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Amazon healthcare?

January 30, 2018

Helping to give the stock market a severe case of jitters today is a press release by Amazon, Berkshire Hathaway and JP Morgan Chase that they are going to collaborate to find a way to improve results and lower the costs of healthcare for their combined nearly one million employees.

That doesn’t mean you will be buying health insurance on Amazon.com any time soon, if ever.

In its most stripped-down form, this is a variation on what many companies used to do routinely, which was to self-insure their employees.

Insurance companies and large healthcare providers were not exactly fans of that approach. Many hospitals would not accept the private insurance, sometimes with good reason. They had a tendency to go bankrupt and leave both the providers and the patients swinging in the wind.

But they also demanded a greater level of transparency from the providers, sometimes doing such revolutionary things as demanding to know why two aspirin in a hospital cost $24, while the same pills over the counter cost less than 3 cents.

It didn’t always work out well for the insured employees either, sometimes leaving them to pay as much as 90% of the bill.

Then there are the current insurance companies.  Losing some 950,000 potential policy holders is bad, but if Bezos, Dimon and Buffett actually crack the code on providing affordable,  accessible and quality healthcare, the insurers will lose a potential market of hundreds of millions.

To some extent, this private effort dovetails with some of the things the Trump administration has been advocating.

Things like allowing small employers to form national associations to purchase insurance in bulk as it were, and requiring price transparency, as well as utilizing more tele-health options.

Although the above-referenced press release specifically states there is no direct profit motive, that’s actually slightly disingenuous.

The cost of providing healthcare today is a significant line item in most company budgets. If they  can control their costs, the savings migrate directly to the bottom line.

On the downside, there is also the chance that private control of the payment model will allow companies to invade the privacy of their employees to a level not now permitted under the law. Suffice it to say, HIPAA may not apply.

For instance, and this is admittedly a somewhat far-etched example, suppose your health insurance usage reveals you have a congenital heart ailment.  That could have an effect on what intra-company job promotions you would be permitted to apply for in the future.

Or let’s say your hobby is sky diving or rock climbing. If the new insurance model penalizes you for those or any other lifestyle choices with higher premiums or even outright denial of coverage, then we are no better off than we were.

It’s patently obvious that the government isn’t having any luck with either the cost of access to healthcare or the cost and quality of the care received.

The sheer number of employees means that there should be a sufficiently large sample involved to provide a fair trial of the methods, provided the group chooses to make its findings public.

Just the threat of this becoming a nationwide model might coerce both insurers and healthcare providers to clean up their act.

All in all, pros and cons aside, this effort bears watching, if only as a sort of living laboratory experiment.

From → op-ed

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