Excited Amazon Will Fix Healthcare? Don't Hold Your Breath, Says Harvard Expert

05 February, 2018, 06:34 | Author: Salvatore Jensen
  • Amazon, Berkshire Hathaway and JP Morgan Chase join forces to tackle employees' health-care costs

And even though Amazon has a number of detractors - not to mention the controversial working environments many of its warehouse employees report - the company maintains considerable power in global markets.

Putting it bluntly: Regardless of who's paying the bill (and how), health care has become expensive. In June 2013, before Obamacare took effect, 70.8 percent of workers between 18 and 64 had employer-sponsored coverage.

But most significant in this context is that his company, Berkshire Hathaway, owns a number of insurers including GEICO.

It's interesting to imagine how three large companies could build a better system for themselves. They have provided few details beyond that.

Other business owners have tried in the past to tackle this problem, or have beseeched government to solve the problem. "They're going to need to do things to do that". While details on the new collaboration now remain scant, Friend believes the company could ultimate leverage those items to deliver better health care.

"Hard as it might be, reducing healthcare's burden on the economy while improving outcomes for employees and their families would be worth the effort", he maintained.

"When large and successful companies come together in this way, it's potentially disruptive", says Frank Easley, senior vice president of Aon's health and benefits group, about the Amazon, Berkshire and JPMorgan partnership. But we also do not accept it as inevitable.

Buffett may have been more accurate than he wished he had been.

Companies like employment-based health care, despite its costs, because it keeps the workforce captive.

Whenever Amazon.com threatens to enter a market sector, the resultant scare brings falling stock prices for companies within that segment. Those fears haven't panned out, however, as the changes also helped attract more people to the service and convince existing users to choose PayPal more frequently. And while I still believe that to be true, I can not help but emphasize that a big part of what's driving this new venture is Amazon's discovery that care market supply chains are an extraordinarily tough nut to crack - perhaps harder than, for example, revamping the entire pharmaceutical distribution industry.

Whether and how that will benefit employees directly - and whether solutions the company develops will scale and be a model that could be used by other employers - remains uncertain, he said.

Those looking for a deep dive into what Laszewski thinks will actually work can check out the complete post, but for non-wonks, his bottom line seems to be this: to fix healthcare we need to control costs overall, and to do that the industry as a whole must be forced to stay within a set budget rather than gobbling up more and more of the nation's money. Cantor Fitzgerald health services analyst Steven Halper says the announcement has "more bark than bite at this point". Its longtime chairman, Buffett, said a year ago at his shareholder meeting that health-care costs were a bigger impediment to American competitiveness than taxes. It's not just about selling drugs, however.

A visit to a primary care physician, for example, comes with an average co-pay between $15 and $25. Amazon has taught everyone how to shop far better online than in stores and JPMorgan has had extensive experience with Health Savings Accounts, which are tax-sheltered savings accounts paired with high-deductible insurance polices that eligible people can use to pay for health care costs.

With consumerism on the rise, patients are going to want greater access to that data, particularly quality metrics and performance outcomes they can't easily get today, said Dr. Michael Ash, chief transformation officer at Nebraska Medicine.

Just because CVS and Aetna may be able to jointly achieve their goal, however, doesn't mean JPMorgan, Berkshire and Amazon can. Experts don't think the yet-to-be-formed team will be up and running until 2020.


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