What Amazon & JPMorgan’s New Health Care Company Means For You

On Tuesday morning, three of the largest companies in the US made an announcement that completely rattled the healthcare industry. Amazon, JPMorgan, and Berkshire Hathaway revealed their plans to start a joint company aimed at providing “simplified, high-quality and transparent” health care for their employees that is “free from profit-making incentives and constraints”.

Berkshire Hathaway CEO Warren Buffett called healthcare costs “a hungry tapeworm on the American economy,” and said that the group of three massive businesses forming this company doesn’t have answers to all the problems facing Americans when it comes to health care and health insurance, but is ready to do their part to try and help.

“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,” said Buffett.

What Does This Mean?

Amazon, Berkshire Hathaway, and JPMorgan have launched their groundbreaking initiative with the intention of providing better healthcare options to their employees, with more manageable costs than traditional insurance companies. This isn’t entirely unprecedented, such as in the case of health care giant Kaiser Permanente, which originally began as a way to provide workers comp for employees at Kaiser shipyards, but the conglomeration of three such notable companies, from industries that span from investment to banking to retail, is very much new for the field.

Details about the new company are rare as it is still in the planning stages, so even aspects such as the company’s name or headquarters have not yet been announced. In the initial news release provided by the companies on Tuesday, they stated that the initial goal of the new company will be to find “technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost”. Whether this will come to mean that consumers can add health insurance to their Amazon Prime memberships or purchase prescription drugs at a lower cost remains to be seen.

Amazon has been making some moves in the pharmaceutical world for months, moves which have puzzled many business analysts until Tuesday’s announcement. In light of these actions as well as the announcement from the trio of companies, speculators think that the new company is looking to lower the price of prescription drugs by lowering their own profit margin and using their already massive resources in warehousing and transportation for delivery of products. Meetings that Amazon has held in the past with healthcare providers like Kaiser, Qliance, and Iora Health have also lent some credence to the theory that the new company may also be looking into operating its own health clinics for consumers in an effort to offer health care at a lower cost.


Who Will This Effect?

Almost immediately after the announcement was made, the health care sector took a huge hit on Wall Street, with stocks plummeting and billions of dollars in value lost for companies like Anthem, Cigna, and Express Scripts.

The new health care company won’t take effect immediately, and when it does it will likely begin by only covering US employees of Amazon, Berkshire Hathaway, and JPMorgan at first, but any shakeup of the healthcare industry still has major effects on us all. According to the Centers for Medicare and Medicaid Services (CMS), the National Health Expenditure in 2016 was $3.3 trillion, which breaks down to roughly $10,348 per person. Over the next ten years, this number is estimated to grow at a rate of about 5.6% per year.

United States citizens spend more on healthcare than any other country on the planet, a problem which is no secret to the American public or government. If and when Amazon, Berkshire Hathaway, and JPMorgan decide to open their health care company to the public, it has the potential to upend a massive industry which has remained stagnant and unchanging for far too long. Even if they don’t allow the public to use their services, and only offer health care to their employees, this move could still pave the way for more large companies to do the same. Either way it spells change for the healthcare industry, and in a country where an illness or accidental injury could mean the difference between financial stability and outright bankruptcy, this change is likely to be a good thing.

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