{"id":3803,"date":"2025-07-08T15:53:50","date_gmt":"2025-07-08T15:53:50","guid":{"rendered":"https:\/\/aomtodayprod.wpenginepowered.com\/?p=3803"},"modified":"2025-07-08T15:53:50","modified_gmt":"2025-07-08T15:53:50","slug":"why-are-there-middlemen-for-health-insurance","status":"publish","type":"post","link":"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/","title":{"rendered":"Why Are There Middlemen for Health Insurance?"},"content":{"rendered":"

By Daniel Butcher<\/a><\/p>\n

Under the U.S. healthcare system, private health insurers and third-party administrators (TPAs) raise the costs and increase the administrative burden of getting care. They routinely deny doctor-recommended procedures in the interest of maximizing profits. If their actions lead to suffering, medical debt, and deaths, then why do they exist?<\/p>\n

Academy of Management Scholar Jeffrey Pfeffer of Stanford University<\/a> said that they serve no purpose, because it would be cheaper and more efficient to pay the doctors, hospitals, and other healthcare providers directly.<\/p>\n

\u201cPrivate health insurers and third-party administrators provide no value. Let me repeat that again: They provide no value,\u201d Pfeffer said. \u201cThey provide no cost savings, and they certainly add to the administrative burdens and complexities of the U.S. healthcare system.<\/p>\n

\u201cAnd as you see in the social-media commentary after the death of the United Healthcare executive, they provide only aggravation, so they should not exist, that is, in their current form,\u201d he said. \u201cThey\u2019re providing no benefits.\u201d<\/p>\n

How can employers ease the cost and administrative burdens of the current system on employees? Pfeffer said that step one is demanding a full accounting of costs, which and what percentage of services are denied, and what the administrative burden is to appeal such decisions. Then, negotiate with insurers and TPAs to reduce costs.<\/p>\n

\u201cThe irony is\u2014as has been reported in The New York Times<\/em> and The Wall Street Journal<\/em>\u2014because of the cost and administrative burdens and because so many claims are never paid, in almost every instance, the cash price of paying the healthcare provider directly is cheaper than the rates negotiated by these health insurers and TPA networks,\u201d Pfeffer said.<\/p>\n

As an example of a fintech startup trying to create a new model within the existing system, Pfeffer cited Nomi Health, which touts itself as a \u201cdirect healthcare company\u201d offering a new billing-and-payments model that connects patients and healthcare providers without a health insurer or TPA serving as a \u201cmiddleman,\u201d thus reducing costs and administrative burdens.<\/p>\n

\u201cNomi Health says, basically, \u2018We\u2019re just going to pay healthcare providers directly and, by the way, because we get rid of all this administrative overhead, the cash price is cheaper,\u201d Pfeffer said.<\/p>\n

\u201cThe employee saves money, the employer saves money, the healthcare provider gets paid and saves administrative burden\u2014it\u2019s a win-win-win,\u201d he said.<\/p>\n

\u201cWe should definitely be asking, \u2018Can we do better?\u2019 and if the negotiated health insurer or TPA network price is higher than the cash price, then, for God\u2019s sakes, pay cash.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

By Daniel Butcher Under the U.S. healthcare system, private health insurers and third-party administrators (TPAs) raise the costs and increase the administrative burden of getting care. They routinely deny doctor-recommended procedures in the interest of maximizing profits. If their actions lead to suffering, medical debt, and deaths, then why do they exist? Academy of Management […]<\/p>\n","protected":false},"author":4,"featured_media":4150,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[27,78],"tags":[],"sp_smart_badges":[],"ppma_author":[70],"class_list":["post-3803","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-c-suite","category-policy"],"acf":[],"yoast_head":"\nWhy Are There Middlemen for Health Insurance? - Academy of Management Today<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Daniel Butcher\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/why-are-there-middlemen-for-health-insurance\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/why-are-there-middlemen-for-health-insurance\\\/\"},\"author\":{\"name\":\"Daniel Butcher\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/#\\\/schema\\\/person\\\/d1297a59039d9ca7bac9d9f0952e508c\"},\"headline\":\"Why Are There Middlemen for Health Insurance?\",\"datePublished\":\"2025-07-08T15:53:50+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/why-are-there-middlemen-for-health-insurance\\\/\"},\"wordCount\":430,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/why-are-there-middlemen-for-health-insurance\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.aom.org\\\/today\\\/wp-content\\\/uploads\\\/2025\\\/04\\\/greedy-middleman_money_suit_shutterstock_1511806316-scaled.jpg\",\"articleSection\":[\"C-SUITE\",\"POLICY\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.aom.org\\\/today\\\/why-are-there-middlemen-for-health-insurance\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/why-are-there-middlemen-for-health-insurance\\\/\",\"url\":\"https:\\\/\\\/www.aom.org\\\/today\\\/why-are-there-middlemen-for-health-insurance\\\/\",\"name\":\"Why Are There Middlemen for Health Insurance? - Academy of Management Today\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/why-are-there-middlemen-for-health-insurance\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/why-are-there-middlemen-for-health-insurance\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.aom.org\\\/today\\\/wp-content\\\/uploads\\\/2025\\\/04\\\/greedy-middleman_money_suit_shutterstock_1511806316-scaled.jpg\",\"datePublished\":\"2025-07-08T15:53:50+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/#\\\/schema\\\/person\\\/d1297a59039d9ca7bac9d9f0952e508c\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/why-are-there-middlemen-for-health-insurance\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.aom.org\\\/today\\\/why-are-there-middlemen-for-health-insurance\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/why-are-there-middlemen-for-health-insurance\\\/#primaryimage\",\"url\":\"https:\\\/\\\/www.aom.org\\\/today\\\/wp-content\\\/uploads\\\/2025\\\/04\\\/greedy-middleman_money_suit_shutterstock_1511806316-scaled.jpg\",\"contentUrl\":\"https:\\\/\\\/www.aom.org\\\/today\\\/wp-content\\\/uploads\\\/2025\\\/04\\\/greedy-middleman_money_suit_shutterstock_1511806316-scaled.jpg\",\"width\":2560,\"height\":1440,\"caption\":\"Source: Shutterstock\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/why-are-there-middlemen-for-health-insurance\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.aom.org\\\/today\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Why Are There Middlemen for Health Insurance?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/#website\",\"url\":\"https:\\\/\\\/www.aom.org\\\/today\\\/\",\"name\":\"Academy of Management Today\",\"description\":\"Smarter, faster business news\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.aom.org\\\/today\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/#\\\/schema\\\/person\\\/d1297a59039d9ca7bac9d9f0952e508c\",\"name\":\"Daniel Butcher\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/085e55dd8b6bc186c84fe76ed72735ec1ce8396dff19755de507fb86659a8d08?s=96&d=mm&r=g559188980b254e0e0624aacb72ebc733\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/085e55dd8b6bc186c84fe76ed72735ec1ce8396dff19755de507fb86659a8d08?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/085e55dd8b6bc186c84fe76ed72735ec1ce8396dff19755de507fb86659a8d08?s=96&d=mm&r=g\",\"caption\":\"Daniel Butcher\"},\"description\":\"Daniel Butcher is a writer and the Managing Editor of AOM Today at the Academy of Management (AOM). Previously, he was a writer and the Finance Editor for Strategic Finance magazine and Management Accounting Quarterly, a scholarly journal, at the Institute of Management Accountants (IMA). Prior to that, he worked as a writer\\\/editor at The Financial Times, including daily FT sister publications Ignites and FundFire, as well as Crain Communications\u2019s InvestmentNews and Crain\u2019s Wealth, eFinancialCareers, and Arizent\u2019s Financial Planning, Re:Invent|Wealth, On Wall Street, Bank Investment Consultant, and Money Management Executive. He earned his bachelor\u2019s degree, Cum Laude, from the University of Colorado Boulder and his master\u2019s degree from New York University. You can reach him at dbutcher@aom.org or via LinkedIn.\",\"sameAs\":[\"https:\\\/\\\/aomtodayprod.wpenginepowered.com\",\"https:\\\/\\\/www.linkedin.com\\\/in\\\/danielbutcher\\\/\"],\"url\":\"https:\\\/\\\/www.aom.org\\\/today\\\/author\\\/daniel-butcher\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Why Are There Middlemen for Health Insurance? - Academy of Management Today","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/","twitter_misc":{"Written by":"Daniel Butcher","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/#article","isPartOf":{"@id":"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/"},"author":{"name":"Daniel Butcher","@id":"https:\/\/www.aom.org\/today\/#\/schema\/person\/d1297a59039d9ca7bac9d9f0952e508c"},"headline":"Why Are There Middlemen for Health Insurance?","datePublished":"2025-07-08T15:53:50+00:00","mainEntityOfPage":{"@id":"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/"},"wordCount":430,"commentCount":0,"image":{"@id":"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/#primaryimage"},"thumbnailUrl":"https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-scaled.jpg","articleSection":["C-SUITE","POLICY"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/","url":"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/","name":"Why Are There Middlemen for Health Insurance? - Academy of Management Today","isPartOf":{"@id":"https:\/\/www.aom.org\/today\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/#primaryimage"},"image":{"@id":"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/#primaryimage"},"thumbnailUrl":"https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-scaled.jpg","datePublished":"2025-07-08T15:53:50+00:00","author":{"@id":"https:\/\/www.aom.org\/today\/#\/schema\/person\/d1297a59039d9ca7bac9d9f0952e508c"},"breadcrumb":{"@id":"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/#primaryimage","url":"https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-scaled.jpg","contentUrl":"https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-scaled.jpg","width":2560,"height":1440,"caption":"Source: Shutterstock"},{"@type":"BreadcrumbList","@id":"https:\/\/www.aom.org\/today\/why-are-there-middlemen-for-health-insurance\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.aom.org\/today\/"},{"@type":"ListItem","position":2,"name":"Why Are There Middlemen for Health Insurance?"}]},{"@type":"WebSite","@id":"https:\/\/www.aom.org\/today\/#website","url":"https:\/\/www.aom.org\/today\/","name":"Academy of Management Today","description":"Smarter, faster business news","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.aom.org\/today\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.aom.org\/today\/#\/schema\/person\/d1297a59039d9ca7bac9d9f0952e508c","name":"Daniel Butcher","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/085e55dd8b6bc186c84fe76ed72735ec1ce8396dff19755de507fb86659a8d08?s=96&d=mm&r=g559188980b254e0e0624aacb72ebc733","url":"https:\/\/secure.gravatar.com\/avatar\/085e55dd8b6bc186c84fe76ed72735ec1ce8396dff19755de507fb86659a8d08?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/085e55dd8b6bc186c84fe76ed72735ec1ce8396dff19755de507fb86659a8d08?s=96&d=mm&r=g","caption":"Daniel Butcher"},"description":"Daniel Butcher is a writer and the Managing Editor of AOM Today at the Academy of Management (AOM). Previously, he was a writer and the Finance Editor for Strategic Finance magazine and Management Accounting Quarterly, a scholarly journal, at the Institute of Management Accountants (IMA). Prior to that, he worked as a writer\/editor at The Financial Times, including daily FT sister publications Ignites and FundFire, as well as Crain Communications\u2019s InvestmentNews and Crain\u2019s Wealth, eFinancialCareers, and Arizent\u2019s Financial Planning, Re:Invent|Wealth, On Wall Street, Bank Investment Consultant, and Money Management Executive. He earned his bachelor\u2019s degree, Cum Laude, from the University of Colorado Boulder and his master\u2019s degree from New York University. You can reach him at dbutcher@aom.org or via LinkedIn.","sameAs":["https:\/\/aomtodayprod.wpenginepowered.com","https:\/\/www.linkedin.com\/in\/danielbutcher\/"],"url":"https:\/\/www.aom.org\/today\/author\/daniel-butcher\/"}]}},"authors":[{"term_id":70,"user_id":4,"is_guest":0,"slug":"daniel-butcher","display_name":"Daniel Butcher","avatar_url":{"url":"https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/01\/DanButcher_Academy-of-Management.webp","url2x":"https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/01\/DanButcher_Academy-of-Management.webp"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"rttpg_featured_image_url":{"full":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-scaled.jpg",2560,1440,false],"landscape":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-scaled.jpg",2560,1440,false],"portraits":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-scaled.jpg",2560,1440,false],"thumbnail":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-150x150.jpg",150,150,true],"medium":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-300x169.jpg",300,169,true],"large":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-1024x576.jpg",800,450,true],"1536x1536":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-1536x864.jpg",1536,864,true],"2048x2048":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-2048x1152.jpg",2048,1152,true],"owl_elementor_thumbnail":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-600x338.jpg",600,338,true],"owl_elementor_team":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-350x450.jpg",350,450,true],"owl_elementor_testimonial":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/greedy-middleman_money_suit_shutterstock_1511806316-100x100.jpg",100,100,true]},"rttpg_author":{"display_name":"Daniel Butcher","author_link":"https:\/\/www.aom.org\/today\/author\/daniel-butcher\/"},"rttpg_comment":0,"rttpg_category":"<a href=\"https:\/\/www.aom.org\/today\/category\/c-suite\/\" rel=\"category tag\">C-SUITE<\/a> <a href=\"https:\/\/www.aom.org\/today\/category\/policy\/\" rel=\"category tag\">POLICY<\/a>","rttpg_excerpt":"By Daniel Butcher Under the U.S. healthcare system, private health insurers and third-party administrators (TPAs) raise the costs and increase the administrative burden of getting care. They routinely deny doctor-recommended procedures in the interest of maximizing profits. If their actions lead to suffering, medical debt, and deaths, then why do they exist? Academy of Management…","_links":{"self":[{"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/posts\/3803","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/comments?post=3803"}],"version-history":[{"count":0,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/posts\/3803\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/media\/4150"}],"wp:attachment":[{"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/media?parent=3803"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/categories?post=3803"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/tags?post=3803"},{"taxonomy":"sp_smart_badges","embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/sp_smart_badges?post=3803"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/ppma_author?post=3803"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}