Anyone else disgusted by medical billing?

Recently our pediatrician advised us to have a cat scan for our three year old daughter because her soft spot had not completely closed. We also needed to have some blood work done to rule out problems with her thyroid.

Here is the billing result:

Charge - Bill - Insurance Deduction - Our Cost
Cat Scan - $1,350.00 - $1,095.90 - $254.10
Cat Scan - $1,777.00 - $1,419.36 - $357.64

Out of a $3,127.00 bill, my insurance company and the hospital decided that it really shouldn't cost that much, we'll only pay $611.74. Or, slightly less than 20% of the billed charge. 80% of the charges just magically go bye-bye.

The blood work is even more striking. Some charges reduced to under 5% of the original bill, overall the $561 bill reduced to $61.27.

With numbers this drastic, you know someone is getting screwed. My guess is that the street price is wildly inflated and far in excess of the real cost of the service provided. I figure that my insurance company can't discount a price to the point where the provider isn't making some profit on the deal. If every service is performed at a loss, you can't make that up on volume, so it doesn't make sense for the provider to agree to not make some profit. I suspect that it is the uninsured, paying street price, that get the royal shafting. I figure as well that as a class, the uninsured are some of the least likely to be able to afford street price.

When media and politicians talk about the cost of health care, are they talking about the street cost, or the 80-90% reduced cost negotiated by the insurance carriers? I bet it isn't the latter.