It's the Middleman, Stupid!

Employers complain about rising healthplan costs. Doctors and hospitals complain about declining reimibursements. The public’s complaining about 46 million uninsured Americans. Politicians complain that there are no easy answers.

Everyone’s complaining about healthcare, except the managed care companies!

But, why should they complain? After all, Blue Cross, United Healthcare, Cigna, Aetna, and the other cash-bloated behemouths continue to rake in huge profits in their role as the proverbial “middleman” in the healthcare equation. Their CEOs earn eight-figure incomes and major shareholders are still fat and happy in the midst of the worst economic downturn. They’ve gained complete control over the buying and selling of medical care in this country to their own selfish ends, yet people still complain as if there were some other reason for this country’s health care crisis.

Since the HMO Act of 1973, HMOs, PPOs, and the handful of insurance companies that came to dominate the managed care industry have methodically isolated the buyers and sellers of medical care from each other in true middleman fashion. First, they built their networks by negotiating discounted rates with doctors and hospitals. Next, they built their memberships by getting employers to offer those networks as the limited source of medical care for employees and dependents. Along the way, managed care companies convinced medical providers and employers that neither side could do business with the other without going through the middleman.

As the nearly perfect middleman, commercial managed care has isolated employers and providers from each other by virtue of “proprietary” agreements. That is, neither side knows the contractual terms or financial details the middleman has with the other side. The middleman, and the middleman alone, dictates how much doctors get paid and, in turn, how much those services cost the employer. By revealing nothing to either side, the middleman effectively “skims” the difference. That’s where they make those un-Godly profits.