I worked for the VA for many years, but I won't pretend to be an expert on VA purchasing policies. However, a few things I do know: the VA is a low cost (and high quality, but that's for a different thread) medical care provider, and a major reason is that they buy in very large quantities and they negotiate prices with suppliers. Medicare is legally forbidden to negotiate, and private-pay patients are lucky if they are only charged at Medicare rates. Durable medical equipment (DME) suppliers charge what they do because they are under no cost controls whatever and because every link in the retail chain has to make expenses and profit. Why insurance costs so much is really a different question. It's a matter of gambling, of course, but wrapped up into it all is, as Dick said, administration and advertising - and I suspect that amounts to far more than 17%, when you consider that 'administration' includes obscene salaries for their CEOs and large profits for their stockholders.
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