Jeff Bezos, Warren Buffett and Jamie Dimon want to fix health care

Can Jeff Bezos, Warren Buffett and Jamie Dimon fix health care?Amazon is partnering with Buffett's Berkshire H...

Posted: Jan 31, 2018 9:44 AM
Updated: Jan 31, 2018 9:45 AM

Can Jeff Bezos, Warren Buffett and Jamie Dimon fix health care?

Amazon is partnering with Buffett's Berkshire Hathaway and JPMorgan Chase, the nation's largest bank, to try to address one of the nation's thorniest and priciest problems -- soaring health care costs.

The three companies unveiled an as yet unnamed company to give their U.S. workers and families a better option on health insurance. The statement said the new company will be "free from profit-making incentives and constraints."

As of a year ago, the three companies had 840,000 global employees between them, though they did not break down how many of them are in the U.S. As of now, the companies are concentrating on a product for their own employees and family members, not a product to offer to other companies.

"The ballooning costs of health care act as a hungry tapeworm on the American economy," said Buffett. "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."

Related: 26-year-olds face challenges as they fall off parents' health insurance

The three leaders of the companies -- Buffett, Amazon founder Bezos, and JPMorgan Chase CEO Dimon, are all friends who have talked for years about the problems involved with providing health care for their employees, especially those based in the U.S., according to an executive familiar with their discussions.

"It wasn't that they saw each other one place and a light bulb went off," said the executive. "These guys talk all the time. It's the result of a lot of talk they've had both formally and informally over the years. 'No one has to deal with buying a product like this other than health care.'"

Experts say that given the resources of the companies, and their history of concentrating on the long-term rather than just the near-term, they have a chance to make significant changes in the way health care is provided. Still, it won't be an easy industry to change.

"Nothing in health care changes in short order," said Gary Claxton, vice president of the Kaiser Family Foundation. "There are many things that are wrong -- prices are very high. The provider markets are very consolidated. The insurance markets are very consolidated. Information is not readily available. And a lot of the money is spent on very ill people," who aren't necessarily concerned about costs.

But Claxton and other experts are encouraged to see these three companies partner together to try to make a change.

"These are very visible companies with very deep assets," said Dan Mendelson, CEO of Avalere Health, a health care consulting firm. "It's certainly a positive they're focused on it."

Health care costs have risen substantially over the past few decades, though the rate has slowed in recent years.

The average annual premiums for a single worker hit nearly $6,700 in 2017, while family coverage cost nearly $18,800, according to the Kaiser/HRET Survey of Employer-Sponsored Benefits. Those total costs are split between the employee and the employer.

Premiums rose 3% for family coverage and 4% for individual plans in 2017, the sixth year of relatively modest increases.

Still, premiums soared for several years a decade ago, pinching workers who didn't see their annual raises keep pace.

In 2000, the average annual premium was less than $2,500 for single coverage and $6,400 for family plans.

Companies foot most of the bill, though they have been shifting more of the cost to employees in recent years. Workers paid an average of $1,200 for solo coverage last year and $5,700 in premiums to insure their families.

Employees are also getting squeezed because they have to pick up more of the expenses when they actually get medical care these days. Deductibles have soared to an average of $1,500 last year, up from $584 in 2006. Workers are also shelling out more in co-pays and for prescription medication.

Amazon, Berkshire Hathaway and JPMorgan say they plan to focus on their own employees, but Mendelson said that based on his conversations with people involved in the effort, he doesn't expect it to remain limited to that group.

"They're going to be using their own spending and resources as a laboratory. But I think their aspirations are bigger than their employee bases," he said.

Related: Millions more Americans went uninsured in 2017

The joint effort will look to find a more efficient and transparent way to provide health care services to their employees and families, the companies said.

"The health care system is complex, and we enter into this challenge open-eyed about the degree of difficulty," said Bezos. "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."

Mendelson said it makes sense for the companies to concentrate on giving more information to their employees, since that could have a significant impact on both the cost and quality of health care.

"Experience shows that consumers will shop, and use price information, especially when it's paired with quality information," he said.

The health care industry has long sought to get Americans more involved in their health care decisions. That was a tall order when the cost of care was so difficult to find out. So the emphasis has been on making prices more readily available. The idea is that consumers will become better shoppers and help keep health care costs in check.

But a recent analysis of health care spending in the employer market found that prices are still soaring even though workers are using the same -- or fewer -- services. Total spending per person rose 15% between 2012 and 2016, according to the Health Care Cost Institute. Price hikes for prescription drugs and inpatient services fueled the increase, jumping nearly 25% and 24.3% respectively.

Amazon's reputation for disrupting markets shook up investors in the health care sector Tuesday.

Shares of established health insurers such as UnitedHealth, Anthem, Aetna and Cigna were sharply lower following the announcement, as did shares of Humana, a hospital operator, drugstore retailers CVS and Walgreens and prescription service Express Script. Shares of Amazon are up 8%, while JPMorgan and Berkshire Hathaway are unchanged.

The companies said their efforts are at an early stage. Each has named one executive to work on the effort, but they have yet to decide on a longer-term management team, a headquarters location or other operational details.

One of the executives named to the effort has ties to two of the three companies. Todd Combs, an investment officer of Berkshire Hathaway, also serves on the board of JPMorgan Chase.

"The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans," said Dimon.

Berkshire Hathaway, which owns the auto insurer Geico, is a major player in the insurance and re-insurance business, but it doesn't offer health insurance.

--Tami Luhby contributed reporting

Indiana Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 147582

Reported Deaths: 3937
CountyConfirmedDeaths
Marion24410780
Lake12911350
St. Joseph8651154
Elkhart8281130
Allen7756221
Hamilton5872113
Vanderburgh547750
Tippecanoe346414
Monroe316238
Hendricks3116130
Johnson2947127
Porter288948
Clark280857
Delaware277174
Vigo245534
Madison224587
Cass220120
LaPorte208853
Warrick185362
Floyd170865
Kosciusko169221
Howard155366
Bartholomew137557
Dubois133423
Marshall129826
Henry120728
Boone117748
Grant116839
Wayne114923
Hancock112844
Noble110033
Jackson106412
Morgan90840
Dearborn89528
Daviess82732
Gibson8229
Clinton80116
Shelby76929
Lawrence76732
LaGrange76114
Harrison72924
Putnam69415
Knox68610
DeKalb67411
Posey6695
Steuben5798
Miami5655
Montgomery55722
Fayette55615
White55615
Jasper5264
Greene50537
Scott50313
Decatur49339
Adams4555
Clay4266
Whitley4246
Ripley4138
Sullivan40612
Wells4045
Orange38124
Starke3787
Wabash3769
Spencer3656
Huntington3645
Franklin35925
Jennings35813
Washington3452
Randolph3318
Jefferson3275
Fulton3232
Pike31512
Carroll30513
Perry28214
Jay2756
Fountain2733
Tipton26123
Parke2152
Newton20511
Vermillion2031
Owen1991
Rush1984
Martin1930
Blackford1843
Crawford1401
Pulaski1401
Brown1283
Ohio1167
Benton1060
Union1010
Switzerland840
Warren721
Unassigned0233

Ohio Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 181787

Reported Deaths: 5067
CountyConfirmedDeaths
Franklin30590635
Cuyahoga19212671
Hamilton15890338
Montgomery9883184
Lucas8058370
Butler7856122
Summit6406260
Warren393360
Stark3605178
Mahoning3567283
Marion332149
Pickaway294646
Delaware275927
Lorain262389
Fairfield254156
Licking241065
Wood240181
Clark231654
Clermont225936
Trumbull2174134
Greene210840
Columbiana207887
Allen195873
Miami191056
Lake184757
Medina175542
Portage153067
Mercer143327
Ross130533
Wayne125968
Richland125724
Tuscarawas117822
Athens11452
Erie111453
Darke108850
Madison101314
Hancock97520
Auglaize92716
Lawrence88524
Putnam86127
Shelby85014
Geauga81950
Muskingum8174
Scioto7709
Belmont76827
Union7203
Ashtabula71348
Huron6909
Sandusky69022
Seneca57614
Preble57417
Ottawa55930
Holmes53710
Fulton4726
Henry44217
Jefferson4384
Defiance43713
Clinton42013
Jackson4197
Fayette4188
Crawford4088
Logan3923
Champaign3783
Highland3714
Ashland3705
Brown3583
Knox35215
Perry35011
Washington32423
Morrow3222
Williams3124
Hardin30913
Coshocton28612
Pike2780
Wyandot27813
Gallia27413
Guernsey2688
Van Wert2153
Meigs20512
Adams1936
Hocking1899
Carroll1887
Paulding1791
Monroe14118
Noble1120
Vinton853
Harrison763
Morgan690
Unassigned00
Fort Wayne
Overcast
48° wxIcon
Hi: 48° Lo: 39°
Feels Like: 46°
Angola
Overcast
45° wxIcon
Hi: 45° Lo: 36°
Feels Like: 45°
Huntington
Overcast
46° wxIcon
Hi: 48° Lo: 39°
Feels Like: 46°
Decatur
Overcast
46° wxIcon
Hi: 48° Lo: 40°
Feels Like: 44°
Van Wert
Overcast
46° wxIcon
Hi: 48° Lo: 40°
Feels Like: 44°
Cloudy Tuesday
WFFT Radar
WFFT Temperatures
WFFT National

Community Events