'Profit-Enhancing Middlemen' Fuel $200B Health-Care Chaos

https://www.bloomberg.com/news/features/2025-03-13/middlemen-in-us-health-care-are-driving-up-costs-frustrating-patients

by petethomas • 1 year ago

130 94 1 year ago

bloomberg.com

thisisnotauser• 1 year ago

This is a real concern for me because people credit the ACA with making a big dent in the healthcare problem here in the US, but it feels more like it just created a massive legal protection for these exploitative middlemen when the necessary solution was to blow up the entire industry with a true public option that could out-compete every profit-driven money-extraction system by simply not being profit-driven.

Not every system becomes more efficient with profit incentives, and this really seems like just such a case.

epistasis5• 1 year ago

The ACA was the best compromise that could be struck at the time, with a large portion of the population being dead set against better healthcare if it meant allowing Obama to be able to take credit for it.

This is the dirty part of the political process: people sacrifice better outcomes for all, merely for the pursuit of more power in the future. And those who want better outcomes for all must somehow gather a coalition that can achieve those outcomes.

Nobody, least of all the architects of the ACA, thought it was the best possible system. It was merely the best system that could get through the democratic process of our government.

Which means we need iterative design on these programs. It's not pass once and done forever. We need maintenance legislation for bug fixes and feature improvements. However, every culture war battle that we fight can be used to distract from actual reform, like a nefarious form of bike-shedding.

fumeux_fume• 1 year ago

As silly as agile government sounds, if it forces our legislators to take part in the misery of a daily standup, I'm all for it.

toast02• 1 year ago

I wish we'd just say ok, people like Medicare, let's drop the age of enrollment by 1 year every year for ten years and see how that goes. If that works out, drop the age of enrollment by 2 years every year for the next ten years. Then figure it out from there. Could start as a paid option rather than just lowering the age when you get coverage based on work history, too.

Maybe something for children too, start with making Medicaid or something automatic for the first N months of life, and increase it every year too.

gatlin• 1 year ago

with a large portion of the population being dead set against better healthcare if it meant allowing Obama to be able to take credit for it.

This is a fiction people repeat with no citation. A large portion of the population wants m4a when it is explained to them. This "system" failure was specifically our elected reps - bipartisanly - ignoring the needs and wants of the people at the behest of their donors. The democratic process failure was when the two parties solidified.

It wasn't pitchfork wielding illiterate rubes (or whatever undoubtedly out of touch "data driven" parody of what an average person is we're operating with) trying to deny a Black man his legacy, it was that Black man's party collectively wanting to be reelected that gave us the "Buy Insurance Or We Fine You Through Taxes" Act.

jordanb3• 1 year ago

The ACA was the best compromise that could be struck at the time,

That's not he way the ACA went down. Obama had this idea that the best way to reform an industry was to have it write its own reform legislation and pretty much let the industry have first draft.

with a large portion of the population being dead set against better healthcare if it meant allowing Obama to be able to take credit for it.

The ACA was initially popular but it became increasingly unpopular during the months of horse trading, the explosion in length of the law, the jettisoning of most of the good parts (drug price controls, public option, etc), retention and expansion of industry giveaways (tax penalties), and yes, relentless Republican opposition and propaganda against it.

But even the latter was Obama's fault for not being prepared to anticipate and deal. He actually spend the first several months pushing for a "bipartisan" deal with Republicans that gave them room to delay and attack.

with a large portion of the population being dead set against better healthcare if it meant allowing Obama to be able to take credit for it.

Obama had a filibuster-proof supermajority in congress. Yes, Republicans were going to oppose his agenda, but he didn't need them. For some dumb reason he loaded a gun, pointed it at himself and handed it to them.

There were lots of comparisons to Medicare/Medicaid being made at the time. That law was a fraction the size of ACA, the implementation phase was like a year instead of a decade for the ACA, and its effect on the public was immediate and profound.

The failure of the Obama administration was the failure of technocracy. Obama thought he could have "experts" develop the ultimate "win-win" policy. What you ended up instead was a bunch of naked self-dealing by craven opportunists who either worked for the industries they were regulating or intended to do so in the future. People saw through this and it lead directly the the rise of Trump

Webstir• 1 year ago

Love how people try to rationalize these vultures. The elite and their PMC toadies are just corrupt. That’s it. The united states is corrupt to it’s core because we allowed the elite to run things.

JumpCrisscross7• 1 year ago

because we allowed the elite to run things

By definition, a society’s elites always run things…

indymike• 1 year ago

we allowed the elite to run things

I'm pretty sure that being elite is a symptom of running things, not the cause of running things.

renewiltord2• 1 year ago

Public option would lead to pure fraud like in the ABMT treatment for breast cancer. Asking for trouble. Especially in the US where people believe that no one should trade grandma for a dollar.

In the UK, they fortunately have a notion of money spent for QALYs earned (adjusted to boost life extension at end of life) but in the US everyone believes that we should spend arbitrary amounts of money on people and if we don't, we should pay their relatives extraordinary amounts to compensate for the fact that we didn't spend a few aircraft carriers worth of money on them.

Put simply, so long as US ethics remains "there is no sum of money that is too high to save an arbitrary person's life", we have to oppose the public option.

krapht• 1 year ago

I'd like to see proof that Medicare does not evaluate QALY and spends unlimited money in general.

SoftTalker• 1 year ago

As if a "public option" would not have a middle tier that evaluated, and then approved or denied claims?

AuryGlenz4• 1 year ago

That doesn’t matter when it’s subsidized by the government. When people talk for a public option all they’re really talking about is one option, because no company would be able to compete.

roenxi5• 1 year ago

Typical US profit margins are somewhere in the area of 8%. If dropping healthcare costs by 8% is what people are arguing over then I've been badly mislead about the problems with the US healthcare system.

There is a real issue with regulatory capture. Making the system purely public is not going to result in the regulators suddenly purging their souls of all corruption. It'll still be a disaster just without any pretence of an alternative. There are literally people on HN every day who would happily improve on the US healthcare system's costs and outcomes if well meaning busybodies hadn't banned them from doing so by overregulating.

ForTheKidz2• 1 year ago

There are literally people on HN every day who would happily improve on the US healthcare system's costs and outcomes if well meaning busybodies hadn't banned them from doing so by overregulating.

I trust the market to provide healthcare about as much as I expect america to suddenly blast off to join the moon. And i trust vc/finance a hell of a lot less than that.

rqtwteye4• 1 year ago

The profit margins are not the only thing. There are tens or hundreds of thousands of people working on billing jobs at doctors and insurances that shouldn’t exist.

slt2021• 1 year ago

high cost of healthcare can be solved overnight: just mandate insurance companies to pay for healthcare for foreign hospitals (at rates not exceeding US rates).

so that Americans could travel overseas and get healthcare expenses reimbursed over there.

watch prices drop...

foolswisdom• 1 year ago

That's nominal profit margins. It doesn't take into account the way that different parts of these conglomerates take money from one pocket and put it in the other (e.g. insurance and Healthcare providers), which means it doesn't show up in the profits for your first pocket. This is why the fact that Healthcare platforms are vertical monopolies (not just horizontal monopies) is important to this conversation.

(separately, profit capping rules means that once a monopoly is cemented, once a company has moved as much as it can from one pocket to the other, there's an internal incentive to spend money on bureaucracy).

throwawayqqq11• 1 year ago

a true public option that could out-compete every profit-driven money-extraction system by simply not being profit-driven.

Much like amazon did in the early days.

When the problem is incentive structures -- of profit seeking corporations or compensation seeking individuals -- what options do you have? (IMO its only regulatory enforcement with democratic oversight and transparenct.)

I think we as a society still have to figure out ways to restructure sprawling institutions and i dont like it when people only put the blame on public or private ones while ignoring the other.

JumpCrisscross7• 1 year ago

a true public option that could out-compete every profit-driven money-extraction system by simply not being profit-driven

We can solve pharmaceuticals without bringing in the miasma of the broader healthcare debate.

Three things:

1. Let Medicare directly negotiate pricing on all drugs;

2. Make it easier for generics producers, including foreign manufacturers, to sell into America; and

3. Reform PBMs [1]. Transparency on pricing. Spun out of monoliths.

While we’re at it, maybe someone can figure out how to cut the $1bn it costs to get a drug to approval to something lower.

[1] https://www.congress.gov/bill/118th-congress/senate-bill/297...

jjav• 1 year ago

This is a real concern for me because people credit the ACA with making a big dent in the healthcare problem here in the US, but it feels more like it just created a massive legal protection...

Both are true! The ACA is a literal life-saver and bankrupcy-avoider for a significant percentage of the population. So it is a huge win for the common person.

At the same time, yes, it perpetuates the corrupt insurance system, which is bad. But at least makes it more widely available, which is good.

Not every system becomes more efficient with profit incentives, and this really seems like just such a case.

Health care can only ever get worse with profit incentives. The best way would be to eject all the profiteering out of the system so that only the people who provide actual care (doctors, nurses, medical technicians,etc) get paid. Remove all profit from the hangers-on that do nothing useful (insurance middlemen).

The path to get there is obvious, but politically quite impossible in the US (and only in the US, since every other country has it figured out.)

conductr• 1 year ago

Nothing in this article was a byproduct of ACA and it all predated it. But also in no way did it reduce costs, that’s a lie. Who even says that? Unless you’re only considering very specific benefits like birth control. Overall it increased costs, even when Medicare of any government program announces a reduction or sequestration the industry just raises prices everywhere else to offset. I’ve been in those decisions when I worked in the industry. We never let it flow through to bottom line, we always found a way.

DarkNova6• 1 year ago

Profit-chasing never makes systems more efficient. It’s competition.

jacksnipe• 1 year ago

It made a massive difference in the day to day lives of the most affected people — the chronically ill.

I cannot emphasize enough how much of a death sentence being chronically ill before the ACA was. No protection for preexisting conditions meant one unfortunate incident could cost you your job could cost your your healthcare could cost you your ability to get back on solid footing to get another job.

Eddy_Viscosity2• 1 year ago

The middlemen would never allow a public option and they have enough money to stop it happening. US policy is the will of the rich not the people.

neuralRiot• 1 year ago

Not every system becomes more efficient with profit incentives

Maybe it does but not for the right people.

cactacea• 1 year ago

https://archive.ph/HlVYh

rqtwteye4• 1 year ago

The whole system is infuriating. Even when you assume a free market is what you want, it's pretty clear that this is far away from a free market. Unless you view non-competitive monopolies as free market.

I don't understand why vertical integration is not made illegal. An insurer should not own a PBM or providers. They all should have an adverse relationship so they put cost pressure on each other.

Also, providers should charge the same prices for the same procedures no matter who pays. Ideally everybody should be mandated to follow Medicare prices. If these prices are too low to survive, then there should be a discussion about adjusting the prices.

The whole system is basically a huge bureaucracy that wastes a lot of money but some of the waste is enough profit for a lot of people to fight tooth and nail to keep the status quo.

lovich• 1 year ago

I don't understand why vertical integration is not made illegal.

Well I decided that would be extremely inconvenient for me if that was the case, so I’m going to call this “bad regulation”, and say it’s against the “Free Market” so if you support it you are a communist.

If later on I decide this is good for me, then I will call it “good regulation” that supports the “Free Market” and you are in the clear.

All sarcasm aside, if you don’t define what your minimum set of regulations are for you to consider it a “Free Market”, then you are consigning yourself to endless bike shedding over what a “Free Market” really is

jimt12343• 1 year ago

I can't speak for all providers, but I can say that, in many cases they're getting squeezed by the insurance companies, too. My girlfriend is a provider of services for young people with disabilities. The insurance companies fully dictate how much she can charge (how much the insurance companies will pay) and even what specific services she can provide (what they'll specifically pay for). It's infuriating. Up until about 7 years ago, she was fully funded by the state through the California Department of Education, and it was simple. She met with a single person from the state monthly, they reviewed her billable hours, made some corrections here and there, and she got paid. Simple. When private insurance was introduced it became a nightmare. She had to hire a full-time employee just to manage billing with the insurance companies. One insurer won't even talk to providers at all. Nothing. Nada. She has to fax them. Yes, fax. And their fax machine only answers during business hours; it's powered-off outside of business hours. Why? Because fuck you, that's why. It's obvious that the insurance companies make it as difficult as possible for providers to get paid, which is not too different from patients. Weird...not.

pimlottc• 1 year ago

And their fax machine only answers during business hours; it's powered-off outside of business hours. Why?

In some cases, privacy laws require that fax machines be actively monitored so that sensitive personal information is not just left sitting around in the open for hours.

Yes, there could probably be alleviated with sort form of purely digital fax system, but for regular fax machines, this could be why they are only available during staffed hours.

rqtwteye4• 1 year ago

It's almost the same when you deal with billing departments in hospitals. They give you the runaround, "lose" things repeatedly, ignore you. The whole US health system is abusive but there is so much money flowing around that it's worth it to many participants. I know doctors who complain about their workload but they would never consider moving from 600k salary to 400k in exchange for a straight 40 hour week.

toast02• 1 year ago

I dunno, I used to have Kaiser which is vertically integrated and the nice thing was there wasn't the thing where the Doctor says we should do X, but your insurance won't pay for it, so we'll do Y. Or my favorite where the doctor writes a prescription, and the pharmacy doesn't fill it because it's not covered, and you have to convey what is covered to the doctor so they can write that instead.

Kaiser would sometimes tell me that we have to try X first before we do Y, but then the X's worked sometimes, so it seemed like they were asking for reasonable things to reduce cost.

droopyEyelids• 1 year ago

I think kaiser is pretty widely regarded as the best experience possible with healthcare in the USA. Unfortunately its not widely available

__MatrixMan__2• 1 year ago

The billing system has cancer, it's time to schedule a biopsy.

notyourwork• 1 year ago

Biopsy? I think you mean amputation.

Y_Y• 1 year ago

You heard him doc, amputate the brain

__MatrixMan__2• 1 year ago

I love the thought, but where do you stop? Doctors and nurses still need to be paid. Or are we just getting rid of money entirely? (If so count me in.)

kacesensitive3• 1 year ago

One of the rare bipartisan areas of agreement in Congress right now is the need to rein in these Pharmacy Benefit Managers (PBMs). Both Republicans and Democrats had rallied around reforms to increase PBM transparency, which could lower costs for employers and, eventually, consumers.

But just as a major PBM reform bill was set to pass last December, Elon Musk fired off a series of tweets opposing it. Within hours, what had been near-unanimous support collapsed. Five days later, Musk tweeted, "What is a pharmacy benefit manager?"—as if he had only just learned about the issue.

This isn’t about whether Musk was right or wrong on PBMs (though evidence suggests reform would lower costs). The bigger issue is how a single billionaire’s influence can derail democratic processes that were functioning as intended. When a reform has broad bipartisan support, expert backing, and clear public benefits, yet can still be nuked by one well-placed tweet, that’s not just a policy failure—it’s a governance problem.

Tech billionaires reshaping policy via social media whims should concern anyone who cares about democratic accountability. If Musk can tank a bill that helps millions save on prescriptions, what else can be undone with a midnight tweetstorm?

JumpCrisscross7• 1 year ago

just as a major PBM reform bill was set to pass last December, Elon Musk fired off a series of tweets opposing it

Source? (Not doubting you.)

kacesensitive3• 1 year ago

https://www.ajmc.com/view/year-end-spending-bill-to-feature-...

https://www.managedhealthcareexecutive.com/view/pbm-reform-i...

https://x.com/elonmusk/status/1869311029131596262?lang=en

pstuart• 1 year ago

what else can be undone with a midnight tweetstorm?

I'm sure we'll find out soon enough.

Such a pity that this is "easily" remedied via campaign finance reform and revoking Citizens United.

error_logic• 1 year ago

It's not that easy. The deeper issue is plurality voting and duverger's law, with people being incentivized not to vote for something but to vote against a perceived evil, as that's what the campaigns get more traction with on the whole.

Plurality voting applied to the tragedy of the commons, i.e. the nash equilibrium decision matrix, results in the worst possibility if there's no basis for trust. If we could vote on the results of that matrix, by replacing {+1, 0, 0, 0...} voting with {+1, +0.5, -0.5, 0, 0, 0...} voting, things might actually improve with 3-4 viable, local parties, with smart selection of candidates actually representing districts constructively and campaigning accordingly.

But we don't have that. I fear its absence at all scales from local right on up to resolution of international conflict may end up being the Great Filter: The coordination problem of solving the tragedy of the commons in all its forms.

jimt12343• 1 year ago

I worked for a PBM in the late-90s. I wish I would've sold crack cocaine and guns to children. I would've felt better about myself. ... Hyperbole, indeed, but wow, that company, and PBM industry, was shady as fuck.

kacesensitive3• 1 year ago

I'd love to hear some of the horror stories

kulahan• 1 year ago

My dad used to have a job where he’d basically go around to failing small-time family practices and help the doctors there figure out their financials. I remember him telling me that in an extremely typical scenario, he’d walk into their office and somewhere in there he would find a huge stack of unfiled insurance claims.

Usually when he’d ask them about this, the process of filing these claims with the insurance companies was so onerous, they just fell way behind on the process. Typically you could resolve this by bringing in someone with a LOT of experience filing these claims I believe.

This was back in the 90s, so maybe the advent of computers has improved this particular part of the game (I’m not in the industry myself), but at least back then, it was infuriating doctors too.

I am not surprised in the least to hear that, like every other system in this economy, it seems to have gotten massively more complicated for approximately zero real-world improvement

'Profit-Enhancing Middlemen' Fuel $200B Health-Care Chaos

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