I have deduced how this works ...

First of all, Disproportionate Share Hospital (DSH) payments (a Federal subsidy) for the indigent (read: uninsured {noncollectable}) are reimbursed to Hospitals that receive Federal Payments (read: Medicare, Federally subsidized Medicaid) for their requirement of providing limited services to the uninsured.

The second part of the equation: The uninsured are billed at the "retail rate (not at the contracted rate given to insurers)'' because maybe one out of fifteen of the uninsured will actually pay that bill -- maybe a few will negotiate a settlement price and pay it or make payments on that settlement.

So bottom line, the hospitals may receive less than 25% of what they bill out to the uninsured from all payment and reimbursement sources.

Of course, the worst part is that they try to pass on some of their actual losses on unpaid care provided to the uninsured to the private insured patient.