Amazon, JP Morgan and Warren Buffett’s Berkshire Hathaway are launching an independent healthcare company for their US employees.
The business giants announced the plan on Tuesday in a joint statement where Buffett described their shared desire to tackle the ‘hungry tapeworm’ of current US healthcare models.
It will begin with their own employees – close to one million in the US – but the trio has clear hopes for the model to eventually be available to the entire country.
‘Our goal is to create solutions that benefit our US employees, their families and, potentially, all Americans,’ Jamie Dimon, the President and CEO of JPMorgan Chase, said.
Few additional details have been released but Buffett, whose holding company is Berkshire Hathaway, said their solution aimed to make healthcare more affordable for their workers.
The joint venture sees the titans of three industries – investments, online retail and banking – tackle the issue of healthcare with unprecedented resources and in times of increasing legislative uncertainty.
All three were strong proponents of President Obama’s public healthcare program, dubbed Obamacare, before uniting to create an exclusive private provider system.
Amazon CEO Jeff Bezos (pictured) was a proponent of Obamacare before launching this private company with two other tech titans
Warren Buffett and Jamie Dimon of JPMorgan Chase are the other two founding members of an independent tech-focused healthcare company for all of their US employees
Buffett, 87, said the initiative will not solve all of the current problems with current models but hoped the venture would simplify healthcare plans.
‘The ballooning costs of (health care) act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable,’ he said in a prepared statement which was released on Berkshire Hathaway’s Business Wire.
The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty
Jeff Bezos, Amazon founder and CEO
‘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.’
The new company will be independent and ‘free from profit-making incentives and constraints’.
‘The initial focus of the new company will be on technology solutions that will provide US employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost,’ the statement read.
‘Tackling the enormous challenges of healthcare and harnessing its full benefits are among the greatest issues facing society today.
‘By bringing together three of the world’s leading organizations into this new and innovative construct, the group hopes to draw on its combined capabilities and resources to take a fresh approach to these critical matters.’
Stock prices for the major, for profit healthcare companies including UnitedHealth Group Inc and Cigna Corporation fell by around five percent each after the announcement was made
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.
The chairman and CEO of Aetna responded positively to today’s announcement, acknowledging that ‘there is an unmet need in health care.
‘Individuals and families want a simple, affordable and high-quality experience that helps them stay well,’ he said.
He compared Aetna’s combination with CVS to the joint efforts of Buffett, Bezos and Dimon, and said that he is ‘encouraged to see other companies working toward the same goal.’
Any solutions the soon-to-be-formed company devises would find a huge and receptive audience. With about 151 million non-elderly people, employer-sponsored coverage is the largest part of the US health insurance market.
Companies get a tax break for offering health benefits to their workers, and many employers also see them as a critical tool for attracting and keeping workers.
Buffett threw his support behind Hilary Clinton in the 2016 presidential elections in part to promote her plans to make health care more accessible to more people
Jamie Dimon shakes hands with former President Obama in 2009. Dimon and his wife have long backed Democratic candidates and the JP Morgan Chase CEO was a friend and adviser to the former president during his first term in office
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.
With insurance, individuals are only responsible for a copay, while their health care provider covers the rest of the cost of a doctor’s visit, medical appointment, procedure or emergency.
A visit to a primary care physician, for example, comes with an average co-pay between $15 and $25. Without insurance the same appointment costs an average of $160, according to research from Johns Hopkins School of Public Health.
But insurance costs are soaring and health care consumes a growing chunk of companies’ budgets. Small businesses have been under particular strain.
While 95 percent of large companies offer insurance, only 50 percent of companies with three to 49 employees offered coverage last year, according to the nonprofit Kaiser Family Foundation.
That’s down from 66 percent more than a decade ago.
The federal Affordable Care Act (ACA) requires all companies with 50 or more full-time employees to offer it.
The ACA also required all individuals to have some form of insurance – through their employer, privately purchased, or through Medicaid – or pay a tax penalty, but that dictate was repealed with the passage of the new tax reforms in December.
Health care is a top priority for Americans, 82 percent of whom rated it as the most important topic for the president to shed some light on in his next State of the Union Address, according to a recent poll from Morning Consult and Politico.
In light of the rampant uncertainty surrounding health care in this country, Tuesday’s announcement was met with excitement from industry experts.
Ed Kaplan, who negotiates healthcare plans for large companies on behalf of Segal Consulting, told The New York Times: ‘It could be big.
‘Those are three big players, and I think if they get into health care insurance or the health care coverage space they are going to make a big impact.’
Dr Brendan Saloner, a professor of health policy at the Johns Hopkins Bloomber School of Public Health says that ’employers have not wanted to be in [the health care] business because they view it as a nuisance,’ he says.
Though employer-sponsored insurance is still the ‘backbone’ of the American healthcare system, ‘it has been eroding because it has been a hassle to try to manage this as a human resource program.’
But, he suggests, companies like Amazon – with its massive warehouses – may be uniquely positioned for a new approach to that problem by having onsite health care that could cut corporate costs while adding value for employees.
On the other hand, ‘these are companies with large white collar work forces, populations that are more used to a more boutique, catered healthcare experience, so I’m interested to see what for lower wage workers.’
The Kaiser Permanente insurance network – among the largest not-for-profit providers in the US, covering 11.7 million people – arose from an unconventional, prepaid approach to insurance and health care.
Dr Saloner says it is seen as one of the most innovative insurance programs in the country, and could be an analogue for what Amazon, JP Morgan Chase and Berkshire Hathaway might do.
The trio of companies have revealed no details about their unnamed program, but Dr Saloner speculates that Amazon’s hometown of Seattle will be the first place to watch for a ‘ripple effect’ on the healthcare system.
As the announcement was made on Tuesday, the Amazon’s executives continued with their search for their second HQ.
Competition to host the headquarters drummed up an astonishing bidding war from cities and states across the country, many of whom offered drastic tax breaks and incentives in exchange for being chosen.
It will bring 20,000 new jobs to whichever city is eventually chosen.
HOW WARREN BUFFETT, JEFF BEZOS AND JAMIE DIMON ARE TAKING ON TRUMP WITH THEIR OWN HEALTHCARE PLAN
The announcement that Warren Buffett, Jeff Bezos and Jamie Dimon are combining their bountiful resources to build a new healthcare system for their companies’ employees demonstrates in the strongest terms yet a united front by the three billionaires against President Trump.
All three have been critical of the president in the past in varied degrees of sharpness.
Their announcement plants them in the void left by Trump and his administration’s lack of action on healthcare after months of discussion and promises to repeal and replace Obamacare.
It also falls in line with their track record of support for The Affordable Care Act.
Buffett, whose net worth is estimated at $93billion, has emphatically stayed away from vocal criticisms of the president.
‘I’m not in the business of attacking any president, nor do I think I should be’, is what he told one CNBC interviewer last August.
His Democratic allegiance is however clear – he endorsed Hillary Clinton during her election campaign and was a champion of Obama’s Affordable Care Act, describing it as a ‘step in the right direction’ despite its flaws.
Warren Buffett endorsed Hillary Clinton during the election (the pair are shown above in December 2015). He was an early advocate of the Affordable Care Act and much of his charity work includes large donations to health-focused organizations
Buffet is a passionate health philanthropist and has used his fortune to upscale The Bill & Melinda Gates Foundation which places affordable healthcare at the forefront of its work.
Trump has said little of him since he took office.
In 2015, he suggested Buffett was the kind of talent he would like in his government and described him as a ‘common sense guy’.
Dimon was a long time Obama supporter and has made generous contributions to the Democratic party.
He was a member of Trump’s now disbanded Strategy and Policy Forum but abandoned the council along with other business leaders over Trump’s controversial remarks about the alt-right Charlottesville riots which left a woman dead.
Despite receiving criticism from fellow Democrats over his decision to join the counsel, he put his support behind the president at the time.
‘I’m a patriot and will do what I can to help the United States of America; that includes helping whoever is president,’ he said at the time.
Jamie Dimon (far left during a 2009 meeting with Barack Obama and PNC Chairman and CEO Jim Rohr) was described as Obama’s favorite banker. He is a long-term Democrat and has made contributions to the party
Dimon was supportive of President Trump in the early stages of the presidency and was a member of his Strategy and Policy Forum but quit alongside other business leaders over Trump’s controversial remarks about white supremacists at a Charlottesville rally in August. They are pictured in February 2017
Dimon reversed that position in a memo to staff after Trump sympathised with the white supremacists in charge of the Charlottesville rally.
‘There is no room for equivocation here: the evil on display by these perpetrators of hate should be condemned and has no place in a country that draws strength from our diversity and humanity,’ he said.
Bezos is the president’s most visible foe out of the trio.
Bezos is a regular target in President Trump’s disgruntled tweets. He has retaliated by saying little of their feud but by donating to DACA recipients and by decrying Trump’s immigration policies
He was routinely ridiculed by Trump during the presidential campaign and deemed a herlader of ‘Fake News’ because of his newspaper, The Washington Post, and Trump’s hatred of it.
He believed he was unfairly attacked by its reporters and, in a separate gripe, has repeatedly alleged that Amazon does not pay internet taxes.
Bezos has refrained from the same Twitter insults he was often the subject of, however he once claimed that Trump would threatened to ‘erode democracy’ before he won.
In one rare, spatty come-back in 2015, Bezos started the hashtag ‘sendDonaldtospace’ and joked that he would ‘save’ the president a seat on his Blue Origin rocket.
His remarks against the president since he took office have been limited to immigration.
Earlier this month, he donated $33million to provide college tuition fees for 1,000 undocumented young Americans or ‘Dreamers’ whose right to stay in the country have been undercut by the president’s harsh crackdown on immigration.
His recent takeover of Whole Foods added hundreds of thousands of employees – the recipients of the new healthcare plan – to Amazon’s roll call.
In Bezos they won a new boss who, unlike former CEO John Mackley, supports Obamacare.
Mackley compared the ACA to socialism in an op-ed for The Wall Street Journal. Later, he said it was more akin to fascism.