Brass knuckles capitalism at work in America's overpriced heath care system

“Social responsibility is a fundamentally subversive doctrine” in a free society, and have said that in such a society, “there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” ― Nobel Prize laureate Milton Friedman, The Ethics of Competition and Other Essays, 1969

“When the rules of the capitalism game exclude only unfree competition, deception and fraud, and businesses buy the legal definitions of unfree competition, deception and fraud from our corrupted pay-to-play system of politics and government, one should expect little to no concern for social responsibility from businesses. What little concern there may be amounts to a public relations propaganda problem. Such problems are almost always addressed by (1) deceiving, distracting and/or confusing the public as much as possible, and/or (2) buying more effective social responsibility-subverting laws from government.” ― Blogger Germaine, Dissident Politics blog post, 2024  

The NYT reports (not paywalled for 30 days) about a quiet, obscure little data analytics company, MultiPlan. MultiPlan is shifting unknown billions of dollars in health care costs from insurers to consumers. The lead example is a woman who used an out of network doctor to treat a serious infection. Insurance paid the doctor $5,449.27 and billed the woman more than $100,000. That was based on a “fair and independent analysis” as MultiPlan and the insurance companies define the concepts of fair, independent and analysis. That amounts to a fig leaf over a very nasty thing to look at.

Insurers Reap Hidden Fees by Slashing Payments. 

You May Get the Bill.

A little-known data firm helps health insurers make more when less of an out-of-network claim gets paid. Patients can be on the hook for the difference.

The answer is a little-known data analytics firm called MultiPlan. It works with UnitedHealthcare, Cigna, Aetna and other big insurers to decide how much so-called out-of-network medical providers should be paid. It promises to help contain medical costs using fair and independent analysis.

But a New York Times investigation, based on interviews and confidential documents, shows that MultiPlan and the insurance companies have a large and mostly hidden financial incentive to cut those reimbursements as much as possible, even if it means saddling patients with large bills. The formula for MultiPlan and the insurance companies is simple: The smaller the reimbursement, the larger their fee.

But when employees see a provider outside the network, as Ms. Lawson did, many insurance companies consult with MultiPlan, which typically recommends that the employer pay less than the provider billed. The difference between the bill and the sum actually paid amounts to a savings for the employer. But, The Times found, it means big money for MultiPlan and the insurer, since both companies often charge the employer a percentage of the savings as a processing fee.

Can you see the incentive to shift

costs to the consumer?

Note the sentence in the NYT article: It promises to help contain medical costs using fair and independent analysis. Think about that a moment. How does shifting already outrageously high medical costs from insurance companies and health care providers to powerless consumers contain medical costs? It doesn’t. Instead, it incentivizes increasing costs by shifting costs to consumers who cannot do anything about it because health care is usually a necessity, not an option. It is exactly like requiring all drivers to have car insurance. All the power is with the insurance companies. That power incentivizes them to squeeze every possible penny out of every consumer.  

The point of this post is to again point out that brass knuckles private sector capitalism, including health care, mostly operates with one and only one moral imperative, profit lust. There are some exceptions, but that generally tends to be in smaller businesses. Incentives that increase profit are effective, regardless of harm or cost to consumers. The more risk and cost that gets shifted to consumers, the higher the profit. Nowhere in this does the strange concept of social responsibility or conscience come into play for brass knuckles capitalists. 

With brass knuckles capitalism, the concept of social responsibility exists only as an evil thing to be minimized as much as possible. Only when government regulates for the benefit of consumers does social responsibility have some effect.