New health care initiative by Amazon, Berkshire and JPM-C

[MichaelB]

This is interesting news. Bloomberg reports https://www.bloomberg.com/news/arti...jpmorgan-to-set-up-a-health-company-for-staff

Three corporate giants are teaming up to combat what billionaire Warren Buffett calls a “hungry tapeworm” feasting on the U.S. economy: health care.

Amazon, Berkshire Hathaway and JPMorgan Chase Inc. and said they plan to collaborate on a way to offer health-care services to their U.S. employees more transparently and at a lower cost. The three companies plan to set up a new independent company “that is free from profit-making incentives and constraints,” according to a short statement on Tuesday.

This is an interesting initiative. The three companies employ more than 1M, so they have critical mass. They also consider themselves as premier employers, so they are motivated to look for health care options that are high quality but lower cost. I suspect they will find lots of opportunity to do, and only wonder if what they find or achieve is scalable or transferable.

 

[REWahoo]

Definitely rattled health care stock prices.

 

[street]

That is very interesting and I will be interesting to follow their progress.
Thanks

 

[Midpack]

I sure hope they tilt the scales...

Health-care spending was estimated to account for about 18 percent of the U.S. economy last year, far more than in other developed nations. Despite efforts to curb costs, studies suggest that U.S. doctors and hospitals continue to provide too much health care. In a survey of physicians’ perspectives published last year in the journal PLOS One, the average estimate was that 20 percent of medical care was unneeded, including about a quarter of tests, a fifth of prescriptions and more than one in 10 medical procedures.

 

[brokrken]

This could be a game changer. I know, in the end, Bezos has an eye on angling this into profits for Amazon. But, if it is able to stop the unsustainable inflation of healthcare costs and create a reproducible model for other companies (or states) then good for him; and hopefully, good for us.

 

[Another Reader]

That's how we got Kaiser, the first HMO. The Kaiser family created the hospital and physician groups and later the HMO for their employees that could not afford regular healthcare. This is what these businesses will use to model their healthcare "system."

History of Kaiser, omitting some important facts...

https://en.wikipedia.org/wiki/Kaiser_Permanente

 

[Running_Man]

I for one am concerned that the world's richest man, the world's biggest investor and the world's biggest banker, who have shown not that much concern over their own employees, choosing to eliminate as many positions as possible of their employees ruthlessly in an effort to cut costs along with wages (Amazon pays some of the lowest warehouse wages while requiring warehouse tasks that result in daily walking in the job of up to 15 miles per shift which keeps it's worker force far younger than most warehouses that results in lower healthcare costs as 1/2 of Amazon's warehouse personnel are under 35) will suddenly turn altruistic in concern for all the non-employees aging population of the United States. That they will be able to exert their power and influence to force solutions may be true and having those 3 determine what healthcare will be "needed" concerns me greatly.

 

[MichaelB]

RM, with all due respect, the thread topic is a health care initiative.

 

[USGrant1962]

This will be interesting to follow. But the "...free from profit-making..." is a bit of a shell game. Any cost reduction in a business is profit so if this new company is successful in reducing the employee health care cost for its owners, it is profit-making for the owners.

The more I think about it, I don't see how this works - the article includes a lot of arm-waving about transparency and unneeded medical care (rationing?). And how will it interact with all of the ACA requirements and mandatory coverage?

Bottom line it looks to me like a new competitor for the health insurance companies but nothing magic here.

 

[MRG]

I sure hope they tilt the scales...

Sure seems like there's a lot of fat to trim. I also wonder about the possible savings from reducuction of administrative people required by the current systems.

 

[tmm99]

What a noble idea!! I like it! The more competitions there are, the better.

 

[athena53]

I'll be interested to see how it works. My last employer was a very large insurance brokerage that pretty much self-insured except for buying excess coverage at very high levels to protect itself against extreme losses in any given year. It was ACA-compliant - just think of it as the employer procuring coverage for its employees from an insurance carrier but with an insanely high deductible. It may also pay for the services of that insurer or another entity to process and settle claims. Since insurers always charge premiums that cover expected losses plus a load for profit and expense (the load can't be more than 15% of premium under the ACA), the more losses they pay directly (rather than through the insurer) the more they save in profit and expenses paid to an insurer.

My guess is that this coverage will work similarly.

 

[bobandsherry]

IMHO, any real improvement in health care needs to start with reducing the cost of health care, not the cost of insurance. ACA has fallen short for same reason. Maybe A/B/J will expand into the total overall health care umbrella, until then they are only cutting out the middle man (administration) which is only a small part in the health care equation. This also presupposes that A/B/J can run the new company for less than what current insurance companies are running at today, excluding the profits.

 

[brokrken]

IMHO, any real improvement in health care needs to start with reducing the cost of health care, not the cost of insurance. ACA has fallen short for same reason.

+1 to this. And, in my opinion goes even deeper, starting with the cost of education. To pay for medical school, doctors have to take on an enormous amount of debt. In order for it to make sense to take on this debt, there has to be a reasonable expectation that they will receive high salaries to repay the debt. In order to receive a high salary, they must charge a high amount for their services, and so on and so on.

 

[travelover]

IMHO, any real improvement in health care needs to start with reducing the cost of health care, not the cost of insurance. ACA has fallen short for same reason. Maybe A/B/J will expand into the total overall health care umbrella, until then they are only cutting out the middle man (administration) which is only a small part in the health care equation. This also presupposes that A/B/J can run the new company for less than what current insurance companies are running at today, excluding the profits.

While I agree, costs can be driven down by the power of negotiating leverage. You can see this in local markets where the big dog insurance company pays less for the same procedures than a smaller insurance company. Conversely, big hospital systems can demand higher rates from smaller insurance carriers, with less leverage.

 

[Another Reader]

I can see Amazon buying up all the urgent care "doc in a box" establishments and putting their clinics there. Doctors then become employees of the joint company. If the hospitals negotiate costs too high, they will just buy some hospitals. Or maybe build them on a different model. Think Kaiser without the insurance piece.

 

[athena53]

IMHO, any real improvement in health care needs to start with reducing the cost of health care, not the cost of insurance. ACA has fallen short for same reason.

My former employer had a Wellness program administered by a third party. If you racked up enough points in a given year you were considered "engaged" and got a 50% discount on your share of the premiums. Points were earned through workouts (tracked by a FitBit or a heart rate monitor), taking on-line classes in topics such as healthy eating and stress management, participating in company-sponsored walks, getting a flu shot, a biometric screening (blood test) and taking a step test (a very mild version of a cardiac stress test). Major point incentives were offered if you were overweight and got back within a normal range, or you quit smoking or lowered your cholesterol.

In my case it was preaching to the choir and I got a nice laptop by cashing in all my accumulated points. They said that employees who were "engaged" had lower average costs than those who weren't, but I never considered that a valid stat- the "non-engaged" group was likely to include a higher % of people who had given up on losing weight or quitting smoking so that group was likely to have more people who were smokers, overweight, etc.- of course they'd be more expensive to insure.

It also occurred to me that many of the benefits of being "engaged" were very long-term. People in their 30s and 40s with healthy habits aren't likely to be that much cheaper to insure, but 20 years down the road those habits will pay off.

Still, I would LOVE to see a program like this with private insurers and with Medicare. It would be a start even thought there are many other factors behind the high cost of healthcare.

 

[Brat]

....

History of Kaiser, omitting some important facts...

https://en.wikipedia.org/wiki/Kaiser_Permanente

Like many of the shipyard workers in CA and OR were African Americans from the south and local physicians & health care facilities shunned them.

 

[bobandsherry]

My former employer had a Wellness program administered by a third party. If you racked up enough points in a given year you were considered "engaged" and got a 50% discount on your share of the premiums. Points were earned through workouts (tracked by a FitBit or a heart rate monitor), taking on-line classes in topics such as healthy eating and stress management, participating in company-sponsored walks, getting a flu shot, a biometric screening (blood test) and taking a step test (a very mild version of a cardiac stress test). Major point incentives were offered if you were overweight and got back within a normal range, or you quit smoking or lowered your cholesterol.

In my case it was preaching to the choir and I got a nice laptop by cashing in all my accumulated points. They said that employees who were "engaged" had lower average costs than those who weren't, but I never considered that a valid stat- the "non-engaged" group was likely to include a higher % of people who had given up on losing weight or quitting smoking so that group was likely to have more people who were smokers, overweight, etc.- of course they'd be more expensive to insure.

It also occurred to me that many of the benefits of being "engaged" were very long-term. People in their 30s and 40s with healthy habits aren't likely to be that much cheaper to insure, but 20 years down the road those habits will pay off.

Still, I would LOVE to see a program like this with private insurers and with Medicare. It would be a start even thought there are many other factors behind the high cost of healthcare.

Curious if after jumping through all the hoops for your Wellness plan if you felt you actually achieved a better level of health. My former employer had similar plan (hint, my former employer is one of these companies). Yes, I went through the horse and pony show for getting my Wellness credits, but honestly, in the end, I was no healthier. After years of basically the same 'education' I was no more health smarter. I felt it was just a way for them to increase rates, let those who were too lazy or had more than enough money pay the higher rates, and those who were more financially concerned jump through the hoops in order to save some money.

 

[bobandsherry]

+1 to this. And, in my opinion goes even deeper, starting with the cost of education. To pay for medical school, doctors have to take on an enormous amount of debt. In order for it to make sense to take on this debt, there has to be a reasonable expectation that they will receive high salaries to repay the debt. In order to receive a high salary, they must charge a high amount for their services, and so on and so on.

Why does a doctor need to spend so much for tuition and education? Why does anyone? With almost $1.5 trillion in student loan debt (average of over $37K per borrower), you've tapped into another underlying issue. Let's lower costs for getting education, that will drive real wage increases (imagine someone not having to pay $700-1000/mo in student loan payments). But that's getting off topic. Until then, perhaps doctors who are members in health care groups can get their debt forgiven based on years of service. Some teachers have this benefit, some companies offer similar reimbursement plans, so maybe now's the time to find ways to lower and cover the cost of doctors becoming doctors.

 

[Chuckanut]

I hope this rattles ups the medical care system quite a bit. With all the focus on insurance, we often forget that it is medical costs that are driving up insurance rates. When a 1/2 hour exam at a specialist costs $424 (such as one I had a few years ago) it is no wonder that insurance rates are booming.

Maybe they will figure out why a joint replacement that costs an uninsured American 20K in Belgium costs the insurance company $50K+ in the USA.

 

[bobandsherry]

While I agree, costs can be driven down by the power of negotiating leverage. You can see this in local markets where the big dog insurance company pays less for the same procedures than a smaller insurance company. Conversely, big hospital systems can demand higher rates from smaller insurance carriers, with less leverage.

IMHO, there should not be any "negotiations" necessary. Why have one person pay less for same level of services. Again, that's where ACA failed by continuing to allow each company negotiate rates. Doesn't it make more sense to have one rate, regardless of who the insurer is? Government should/could get involved by regulation costs that hospital's and medical groups can charge be no higher than the lowest rate charged to other insured patients. Those who have no insurance would then have same rates plus additional charge to based on delinquency/charge-off factors.

 

[MRG]

I hope this rattles ups the medical care system quite a bit. With all the focus on insurance, we often forget that it is medical costs that are driving up insurance rates. When a 1/2 hour exam at a specialist costs $424 (such as one I had a few years ago) it is no wonder that insurance rates are booming.

Maybe they will figure out why a joint replacement that costs an uninsured American 20K in Belgium costs the insurance company $50K+ in the USA.

+1000

A large number of insurance companies don't do their own claims adjudication. These folks are too busy to collect the money owed to them. Companies make millions doing it for them.

IMO any company that can't be bothered to efficiently gather revenues is overcharging everyone!

 

[bobandsherry]

I hope this rattles ups the medical care system quite a bit. With all the focus on insurance, we often forget that it is medical costs that are driving up insurance rates. When a 1/2 hour exam at a specialist costs $424 (such as one I had a few years ago) it is no wonder that insurance rates are booming.

Maybe they will figure out why a joint replacement that costs an uninsured American 20K in Belgium costs the insurance company $50K+ in the USA.

There are various reasons why, such as medical malpractice insurance costs, US is very aggressive at lawsuit recoveries.

But I get what you are saying.... so going further, it needs to be figured out why same doctor performing replacement costs $35K to one insurance company and $50K+ to another insurance company. Who provides the coverage should not constitute what the cost is to perform the procedure or surgery.

 

[Danmar]

Curious if after jumping through all the hoops for your Wellness plan if you felt you actually achieved a better level of health. My former employer had similar plan (hint, my former employer is one of these companies). Yes, I went through the horse and pony show for getting my Wellness credits, but honestly, in the end, I was no healthier. After years of basically the same 'education' I was no more health smarter. I felt it was just a way for them to increase rates, let those who were too lazy or had more than enough money pay the higher rates, and those who were more financially concerned jump through the hoops in order to save some money.

I think, If you need a financial incentive to “do the right thing” from a health perspective, it is much less likely to be effective in improving your health. On the other hand, many health conscious people don’t need a financial incentive to get “healthy”. So in the end, I think financial incentives might be dubious. You can usually find ways to game the system. Although that would be pretty short sighted in my view.