> Hospitals charge $15 for a single pill of Tylenol because they know insurance will pay for it

It’s more they know insurance won’t pay for it, and negotiate discounts based off the “retail” price. Although at this point it’s gotten so ridiculously convoluted and cross-subsidized that I doubt even the insurance company or hospital knows what the actual paid amount for a Tylenol will end up being until months after the fact.