The cost of providing health insurance to a company's employees grew almost 7% previous year, extending not only a long-standing streak of rising costs, but accelerating that trend.
Health care premiums have been growing much faster than wages.
Putting it bluntly: Regardless of who's paying the bill (and how), health care has become expensive. Corporations sponsor health benefits for more than 160 million Americans.
"This move by Amazon, Berkshire Hathaway and JPMorgan is affirming that we are reaching a tipping point with healthcare", said Redirect Health Co-founder David Berg. They have provided few details beyond that. In statements about the new health venture, JPMorgan Chase CEO Jamie Dimon said their efforts could be used as a template for all Americans.
Other business owners have tried in the past to tackle this problem, or have beseeched government to solve the problem. But, hey, good luck to them!
At the time, I believed my column had fallen on deaf ears, but lo and behold, here are these three champions announcing (in a deliberately-vague news release) a partnership to address that very issue.
Amazon CEO Jeff Bezos writes, "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 ballooning costs of healthcare act as a hungry tapeworm on the American economy", said Berkshire chief Warren Buffett in Tuesday's announcement. Our group does not come to this problem with answers. We've also learned most consumers do not touch the health care delivery system with enough frequency to ever be a sophisticated consumer.
Buffett may have been more accurate than he wished he had been. Clearly, managing health insurance is a large part of the cost of health care. More than likely, they're probably already self-funded, given the size of the three employers.
You may not know that most employer-based "insurance" isn't insurance at all. They are moving into an industry where the lines between traditionally distinct areas, such as pharmacies, insurers, and providers, are increasingly uncertain. This is set to really light a fire under the local industry, if you'll pardon the pun, and it's odds on that it will be FHIR that proves the game-changer in digital health more than any other factor, including the Amazon juggernaut.
They must compensate their specialists in a method other than fee-for-service to discourage costly, excessive, and risky procedures.
Piper Jaffray analyst Sarah James is one of those doubters, saying, "We do not expect this JV to be a meaningful disruptor to the industry, despite the stock reaction indicating that it is". Its longtime chairman, Buffett, said previous year at his shareholder meeting that health-care costs were a bigger impediment to American competitiveness than taxes. CVS Health's deal last month to buy the health insurer Aetna for about $69 billion is just one example of the changes underway. 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.
Amazon has disrupted big-box retail, made waves in the grocery store world and tantalized hundreds of cities around the country simply by offering to open a second headquarters. Experts don't think the yet-to-be-formed team will be up and running until 2020. Any speculation about the potential for disruption is just that - speculation. "This isn't about hospitals and physicians need to lower their costs, this is about how do we make more efficient use of the health care system". It's not (yet) a marketable product. But that might not matter. They fight and argue and stand their ground at the expense of the rest of us while they enjoy one of the best health care plans available. And at the root of it all is our for-profit health system. He understands the role of middlemen (of which the health care system abounds).