Amazon, Berkshire Hathaway and JPMorgan establish a joint healthcare company

Amazon, Berkshire Hathaway and JP Morgan Chase join forces to tackle employees' health-care costs

I'm sure you read the news that Berkshire Hathaway, Amazon and JP Morgan Chase are banding together to form an independent health care company for their employees.

Just over half - 55.7 percent - of Americans get their health insurance from their employers, and about 20 percent are insured through the federal program, Medicaid.

It's hard to say if what these three companies create will be bad or good, because there really isn't any available information on it yet. "Rather, 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 Berkshire Hathaway Chairman and CEO, Warren Buffett.

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But what does all of this mean and how can it be successful when so many other initiatives have fallen short? Some of the advice has been edited for clarity and length. And while I still believe that to be true, I can not help but emphasize that a big part of what's driving this new venture is Amazon's discovery that care market supply chains are an extraordinarily tough nut to crack - perhaps harder than, for example, revamping the entire pharmaceutical distribution industry.

And he's a longtime critic of the health care system. If Amazon has an idea, and is willing to put some money behind it, that's wonderful.

They must compensate their specialists in a method other than fee-for-service to discourage costly, excessive, and unsafe procedures. "They'd probably have to miniaturize them, wouldn't they?" It's not hard to imagine, however, how the three companies could set up a large, closed system that could serve as a blueprint for the only disruptor with the ability to fix the entrenched, inefficient USA health care system - the US government. Look at hospital prices and prescription drug prices.

"It has been said that health care is complicated". And that's the only thing that has proven to work in great primary care. They only have to have "reinsurance" to cover the costs above the level that they can finance themselves. But that's not necessarily the case.

Shares in health care companies took a big hit in early trading Tuesday, suggesting the threat of the new entity to how health care is paid for and delivered in the broader economy. That was kind of an "aha" - this kind of convenience and high-touch experience is what they're looking for.

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"That's a big competitive advantage over [United Health] or the other guys who, by corporate set up, have to focus on [maximizing profits]", he said.

"Health care is complex and expensive, so the aim should always be simplicity and affordability".

Since these companies are all led by bright innovators, they will probably ultimately arrive at the same conclusion: that technology alone will not lead to high quality, low cost care.

"It sounds like they [the companies] are limiting the use of health plans, but if they're going to get into that business, they're going to come up with the same challenges health plans face". The problems go far beyond increased insurance premiums, limited choice of providers, and exorbitant pharmacy prices. Go forth and disrupt, we say. It's intriguing to consider the possibilities of integrating health care into consumer routine.

"And I think that therein lies the opportunity".

America spends nearly three times as much on healthcare as other developed countries but on average people here still live shorter, less healthy lives. Change incentives for consumers. It's no secret that Amazon is eyeing up the pharmaceutical distribution market and last October it received a number of wholesale pharmacy licenses, so those plans may be enveloped into this new initiative.

The Kaiser Permanente insurance network - among the largest not-for-profit providers in the U.S., covering 11.7 million people - arose from an unconventional, prepaid approach to insurance and health care. "I would encourage this group to focus on how to better serve those individuals who need help managing multiple chronic conditions". The secondary reason is to assure more responsive healthcare delivery to their employees. We don't know what piece of the puzzle they will tackle. "Our health costs have gone up incredibly and will go up a lot more". Since unaffordable and unavailable are two sides to the same healthcare coin, decreasing costs may provide adequate health coverage to more people.

The worst thing the joint venture could do is try to use its bargaining power to bring down costs within the existing system. These companies have a history of raising the bar.

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