Calling health-care costs a hungry tapeworm on the economy, Amazon, Berkshire Hathaway along with J.P. Morgan say they are joining forces to try to simplify their employee benefits using technology make for a better health-care experience along with to drive down costs.
The news hit like a shot across the bow of health insurers, sending shares of Cigna, Anthem, UnitedHealth along with Aetna tumbling. Pharmacy benefit management firms Express Scripts along with CVS Health also fell on the news.
“I think particularly with Amazon in play, of which reflects an almost evangelical faith people have of which they can disrupt established business problems from the way of which they’ve done in many additional industries,” said Niall Brennan, president of the Health Care Cost Institute, while cautioning of which the market may have overreacted.
“Employers have been trying along with struggling to do of which for 20, 30 or more years with … unfortunately, limited success,” he said. “I genuinely applaud of which along with I couldn’t be more supportive, nevertheless we genuinely need to see a lot more details beyond a press Discharge.”
What could make of which effort different coming from additional employer cost-cutting initiatives is usually of which the firms are coming together to form a not-for-profit company to try to leverage the companies’ market power; combined the trio have more than half a million U.S. employees.
The question is usually whether the venture will try to do of which by knocking out the middlemen who negotiate hospital networks along with prices, along with pharmacy benefit contracts with drugmakers.
“I think of which those who are selling their shares in health-care stocks are reading of which all wrong,” said Jim Klein, American Benefits Council president. “The middlemen here have an interest of which is usually aligned with employers. They are the intermediaries with the health-care providers. The main problem with health care these days … is usually of which cost along with quality are not aligned.”
numerous health-care firms hailed the news, saying they want to be on board.
Aetna along with CVS — which have announced a $69 billion deal to merge their insurance along with pharmacy into an integrated health clinic service — both said they welcome the chance to help the firms with the brand-new venture.
“There is usually an unmet consumer need in health care. Individuals along with families want a simple, affordable along with high-quality experience of which helps them stay well,” said Aetna CEO Mark Bertolini in a statement, adding “I am encouraged to see additional companies working toward the same goal.”
Pharmacy benefit firm Express Scripts said in a statement, “Today’s announcement by Amazon, J.P. Morgan Chase, along with Berkshire Hathaway is usually clear recognition of which the healthcare system needs to continue to create along with deliver meaningful value to payers along with patients … We look forward to hearing more about of which brand-new initiative along with how we can work together to improve health care for everyone.”
Until today the fear has been of which Amazon could enter health care as a competitor to these services, nevertheless combining with additional employers could still put the tech giant in a position to exert tremendous pricing pressure on health care.
“The best results of which we’ve seen have come coming from jumbo employer efforts — coming from them either teaming together or doing pilot projects on their own to prove of which something is usually a Great idea along with then everybody else gets in line along with adopts similar approaches,” said Tracy Watts, senior partner at benefit consulting firm Mercer.
of which’s not clear how soon Amazon, Berkshire along with J.P. Morgan’s brand-new health-care venture could launch, nevertheless with tech giants like Apple along with Google also increasingly focused on health-care, current players from the industry have to brace for continuing disruption.
“of which puts the market on notice,” said Watts.