The $2.1 Trillion Writeoff: Why Doctors Charge 4x What They Get Paid

Published February 2026 · 15 min read

The Biggest Hidden Number in Healthcare

There is a number so large, so absurd, that almost nobody in healthcare talks about it: $2135.7B.

That's the total amount that Medicare providers charged but never collected over the past decade. Doctors submitted $3223.5B in bills. Medicare said "we'll allow $1087.8B of that." And then Medicare actually paid $854.8B.

The math is staggering:

For every dollar providers bill Medicare, they collect about 27 cents. The charge-to-paid ratio is 3.77x. Doctors know this. Insurance companies know this. CMS knows this. And yet the system persists.

Why Do Doctors Charge 4x What They Know They'll Get?

This isn't incompetence — it's strategy. There are three key reasons providers set charges far above what Medicare pays:

1. The Fee Schedule Floor: Medicare pays based on its own fee schedule, regardless of what you charge — but if you charge less than the Medicare rate, you get paid your lower charge. So providers set charges high to ensure they never leave money on the table.

2. Private Insurance Benchmarking: Many private insurers negotiate rates as a percentage of Medicare or a percentage of "billed charges." Higher chargemaster prices give providers leverage in these negotiations. A provider who charges $500 for a service and negotiates 60% of charges gets $300. One who charges $200 gets $120.

3. The Chargemaster Game: Hospital and practice "chargemasters" — the master list of prices — have been disconnected from reality for decades. Prices are set by administrative inertia, competitive positioning, and the knowledge that almost no one actually pays them. It's a fictional price list that everyone agrees to pretend is real.

The Coinsurance Problem: $233 Billion on Patients

There's a hidden casualty in this system: patients. The "coinsurance gap" — the difference between what Medicare allows and what Medicare actually pays — totals $233.0B over the decade.

This is the amount patients are theoretically responsible for through copays, coinsurance, and deductibles. That's 21.4% of the allowed amount — money that comes out of seniors' pockets or their supplemental insurance.

The Writeoff Is Getting Worse

The gap between charges and payments has been widening every year:

In 2014, providers wrote off 63.3% of charges. By 2023, it was 68.1%. The markup ratio climbed from 3.47x to 3.96x. Providers are inflating charges faster than Medicare is increasing payments.

Which Specialties Write Off the Most?

The writeoff rate varies enormously by specialty. Some specialties charge nearly 10x what they get paid:

Anesthesiology assistants top the list at nearly 90% writeoff — charging 12.2x what Medicare pays. CRNAs, anesthesiologists, emergency medicine, ambulatory surgical centers, and radiation therapy centers all write off 80%+ of their charges.

At the other end, chiropractors write off only 30% — their charges are closest to what Medicare actually pays. Optometry (35%) and pharmacies (34%) also have relatively realistic pricing.

The Biggest Charges by Specialty

In absolute dollar terms, internal medicine leads with $223.1B in total charges over the decade. But the most interesting story is in the writeoff amounts:

What Does This Mean?

The $2.1 trillion writeoff isn't "lost money" in the traditional sense — no one actually paid it. It's more like a system-wide fiction that everyone participates in:

• Providers set high charges to maximize negotiating leverage with private insurers
• Medicare ignores charges entirely and pays its fee schedule
• Private insurers use the inflated charges as a benchmark for "discounts"
• Patients who are uninsured or out-of-network face the full fictional price

The real losers are the uninsured and underinsured, who may be billed at chargemaster rates that bear no relationship to the actual cost of care. The $2.1 trillion writeoff is the clearest evidence that American healthcare pricing is fundamentally disconnected from reality.

The Bottom Line

Every year, the gap grows wider. In 2023, providers charged $371.2B and collected $93.7B. That's a 68.1% writeoff rate — the highest on record.

Until we fix the underlying incentives that reward inflated pricing, the fictional charges will keep climbing, the writeoffs will keep growing, and the gap between what healthcare "costs" and what it actually costs will remain America's biggest hidden number.