Hospitals and other providers make their "list" prices as high as possible when negotiating contracts with health plans and Medicare regulators. No one is ever expected to pay the list price.
Then that 'list price' is negotiated down by the payer. This is not insurance.
...most people these days don't have health "insurance." They have prepaid health plans. They pay premiums to take advantage of a pre-negotiated fee schedule arranged for and administered by a third party.
In this particular case (explained in the WSJ article), the patient actually had an insurance policy...that was too costly to use. So he didn't, and got, for $3,000, a hernia operation that was going to cost him $20,000 in co-payments.
It is the third-party payment system that interferes with true price competition, so "market clearing prices" can't develop.
Take the examples of Lasik eye surgery or cosmetic surgery. These services are not covered by insurance. Providers compete on the basis of quality, outcomes and price. And prices have continually dropped as quality and services have improved—unlike the rest of health care.