The thing is, there is no "fair market pricing" for a lot of health care. If you are in a car accident, you don't have the benefit of shopping around to different emergency rooms to find the best deal. Many times, you have no option and have to take what is there because you don;t have a week to research all your different options.
As for Medicare, they actually pay a reasonable cost. There is a group of physicians who actually figure out what it costs to perform certain functions and this is what the payments are based on. So they can't charge ridiculous prices like they do normally, they are forced to charge something reasonable based on what the task performed actually is. Most insurance companies actually negotiate their prices based off of the Medicare pricing. If everyone paid Medicare rates, providers wouldn't go bankrupt, but it wouldn't be the huge cash cow it is now.