"Middle-man" costs make healthcare expensive

The American healthcare system is complicated and has multiple layers. The over-complication of the system leads to lots of middle-men, people who go in between two groups and are to some extent, not a necessary supplier or consumer. These include negotiators such as insurance companies and groups that buy hospital supplies for hospitals from producers. Hospitals require drugs and equipment to be regularly replenished in order to properly function. Instead of negotiating directly with the producers of these drugs and equipment, hospitals go through Group Purchasing Organizations (GPOs) or Pharmacy Benefits Managers (PBMs). These groups negotiate prices and purchase goods from the medical supply (for GPOs) or drug companies (for PBMs). Obviously, these groups must be paid for their services. In addition, the hospitals are the ones actually paying for the goods, so the middle-men have little incentive to negotiate for low prices. This raises the price of medical goods, and introduces a new step to make healthcare more expensive.^[1] Insurance companies also serve as a type of middle-man. In many countries, the government establishes how much basic treatments cost for hospitals. The government holds all patients, so the hospitals cannot refuse the prices, or else they will have no business. But in America, there are many small insurance companies that negotiate with hospitals. These insurance companies only hold a small number of patients, so the hospital will not suffer significantly if they don't accept the price the insurance companies suggest. The insurance companies don't have much leverage over the hospitals, so the hospitals can negotiate high prices for treatments, increasing healthcare costs. Additionally, insurance companies must make money; yet another middle-man driving up costs for healthcare.^[2]

[P1] American healthcare is structured so that there are many middle-men. These middle-men cannot or do not negotiate low prices, increasing healthcare costs. [P2] Middle-men charge for their services, increasing healthcare costs.