Between producers and consumers, you’ll find a cadre of professionals who broker deals, facilitate transactions, and move goods and services along.
They’re called middlemen, and they thrive in virtually every industry—from real estate and retail to finance and travel services. If not for middlemen, houses and blouses wouldn’t sell. Banks and online booking sites wouldn’t exist. Middlemen are the reason a tomato grown in South America makes it aboard a ship headed for North America, passes through customs, reaches a local supermarket and ends up in your basket.
Middlemen do all of this, for a price. Opinions differ among consumers and economists as to whether middlemen are nasty parasites, necessary for modern living or both.
While the debate goes on, one thing’s for sure: Middlemen are plentiful and prosperous in American healthcare.
The many middlemen of medicine
Before middlemen entered the picture, doctors and patients formed personal relationships and made direct payments.
A 19th-century farmer with an aching shoulder would request a house call from his family physician who, in turn, would perform a physical exam, make a diagnosis and provide painkilling medication. All that in exchange for, say, a chicken or a small sum of cash. No middleman required.
That began to change in first half of the 20th century as the cost and complexity of care became problematic for many. In 1929, the year the stock market crashed, Blue Cross began as a partnership between Texas hospitals and local educators. Teachers paid a 50-cent monthly premium to cover the hospital care they needed.
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