Without that, competing hospitals can arise that will compete on price.
That is why i laugh at republicans (Ben Shapiro et al) argument that healthcare competition is what making it the "best" in the world. Don't compare it with restaurant business.
Patients shop on reputation. In a country with less regulation, like India, you see competing hospitals across the spectrum of price and performance. Everyone knows which ones are good and which ones are expensive. People know which hospitals they're going to attend before they fall sick. The outcomes in their top cardiology departments are way better than those in top American cardiology departments.
Their doctors perform way more surgeries and are therefore far more practiced and experienced. They are far cheaper because there are so many more of them.
For the majority of lower-middle and poor class, medical care is hard to obtain because they cannot afford the private care, and the government-run hospitals that offer low-cost care suffer from bad service, and inadequate facilities/medicine.
India is well on its way to emulating the American medical system:
(1) medical costs have been rising at a rate of 15-25% a year (where inflation has been 5-10%). This is okay for now, but in about 2 decades will price out even the affluent classes.
(2) Health insurance is being touted by the Indian government as a solution to this -- which is the first step to going down towards the American model of healthcare. India also has poor safeguards against crony capitalism so I expect large insurance companies to capture the regulatory framework to frame rules in their benefit.
Surgery outcomes in Indian top cardiology hospitals are better than in America. And they're cheaper. And more available. And perform more surgeries per week. Competition is good.
EDIT: I am responding to a comment that the AMA is the problem. Maybe the AMA is a problem but it has nothing to do with hospitals not competing over prices.
The real crux is that point, the patient is removed from pricing and so the whole market becomes distorted. It’s like going to a store without price tags and complaining that your bill is much higher than you expected.
It's more like only having stores without price tags and then when you overpay people telling you that you should have shopped around for a good price.
But it isn't reasonable to expect upfront pricing in things as complicated as heart surgery. Or where you are going in for unknown problems. There is no way to know what complications may arise or additional procedures, x-rays or scans may be required.
On the consumer side I just found out about healthcare blue book and they have prices for just about any procedure.