insurance rates to the hospital. If you're going to have to bankrupt yourself to pay for an expensive procedure either way, why not save your $500/month and take a vacation instead?

> When the office manager explained to me how they do billing, he told me the providers and insurance have no upfront agreement regarding what the prices of each procedure are going to be. The provider just knows there is some limit to what the insurance will pay, but not what it is.

Again, no, that's not how it works. He is correct in the sense that there is no set price for a "procedure". Each item or service is translated into a "code", and insurance companies are billed based on the codes required to complete your surgery. If you are high-risk, they might require an anesthesiologist to be present for the entire procedure (they might be anyways, I can't recall). That's another code. Each syringe they use is a code. The hospital has no way of knowing ahead of time if they aren't going to be able to get an IV into your hand, and are going to have to put one in your jugular. That's a whole new set of codes they need to bill for.

I believe the ACA did away with lifetime limits on insurance. There is no "cap" on what insurance will pay out. The higher the bill, the harder they're going to fight to not pay it, but there is no loophole in the contract that says they don't have to pay out if the procedure costs more than $X.

Another thing to point out is that hospitals can deduct unpaid hospital bills from their taxable revenue, iirc. They have an incentive to send you a bill for 4x what it cost them and then settle for what it actually cost them because I believe the other 3/4 of the bill can be counted as a loss.

> But you almost certainly will never have to pay this money. There was never a single year I actually ended up paying more than my out of pocket max.

This is probably true though. The federal government gives hospitals some compensation for bills that people don't pay. Also, as noted above, they can write some of that off of their taxes.

The hospital would probably be happy to recover 10% of that. I forgot to pay a medical bill once, they sent it to collections, collections offered to discharge the debt for $150. I didn't even haggle, on the first call they told me what I owed and said if I paid them the $150 they'd discharge the rest. My impression is that hospitals will do drastic fee reductions, because the debt is worth single digit pennies on the dollar. If you'll pay them 10% of the debt, it's more than collectors will pay for it, and probably more than they net if they bankrupt you and seize assets (once they pay for lawyers).