I'm in the health insurance business, but I was recently blown away by the absurdity of the medical billing system. I have lower back pain from a condition called spondylolisthesis. That's basically a slippage of one of the vertebra in my lower back that pinches the nerves and causes sciatic pain. When the pain gets bad, I get an epidural injection that takes away my pain for a couple of months at a time.

The outpatient surgical center billed $4,136 for the epidural procedure. My insurance company allowed only $1,039 of which I paid $208 for my coinsurance - just 5% of the amount originally billed.

Why are medical bills so outrageously overpriced? Who pays the full "retail" bill? Not the insured. It's the uninsured who are stuck with these inflated medical bills. As individuals, they have very little negotiating power to reduce the initial bill to a reasonable fee and are left with no choice but to pay the inflated fee which can wipe them out financially.

Medical administrators call this system "cost plus" billing. The cost plus bill includes the cost of the service plus a share of the provider's overhead expenses, including the unpaid bills of the uninsured. And so it goes in an ever escalating spiral of unrealistic medical costs.