Amazon, Berkshire Hathaway, JPMorgan Chase to form new health care company for employees
Amazon, along with Berkshire Hathaway and JPMorgan Chase, will form an independent health care company for their employees in the United States, the three companies have announced.
In an announcement short on specific details but long on ambitious goals geared toward reducing employee health care costs, leaders described the new venture as “free from profit-making incentives and constraints.”
“The ballooning costs of health care act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable,” Warren Buffett, Berkshire Hathaway Chairman and CEO, said in a press release. “Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes.”
The new company, the name of which has not yet been announced, will promote “technology solutions” to provide employees of Amazon, Berkshire Hathaway and JPMorgan Chase who live in the U.S. with “simplified, high-quality and transparent health care at a reasonable cost,” per the press release.
“The health care system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” Jeff Bezos, Amazon’s founder and CEO, said in the announcement. “Hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort. Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”
Details about the new company’s management and operations are still forthcoming.
It was not immediately clear what changes the partnership could bring to the industry. However, Jamie Dimon, chairman and CEO of JPMorgan Chase, hinted in a statement that coverage might eventually extend beyond patients employed by the three founding businesses.
“Our people want transparency, knowledge and control when it comes to managing their health care,” Dimon said in the prepared statement. “The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans.”
Changing the outlook on U.S. health care
In a statement emailed to Healio.com, Robert Greenwald, faculty director of the Center for Health Law and Policy Innovation and professor at Harvard Law School, said the venture pointed to a systemic issue with American health care.
“We have failed as a nation to produce a health care delivery system that affords comprehensive health coverage to everybody, Greenwald wrote. “Seeing the increased need to take action due to recent efforts to sabotage the health care system, these companies have stepped up to cut costs and hopefully provide better care to their employees.”
Greenwald also questioned how much the private sector should influence health care.
“While these companies are moving forward with a progressive and well-intended idea, other businesses often make decisions that put profits over people,” he said.
Memo Diriker, PhD, MBA, DBA, Director of the Business, Economic, and Community Outreach Network (BEACON), Franklin P. Perdue School of Business at Salisbury University, pointed out that the U.S. is the only industrialized country to rely heavily on for-profit medical insurance.
“The proposed company does not have a profit motive. That alone is a game changer,” he said. “In addition, since the founding principle of the proposed company is to reduce costs, the impact on overall health care costs is bound to be positive. Finally, if this initiative leads to price competition in the broader health insurance market, consumers win.”
Further, Diriker added, a model that is not profit-based could change the relationship between insurance companies and clinicians.
“Health care providers have a very difficult relationship with insurance companies,” he said. “Frequently, they may find that they have different objectives when it comes to what happens with a patient’s care plan. If the proposed company does not have a profit motive, and if the objective is funding evidence-based high reliability care, this too will be a game changer.”
As for whether the idea would spread to other large companies, he said, “it all depends on how this initiative fares in the marketplace.
“If costs indeed come down, the floodgates could open.” – by Andy Polhamus
Disclosure: Buffett is employed by Berkshire Hathaway, Bezos is employed by Amazon, Dimon is employed by JPMorgan Chase and Saunders is employed by Allergan.