The 1965 billing rule that makes US ambulance rides cost thousands

Roughly three million privately insured Americans take an emergency ambulance ride each year, and about half get hit with an out-of-network ‘surprise’ bill afterward — a rate seen nowhere else in medicine. One San Francisco man, transferred six miles between two hospitals without any say in the matter, was billed $12,873, most of it an $11,670 ‘base rate,’ and still owed roughly $3,000 after his insurer paid. When Congress outlawed surprise medical billing in 2020, ground ambulances were left out as the glaring exception. The predictable result: a 2024 poll found 23 percent of Americans have skipped an ambulance over cost fears.

The author argues the usual villain — private-equity greed — doesn’t hold up, since ambulance operators run chronically thin margins, underpay crews, and regularly exit the business. The real cause is structural. In 1965 Medicare decided to reimburse ambulances per ride, after the fact, as if a trip were just another medical procedure, and commercial insurers built their fee schedules on top of that model. But the economics have since inverted: almost none of an ambulance service’s cost comes from the ride itself. Nearly all of it goes to standing ready — stations, vehicles, and crews on call around the clock for calls that may never come.

The piece frames ambulance services less like taxi companies and more like option sellers or fire departments: the actual product is guaranteed readiness, a value residents ‘consume’ every day whether or not they ever dial 911. Because that readiness has to be funded regardless of ride volume, the sensible model is a small premium spread across everyone. Instead, the U.S. crams fixed standby costs into a variable per-ride fee billed to whoever happens to need transport, producing bills that are enormous, unpredictable, and — since patients don’t choose their provider — impossible to shop for.