As Health Middlemen Thrive, Employers Try to Tame Them

Perdue and Caterpillar are grappling with a big issue in U.S. health care: the role of middlemen. Employers are trying to make sure they get their money's worth from intermediaries, some of whom are reaping bonanzas as they stand between patients, doctors and those who pay the bills.

But a lot of the money goes more toward fattening middlemen's bottom lines than toward improving the quality or efficiency of American health care. "At the end of the day, the only reasonable conclusion is that we waste a huge amount of money on the most nuttily cumbersome administrative system in the world," says Henry Aaron, a Brookings Institution economist.
While the middleman business booms, health-care costs keep rising, the ranks of the uninsured grow, and paperwork expands as each party in the system tries to enlarge its slice of the pie. "There's more money to be made by monitoring cash flow than monitoring patients," says David Cutler, a prominent Harvard University health economist.