Amazon-Berkshire Hathaway-JPMorgan health care initiative isn't the "solution" America needs

Feb 01, 2018, 00:20
Amazon-Berkshire Hathaway-JPMorgan health care initiative isn't the

So people perked up Tuesday morning when the CEOs of Amazon, Berkshire Hathaway and JPMorgan Chase said in a press release that their companies are going to partner in a nonprofit venture to figure out "ways to address healthcare for their US employees, with the aim of improving employee satisfaction and reducing costs".

Three immensely wealthy companies, each with an immensely famous CEO, say they're joining together to attack health care costs. The goal is to create create an healthcare company that would be "free from profit-making incentives and constraints".

Three of the world's largest organizations are joining up to form an independent health-care company with the aim of providing US employees and their families with simple, reasonably priced and transparent health care. Together, those companies will form a venture meant to improve health care for their USA employees by doing - what?

Amazon CEO Jeff Bezos chimed in saying "Success is going to require talented experts, a beginner's mind, and a long-term orientation".

However, JPMorgan Chase Chairman and CEO Jamie Dimon said: "Our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans". It is not clear if the leaders' ultimate goal involves expanding to offer coverage to people outside their businesses. The market response has been instantaneous and unforgiving, with shares in U.S. healthcare companies falling across the board, wiping out billions of dollars of market value.

The announcement Tuesday again highlighted investor worry about Amazon disrupting the health care industry.

"There should be a way to avoid things like that, but they're not really innovating", he said of existing health insurance companies. "The collective resources of these three companies, emerging technologies and Amazon's customer obsession and supply-chain savvy gives me optimism that they will pursue a consumer-focused model that will transcend the fragmented, provider-centric delivery system that we have today".

Health costs have been an increasing burden for workers and businesses in the US, where about half the population gets health insurance through work. "But we also do not accept it as inevitable", Berkshire Hathaway Chairman and CEO Warren Buffett said in a statement. The announcement concedes the operation is "in its early planning stages" right now.

Several of the biggest losers on a down day for the market Tuesday were health care companies. The new company is set to mitigate costs by enabling direct purchasing of medical items, cutting out the middleman, saving doctors and patients money.

It was not disclosed if the company would act like a traditional health insurer or be some sort of mediator between employees and insurance companies. "Many have tried, but few have succeeded", she said.

Nevertheless, if the new non-profit provider eventually opens its enrolment to employees beyond Amazon, Berkshire Hathaway and JP Morgan, it could gather momentum very rapidly. With the Amazon threat looming, CVS agreed previous year to take over insurance giant Aetna, while Anthem said it will set up its own pharmacy-benefits manager after the insurer's relationship with Express Scripts fell apart in a dispute over pricing.

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