(I don’t mean to belittle your comment about universities which is factual and helpful. I’m just pointing out that US education system is just as fucked up as the US healthcare system the OP is talking about.)
Even people in the US don't understand why those $200K hospital bills aren't real.
Insurance providers (including government programs) have a fixed limit for what they pay for procedures. They pay min(billed_amount, allowed_amount) so providers don't want to risk leaving money on the table by having billed_amount < allowed_amount. To ensure this doesn't happen, they bill an arbitrarily high number with the expectation that insurance will lower it down to some much smaller number.
So every time you see posts on the internet where people talk about their "$200K hospital bill" they're always talking about that arbitrarily high value. If you have to pay cash for some reason, they will reduce the value to the cash pay amount which is in line with the insurance paid numbers.
Nobody ever pays those high hospital bill amounts.
An FSA really has nothing to do with an HSA.
More or less all high income earners who do not have a chronic health issue are better off choosing a HDHP paired with a HSA - especially if the company provides any sort of matching benefit. Keep that account as an additional retirement account and pay out of pocket for most healthcare needs.
Think of it also as actual insurance vs. a pre-paid health plan.
The math of course changes for folks who are not highly paid, or have expensive chronic health conditions that would result in maxing out the deductible each year.
You are likely thinking of a FSA which is use it or lose it.
If you have a FSA I strongly suggest that you get an HSA instead.
https://www.fidelity.com/learning-center/smart-money/hsa-vs-...
Why do 41% of Americans have some form of medical debt?
https://www.kff.org/health-costs/kff-health-care-debt-survey...
In the medical context, the only contract in the picture is possibly between the medical provider and the healthcare management organization. It would be fine if providers only sent the fake bills to them as they're both willingly playing this perverse game.
But the problem is when they send their fake numbers to patients as if they're some kind of legitimate bill. Medical bills to patients are presented on a "cost reimbursement" basis - helping you cost them this much, so you are responsible for reimbursing them. By inflating the numbers 3-5x they are straight up lying about the costs they incurred. That's fraud.
