Three of the largest and most influential companies in the U.S. are teaming up to tackle the health care crisis in the U.S.
E-commerce titan Amazon, business conglomerate Berkshire Hathaway, and mega-bank JPMorgan Chase announced on Tuesday that they will collaborate to offer their U.S.-based employees solutions for better and more affordable health care.
The leaders of the companies–Amazon’s Jeff Bezos, Berkshire Hathaway’s Warren Buffett and JPMorgan’s Jamie Dimon–are among the wealthiest and most prominent business executives in the world. And the combined weight of these companies will bring to bear resources that few other companies can match, says health-care expert and journalist Sam Baker of Axios.
The executives offered few details about the project, which they said is in its early stages, but they said in a press release the companies would focus “on technology solutions that will provide [their] U.S. employees and their families with simplified, high-quality and transparent health care at a reasonable cost,” as well as creating a solution “free from profit-making incentives”.
Hoping to cut health care costs
Health care costs in the U.S. are the most expensive in the world, and they increase every year.
Spending on health care makes up a staggering $3.3. trillion, or 18% of the economy, according to the most recent report from the Centers for Medicare & Medicaid Services, the federal agency that administers both public health care insurance programs. Spending amounted to $10,348 per person in 2016, the most recent year for which the agency had data.
“The ballooning costs of health care act as a hungry tapeworm on the American economy,” Buffett said in a statement announcing the initiative. “Our group does not come to this problem with answers. But we also do not accept it as inevitable. 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 combined count of U.S. employees for Amazon, Berkshire, and Chase is 1.2 million, according to reports.
Spending on healthcare makes up a staggering $3.3. trillion, or 18% of the economy, according to the Centers for Medicare & Medicaid Services
In addition to size and scale, each company has potentially unique strengths to bring to the new endeavor, according to analysts. Amazon offers its cutting edge data analytics and logistics, whereas Berkshire is an expert in insurance, and Chase specializes in banking and finance.
Warren Buffett, Jamie Dimon, and Jeff Bezos
“The health care system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” Bezos said in the same statement. “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.
The Amazon effect
Amazon has long been rumored to have an interest in disrupting the health and medical markets, for example through its involvement in medical device sales, and potentially by changing the vast pharmacy market.
And it’s not alone among large U.S. companies tackling the rising costs and increasing dysfunction of the health care market.
In December, drugstore giant CVS announced it would acquire health insurance titan Aetna in a deal worth nearly $70 billion.
Both Aetna and CVS are making a bet on the way health care will be delivered in the future, experts say, with a focus on one-stop shops in local communities offering a range of health and wellness services, including walk-in clinics and filling prescriptions.
The stocks of a wide segment of health companies fell following news of the alliance, according to reports. Aetna’s stock dropped 2.3%, while shares of Cigna declined 5.7%, and benefits manager Express Scripts fell 6% in morning trading*.
*Source: Yahoo Finance, Tuesday, January 30