So the news this morning is that Amazon, JPMorgan and Berkshire Hathaway have come together on addressing healthcare costs…somehow. Presumably this means, probably, self-insuring their own employees. At least that’s my understanding. Stories and headlines are saying things like this will “shake up” the healthcare industry, and certain healthcare and pharma stocks saw plunges today at the news.
So what does this mean? Why is this going shake things up so much?
What does this mean for the general public, if anything? Could we eventually realistically see these companies buy healthcare systems and brand them (for example, “Amazon Healthcare”), where people would then buy into a plan kind of like Amazon Prime, giving people access to more affordable healthcare-- as long as it was done at *their *clinics/offices/hospitals?
Admittedly, I know very little about American healthcare, other than it sucks, especially for self-employed people with families like me. As a business owner who’s not getting any younger, but has a wife and a couple kids in need of insurance, I long for a simpler system that allows anyone to have access to what they need at any given time, affordably, and go about their lives without constantly worrying about if they still qualify for something or where they can go to get treatment, or did they submit the right paperwork on time, etc. If the government doesn’t give Americans something affordable, simple and accessable, could the business world step in and offer something like that?
I know that we’re in the situation we’re in because we’ve allowed insurance and healthcare to be for-profit for too long, but I’m wondering, in this current pro-healthcare reform environment where there’s definitely a demand for better more-universal coverage, if there’s a place for a well-funded entity (like the three corporations listed above) to be profitable while still offering simple, affordable coverage to anyone that needs it.
Health care costs have been going up principally because employers offer health care as a perk of employment. It creates a market force for increased spending into health care.
If a large group of employers gets together and decides to stop doing that and, instead, to actually start looking at the actuarials and value of different procedures and drugs on longevity and quality of life metrics, and limit their health care spending on that basis, then it would create a sizable market force back down.
Of course, it could also make companies outside of Amazon, Berkshire Hathaway, and JP Morgan look less attractive to employees. “Well yeah, we’re offering you cheaper health insurance than our competitors, but that’s only because we only cover the things that are economical! Why wouldn’t you want that!”
It’s possible to know that it sucks by looking at the big picture: it cotss more (per capita) and delivers worse outcomes than the health care systems in other advanced capitalist economies.
I think the opposite is correct. One of the biggest drivers of healthcare spending increases is, as you suggest in your opening paragraph, that the people making the decisions about healthcare (the people, with the advice of healthcare providers) are not the same as the ones paying most of the cost (the employers, insurance companies, or government). This skews the cost/benefit aspects of the decisions. (Socialized medicine deals with this in large part via rationing.)
But the bottom line is that people are not willing to accept limits on their healthcare, based on “actuarials and value” or anything else. Insurance companies have attempted to do this exact type of cost/benefit process, and what invariably happens is that they depicted as heartless bastards only out for the bottom line. If these companies do something along the same lines, they won’t be considered attractive employers - to the contrary, they will be depicted as abusive employers, making billions in profits and denying their employees necessary coverage (along with inevitable media stories about so-and-so who was denied coverage for some procedure or other and suffered enormously as a result, and so on).
I’m curious as to what they’re up to (I have a professional interest, as a health care actuary) but my initial thought is skepticism as to whether these companies can accomplish anything that the big insurance companies - with their armies of actuaries, underwriters, and health care experts - can’t do. (It’s very possible that all they’ll end up doing is just creating their own captive insurance company, with perhaps minor differences from other companies - in which case the other insurers can lose market share but the overall market is unaffected.)
Cuz I’m in it, I’m a customer of it, it sucks. And I know other countries offer universal healthcare to their residents. To say America can’t do what every other developed nation on earth has done is to say we’re somehow inferior to those countries.
A recent example: I am on a silver plan, which isn’t cheap, and it still took an afternoon of calling pharmacies to find someone that would cover my family’s flu shot. That’s insane. An afternoon calling my insurance company, calling pharmacies, etc. Or I could shell out $130 for my family to get shots. Insane.
Another example: I run a small seasonal business. Some months, based on the amount we have coming in, my kids only qualify for the state’s Medicaid plan. But then other months, they don’t. If I don’t constantly check in with the county office, and report changes, I could be busted for Medicaid fraud. But then because I do check in with income changes, my kids are on a new plan every couple months, it seems, and then we have to shop plans to find one that takes their doc…every few months. And they’re never simply on their parents’ plan-- it’s either CHIP or Medicaid. And don’t get me started on dealing with doctor’s office staff when we give them our kids’ insurance. It’s freaking exhausting the hoops we have to jump through for simple insurance for our kids who rarely even go to the doctor. And I consider us to be solidly middle class, not poor-- just self-employed people with income that radically fluctuates. I’m tempted to report I make more on monthly basis just to keep my kids on CHIP, but then worry what happens at tax time when and/or if things don’t line up. Again, it’s insane, and exhausting. It makes me want to just go back to working for someone else full-time, but then that means giving up everything we’ve built.
Don’t get me wrong, I’m glad the insurance is there, but it could (and should) be so much simpler for people. If something could be done to simplify it, I’m in. I’m just curious what sort of thing Amazon et al are up to, and people’s thoughts on that, not why I think the current system sucks.
My insurer does cover flu shots, but only they chose which ones to cover apparently. It took several calls to find a pharmacy that offered the specific shots they covered. (Costco)
Right. However, the causal relationship is not that the costs are lower because the people are healthier. It’s because the health care system is more effective because it’s more efficient.
a big organization can actually setup their own health insurance system. For example the state of NC for their employees has their own health plan. Blue Cross only processes the claims they don’t set the policies. That’s what this looks like , they are going to have their own plan and not use Cigna, United, etc.
Most big companies self-insure in that sense, and virtually all jumbo companies do. (In addition to saving on some insurance company risk charges, they also exempt themselves from various insurance mandates and premium taxes.) I have no doubt that these companies are already self-insuring. This is clearly something a lot more ambitious.
So if that’s what this is, why the stories that this will shake up the healthcare industry? Could these three companies shake it up with some sort of deal like that, or are reactions to this overblown?
Here in NC 2 of the biggest health systems are talking about merging UNC health and Carolinas health. If that merger happens there is talk they will be big enough to be their own insurance company. You would sign up with them and skip Blue Cross, etc
I think people are nervous about this because Amazon is so huge now and getting bigger all the time. And they have the ability to ship things out very quick so they could start out by becoming a mail order pharmacy company pretty quickly if they choose to go that route.
I would expect them not to do status quo self insurance. I bet they are thinking outside the box and will not (hopefully) hire a bunch of seasoned health care industry consultants to help guide this effort. They should be using fresh ideas, and I read try to do something to take the profit motive out of the equation.
For example, with a customer base orders of magnitude larger than CVS, I imagine Amazon could swing better pricing with Pharma when they get into pharmacy. Perhaps also, using their combined size and influence, be able to negotiate standard pricing for everything from flu shots to heart surgery, so everyone (patients, doctors) have total transparency as to what something will cost (and be reimbursed), rather than the current guessing game with pre-auths (Surprise! We wont cover your ER visit because it was just a sprain and not a break!).
I suspect they are not getting into this to be just another player, but want to be a disruptive force in this market, with benefits to them as businesses, as well as to their employees, and eventually the public at large.
You can see that the U.S. spends about twice as much as comparable countries like Canada and Australia, but life expectancy is significantly lower. As I said, other countries are both more efficient and more effective.
News reports today indicate that this could be a big disrupter in the pharma space. Lots of negotiating power with drug manufacturers and a built-in (Amazon) distribution system. With no profit motive, Express Scripts will have a tough competitor.
Another area ripe for the picking is telemedicine. Video chats with medical professionals could be cheap, fast and avoid a lot of office visits. See above for needed meds, contracts with Costco, Walgreens, CVS etc. for immunizations.
Next, contract with ‘Doc in a Box’ chains or build out a nationwide one for things that need hands on treatment.
Imaging, surgery and hospitalization are probably longer and harder things to deal with. Likewise dental and mental health treatments.
a lot of people don’t know that Amazon already runs a lot of other websites beyond their own. Which means they have a lot of hardware/servers that can be deployed for video Dr. visits.
