Amazon, JPMorgan, Berkshire team up to tackle health care

Amazon, JPMorgan, Berkshire team up to tackle health care

Amazon, Berkshire Hathaway and JPMorgan Chase's announcement that they will create an independent company to offer health care to their employees "free from profit-making incentives and constraints" sent a shock through the health care industry, with share prices of some incumbents tumbling on January 30.

Efforts to increase transparency have been an important focus for employers of late and have "enormous potential" when it comes to transforming employer healthcare, says benefits consultant Jack Kwicien.

Benefits experts quoted by The Associated Press speculated the new company could create a virtual marketplace that makes shopping for health care as easy as buying a shirt on Amazon. Not so long ago, Amazon was dabbling in drug products in a unsafe way, selling prescription drugs without a prescription via its marketplace, something I documented in an investigative report. Or it could be a system that bypasses insurance companies altogether and contracts directly with doctors and hospitals for better deals.

"Hard as it might be, reducing healthcare's burden on the economy, while improving outcomes for employees and their families would be worth the effort", he added.

Using technology, all three want to cut down the costs of healthcare and reduce expenditures for employees. Buffett's already figured out a way to profit from the ups and downs of health care delivery: his health insurance reaps profits when things go smoothly, and because care sometimes go awry, providers always endure the risk of lawsuits, keeping their money flowing into his professional liability insurance.

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The leaders of each company, Amazon's Jeff Bezos, Buffett, and JPMorgan's Jamie Dimon, offered few details Tuesday and said that the project is in the early planning stage.

Here is some of what we know, and don't know, about the plan and about the health care crisis in the United States.

The three businesses said their new venture will be independent and "free from profit-making incentives and constraints". Some analysts said that move is partly the reason why CVS and Aetna sought its tie-up, to build a large heatlh care services company that can compete with the giant online retailer.

"The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our USA employees, their families and, potentially, all Americans", he said. The companies have an estimated 1 million workers in the USA, combined.

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

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Before the opening bell, eight of the top 10 decliners on the Standard & Poor's 500 index were health care companies. "It will take a substantial amount of research first, and it will take some substantial amount of resources probably in many geographies to have the kind of impact [Amazon, Berkshire Hathaway an JPMorgan Chase] are saying they'll like to have", he said.

Several of the biggest losers on a down day for the market Tuesday were health care companies.

"I think that those who are selling their shares in health-care stocks are reading this all wrong", said Jim Klein, American Benefits Council president.

The new venture gives Amazon another industry to shake up. "We look forward to hearing more about this new initiative and how we can work together to improve health care for everyone". And it has been blamed for the decline of department stores, toy stores and bookstores. Most recently it has upended the grocery sector, spending $14 billion previous year for Whole Foods Market Inc.

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