Here come middleman eager for cut of health-care pie

Middlemen work between the consumer and the corporations increasing the cost of health care and eating a share of the profit. 

Insurance companies pay middlemen — brokers — a commission on every contract sold. Medicare Advantage brokers earn between $600 to $700 for each Medicare Advantage plan sold, $300 to $400 for each yearly renewal and up to $100 for each Medicare Part D sold with lower amounts for renewals.

The insurance company may write the check to the broker, but we the patients will pay the fee in premiums, co-pays or taxes.

Pharmacy benefit managers — or PBMs — are the middlemen between drug producers, insurance companies, pharmacies and beneficiaries. They earn a little slice of everyone’s pie. 

Kate Queram in News from the States reports, “PBMs create and update formularies of preferred drugs, with different prices and cost-sharing amounts that influence what beneficiaries pay out of pocket and which medications they can access through their insurance. PBMs negotiate rebates and discounts for insurance from drug manufacturers and determine the prices insurers pay and the payments pharmacies receive. PBMs can also take on the administrative role of directly reimbursing retail pharmacies on behalf of an insurer. Both public and private insurers, including Medicaid, Medicare Advantage plans, employer-sponsored insurance plans, and individual market plans, use PBM services.” 

Since PBMs negotiate rebates and discounts from the pharmaceutical company for the insurance company, the PBM may retain a portion of the rebates for their own profit instead of passing it on to the insurer or the customer. Pharmacies also negotiate with PBMs for their drug supplies. 

The PBM negotiates what the insurance companies will pay the pharmacy for the drug. The PBM may increase their profits by paying the pharmacy less for the drug than the insurance company pays them. As negotiations are secret, the opportunities for profit abound. Three little slices in each piece of pie. 

Ultimately, the patient beneficiary pays in higher premiums and cost sharing. Is it any wonder that Americans pay twice what Europeans pay for the same drug? 

One middleman, Multiplan, has a unique way to suck profit from the system. When patients see an out-of-network provider, “UnitedHealthcare, Cigna, Aetna and other insurers often send their bills to MultiPlan to recommend a payment amount,” according to The New York Times. “The most common way Americans get health coverage is through an employer that pays for workers’ medical care itself and uses an insurance company to administer the plan. Providers in the plan’s network have agreed-upon rates, but out-of-network providers often must negotiate payments.

“By using MultiPlan’s frugal recommendations, insurers say they are saving employers money. But insurers and MultiPlan also benefit because their fees are typically based on the size of the declared ‘savings’ or ‘discount’ — the difference between the original bill and the amount actually paid. In some instances, insurers and MultiPlan have collected more for processing a claim than the provider received for treating the patient.” 

Because there is no transparency about PBM or Multiplan negotiations, we don’t know how much they actually contribute to rising prices for the government, the insurance company, the hospital or the consumer. 

However, “In 2017, CVS Caremark and OptumRX — two of the three largest middlemen — took nearly a quarter billion dollars from Ohio Medicaid,” Queram reports. “Rounding out the trio is Express Scripts, which sometimes paid itself more than 100 times the cost of drugs it could have obtained more cheaply in negotiations for a public employee insurance plan in West Virginia. 

“Together, those companies represent more than 80 percent of Americans with prescription drug coverage. All three are under federal investigation.”

Clearly, our for-profit health care system is not serving us well. The costs of U.S. medical services rose 3.7 times faster than general inflation. In 2023, we spent $4l7 trillion on health care. And we are not getting our money’s worth. 

Current and constantly increasing costs for health care are not sustainable. It is time to consider changing to a single-payer system similar to Medicare and eliminating the private profit seeking drains on our healthcare taxes.