Don't Blame The Middleman

GMO’s Focused Equity team challenges the prevailing narrative around U.S. health insurers, arguing that managed care organizations (MCOs) are vital, misunderstood players in a complex healthcare system—and currently undervalued by the market.

Key Insights:

• Misplaced Criticism: Health insurers often bear the blame for system-wide issues driven by providers and payers, despite limited margins and regulatory oversight.
• Defensive Positioning: MCOs provide scale, cost efficiency, and proactive care models (e.g., Medicare Advantage), driving value for patients and payers alike.
• Pharmacy Benefit Managers (PBMs): Often scapegoated for rising drug prices, PBMs play a critical role in cost control via negotiation and formularies.
   

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