
Amazon, Berkshire, JPMorgan to Create Healthcare Company - uptown
https://www.bloomberg.com/news/articles/2018-01-30/amazon-berkshire-jpmorgan-to-create-healthcare-company-jd1lraa9
======
jawns
> The three companies said they plan to set up a new independent company "that
> is free from profit-making incentives and constraints."

I wonder if they will be setting it up as a health insurance cooperative, an
organizational structure in which the primary goal is to serve its members,
rather than to generate value for external shareholders:
[https://en.wikipedia.org/wiki/Health_insurance_cooperative](https://en.wikipedia.org/wiki/Health_insurance_cooperative)

It's not at all unprecedented for publicly traded companies to create
cooperatives for their employees. Employee credit unions are one example.

Co-ops were part of an early proposal while the ACA was still shaping out, but
unfortunately, due to pressure from for-profit health insurers, they were
later shot down:
[http://www.nytimes.com/2009/08/17/health/policy/17talkshows....](http://www.nytimes.com/2009/08/17/health/policy/17talkshows.html)

As a fan of distributism
[https://en.wikipedia.org/wiki/Distributism](https://en.wikipedia.org/wiki/Distributism),
I would love to see an increase in health insurance cooperatives, and
cooperatives in general. Under a cooperative structure, the
members/policyholders fully own the company, so it's not beholden to outside
shareholders seeking to profit at the expense of its members. Any profits that
a cooperative generates are returned back to the members/policyholders in the
form of lower premiums, or improvements to services.

~~~
visarga
> distributism

Thank you for giving a name to something I have been pondering a lot. I have
come to this conclusion by thinking about automation and technological
unemployment. If people own land, or productive tools, they can be self
reliant and exist without jobs from corporations, or help from the state.
Naturally people would organise as a cooperative or a market of services,
exchanging services for services, because they have little money and no
corporate jobs. Yet they can work, so they can create a kindergarten for
children of the neighbourhood, or a medical clinic, or a mechanic repair-shop,
or a construction company, and so on.

By combining these skills a neighbourhood, or a city could be self reliant. In
the future, with the advent of solar energy, agro-bots, 3d-printing and other
empowering technologies it will be even easier to be self reliant. I see this
as a better solution to UBI which depends on the state, which is corruptible
and the corporations, which are greedy. People would retain their agency,
unlike in the UBI scenario, where they would be wards of the state.

There is no purpose to automation that does not exist in the service of
humanity at large, but only for a few. Automation must be owned by the people
directly. We need to have the means of production in our hands in order to
survive. There is one single job the advancement of automation can't take from
us - the job of taking care of ourselves! And that's hard work.

~~~
rmk
This is a type of utopia that many of us yearn for, but never appears to have
worked at the level of large nation-states. I mean, here are some things that
are not taken into account:

\- People who can not work because they simply can't hold down a job, period.

\- Externalities such as neighboring (or even distant) communes dumping
wastewater into rivers etc., or polluting the ground, or air... you get the
idea. What about natural calamities, such as earthquakes, tsunamis, volcanic
eruptions, and such?

\- Conflicts over scarce resources. Water, for example. Communes that rely on
a common source of water will likely have conflicts. How are they resolved?

\- Any commune is exceedingly unlikely to be good at producing all the things
it needs. Trade will need to develop. Does 'self-reliance' exclude the
possibility of trade?

\- How large should a commune be, to enable innovation? Without innovation,
there will be stagnation that will harm the commune in the long run.

\- How would a commune handle people that are 'different'? How about criminals
within and without?

~~~
pjc50
Probably best to distinguish between "self-reliant economically, but connected
to the world economy" vs "closed system". Trying to be self-reliant in terms
of physical inputs doesn't work in the oil age. Whereas the various small and
micro-states manage to be economically self-reliant while importing staples.

I don't think distributism requires a closed system.

------
dekhn
Here's what this is about. Large successful companies contract out their
health insurance and care to external companies. Most of those companies are
profit centers- they provide a service, but they take a very large profit on
it. Much of that profit is just waste- it's money that goes to people who
aren't innovating, or providing value, just acting as gatekeepers (note: this
is just my opinion, not provable fact).

Companies like Amazon know they can provide that same service- or a simplified
version of it that focuses on effective treatments that don't cost a lot of
money- far more cheaply, because they have willingly forgone short-term
profits.

Whether this saves money and provides adequate care remains to be seen.

~~~
013a
Insurance companies, by and large, are gate keepers to capital. The "best"
have a lot of highly innovate algorithms, machine learning, and data
collection, but they're all designed to maximize the profit of the company by
accurately pricing premiums. An accurately priced premium means customers who
don't their services less pay less; in effect, they're using data to increase
premiums for the customers who actually use their service, while increasing
revenue in order to fund their massive, inefficient bureaucracy.

~~~
ian0
The last few insurance companies Ive delt with seem to act more like banks
giving loans. Twice now, they have priced premiums for our company policy low
in the first year before increasing them the following year based on how much
was claimed. One agent actually admitted it was to "recoup costs".

We joked that the meme where actuaries were being replaced by machine learning
was actually just the insurer firing actuaries because they figured out they
could just demand the money back from the client after a claim.

------
dawhizkid
I strongly feel that what needs to be changed is employer-based healthcare
itself. It is really kind of crazy, if you think about it, how closely the
quality of our healthcare and the healthcare of our dependents is tied to the
company we choose to be working for at the moment.

If you or a dependent take a very specific expensive medication that isn't
covered by a plan a new employer might offer, then you pretty much can't take
that job unless you want to pay out of pocket.

Employers can change the plans they offer every year as well, so really even
at the same company you might face the same dilemma at the next open
enrollment.

~~~
Someone1234
I have a choice of exactly two health insurance companies because that's who
my employer selected for me. Both are for profit companies, with Aetna just
posting record profits, and we see our premiums rise year upon year.

But beyond me, the fact that someone working minimum wage, unemployed, or at a
startup using the Obamacare exchange pays more than an executive at a fortune
500 makes no rational sense. That's because the market has been silo-ed by
employer instead of each individual insured.

The US would be in a much better state if everyone had to get their insurance
from the exchange. One of the two political parties is constantly drumming the
"competition" drum as a magical solution, but they're too scared to actually
make the market competitive.

\- Give everyone in the US a HSA (health savings account).

\- Increase HSA contribution maximums significantly ($20K/year or more)

\- Allow employers to give money, tax free, to employees via their HSA

\- Allow employees to pay their insurance premiums via the HSA

\- Ban employers from directly picking the employee's insurance or providing
the insurance

\- Employees (and everyone else) would pick insurance from the health
insurance marketplace

\- Medicaid would pay 100% of premiums, but Medicaid recipients still pick
their own insurance

\- The VA would move to a mixed model, help pay for regular insurance (via the
HSA), and offer bespoke services specific to former enlisted personnel. Most
common services would be received at regular healthcare providers, not VA
hospitals.

Now instead of employers paying $1000/month for your health insurance they put
that $1000 into your HSA, you then go onto the health insurance marketplace
find insurance, and use your HSA to pay your premiums. Don't like your
insurance company? Change. This is how you spurn competition.

Additionally if your employer doesn't help you with health benefits, you can
contribute to your HSA yourself tax free and you won't be further punished
(i.e. pay the same overall premium, with same tax benefits, as someone with a
better employer, unlike now).

~~~
djsumdog
This is what was talked about in the book "Redefining Health Care." The
employer based model is totally broken.

What you're describing is more open capitalism in health care where everyone
is on an open playing field. I use to really believe in this at one point
years ago, even when working in Health Insurance.

Today, I'm not even for this compromise. I think it should be taken out of our
taxes in single payer. Insurance would still be contracted out to those
private insurers (cause America). We might even be able to create a system
where people chose which insurance provider they use, but it should be payed
for by taxes .. it's there for everyone and everyone pays the same proportion
of income and everyone gets the same level of coverage. If something is in
short supply, then it's going to need a needs based + lottery system (just
like organ transplants currently).

For profit and _non-for-profit_ (not to be confused with non-profits; most
health care companies are non-for-profits which is a weird legal area) have no
place when it comes to public welfare services. People don't pay individually
for private security/police. We don't pay for fire. We don't pay a fee to
visit a city park (and I'm against fee based national parks actually). The
general good should be paid for equally by everyone to their abilities.

~~~
jedberg
> People don't pay individually for private security/police. We don't pay for
> fire.

Sure they do. Rich people hire private security all the time. Heck, not-rich
people do it too. Like your local Chuck E Cheese who hires a security guard on
Friday night.

Same with fire protection. There are plenty of private fire protection
companies.

Everyone gets those basic services paid for out of their taxes, but some
people want more than basic service, and there is nothing wrong with that.

The OPs system would work great and you could modify it simply enough to
account for your system too -- everyone pays a health tax, which is then
redistributed as an HSA payment to every American, setting a base level of
funding.

I'm actually a big fan of single payer, but not because of the social impacts,
only because of the ease of administration aspects. But if you did OPs system
and made sure everyone could participate, it would probably work just as well,
because there would need to basically be a health payment cleaning house to
make it work.

~~~
TillE
Germany is one of very few countries with a robust public insurance scheme
which also allows private insurance, but I wouldn't expect that to last too
much longer - there's a growing consensus (57.6% in a recent poll) around the
idea that receiving faster or better care because you can pay more is
fundamentally unfair.

People need the health care that they need. Unless we're talking about small
things like your own private bed in a hospital, there's no room in a just
society for a "basic service" which does not provide the best possible care.

~~~
jedberg
> there's no room in a just society for a "basic service" which does not
> provide the best possible care.

Unfortunately health care is still a finite resource, and you can't give
everyone the best care. You either give some the best care and everyone else
good care, or you give everyone pretty good care, but no one gets the best
care.

Each has its merits, but my personal feeling is if no one gets "the best
care", then we as a society will forget how to give such care, and medical
innovation will become stagnant.

There is a reason that the health systems with at least some private
participation (USA, France, Germany) also have the most innovation. We need a
balance so there can still be a motive for innovation.

~~~
gbacon
If everyone is super, then no one is.

------
mapgrep
As some other people have mentioned below, the much lauded[1] vertically
integrated health provider Kaiser Permanente started this way, as the health
provider caring for the workers of an enlightened large employer, Kaiser
Steel, which at the time was a massive shipbuilder for the Navy and others
headquartered in California with a major presence in the SF Bay Area.

I was briefly covered by a Kaiser plan, and have a lot of old friends who are
either covered, work there, or worked there, and can say people really
appreciate not only the relatively low costs but also the ability to just come
to one place no matter the ailment and know you'll be able to get an
appointment quickly and be taken care of, and won't have to haggle to get the
care you need or deal with insurance company roadblocks. To the extent there
are downsides (and of course there are) they are around not being able to have
your own doctor (though I do think there is an approximation of that) and
overzealous cost cutting (see the kidney center scandal).

My understanding is Kaiser has not spread much beyond California due to
regulatory issues.

(Interestingly, Kaiser Steel was a major setting for Atlas Shrugged.)

[1] [http://www.nytimes.com/2013/03/21/business/kaiser-
permanente...](http://www.nytimes.com/2013/03/21/business/kaiser-permanente-
is-seen-as-face-of-future-health-care.html)

~~~
e40
Kaiser is no longer a low-cost provider. They actually are quite expensive. We
go through a very large group to get a better rate but it's still much higher
than many of the other options that we have in our plan.

When you look at how Kaiser is structured, they should be cheaper. I think
they're just pocketing the difference between the market rate and what their
costs are.

~~~
learc83
>I think they're just pocketing the difference between the market rate and
what their costs are.

This is baseless and not really possible.

Insurers must spend 80% of premiums (85% for large group plans) on providing
care for their insured.

~~~
kevin_thibedeau
> "There is no such thing as a legitimate price for anything in health care,”
> says George Halvorson, former chairman of Kaiser Permanente, the giant
> health maintenance organization based in California. “Prices are made up
> depending on who the payer is."

When you can game the pricing you can always just slice 80% from an ever
increasing pie.

~~~
learc83
That's not really how it works. The "ever increasing" pie would have to come
directly from increasing subscriber premiums, not from cutting costs and
pocketing the difference the OP indicated.

It doesn't matter how much they play with pricing on the back end, the company
can't make more than 20% profit from subscriber premiums.

~~~
kevin_thibedeau
There is a whole lot of backscratching with the profiteers taking their cut of
the 80%. That is why we get $30 Tylenol pills under the guise of "care".

~~~
learc83
Hospitals aren't charging insurance companies $30 for Tylenol and then paying
insurance companies under the table if that's what you're alleging.

That's completely illegal and it's just too noticeable for them to do it large
scale.

The OP was making a baseless claim because they didn't know what they were
talking about, and you're now grasping at straws supporting their claim for
some reason.

~~~
kevin_thibedeau
None of the stakeholders in American for-profit healthcare have any incentive
to reduce costs so everything just keeps ratcheting up. Growth can't be
achieved by increasing the population of sick people so the only other option
is to raise prices. The insurance companies _do_ benefit from this. They agree
to cover the inflated pricing so that their 20% cut can be bigger. If ACA
permitted rational price controls this whole problem would have been reigned
in.

~~~
learc83
How does this have anything to do with

>I think they're just pocketing the difference between the market rate and
what their costs are.

The OP had made a very specific claim about Kaiser. That Kaiser is reducing
their costs but pocketing the savings and not passing them on to consumers.

I pointed out that there is no legal way for them to do that. You've made 3
posts and so far nothing you've said in anyway refutes that.

------
11thEarlOfMar
It's not just the cost. It's the incredible inefficiency of the operations,
and, the gerrymandering of coverage. Under the ACA, I had to choose between
allowing my family to continue to see their lifetime care givers, or, paying
in network rates, for the full year, because the insurance company I chose
gave me incorrect information when they were trying to get my business (my
wife is less kind in evaluating their motives). I paid $30,000 in health care
expenses out of pocket that year for what was essentially a healthy family. I
was not permitted to change insurance companies once I learned they had misled
me.

Buffet calls them a tapeworm, I call it the next, ongoing rape of the American
middle class.

~~~
weka
I had the same unfortunate experience that in angers me to even think about
it.

\- I leave my last employer on July 21, 2017

\- My old employer rols me off system on last day of July 2017

\- On June 2017, they switch HR providers from TriNET to Namely and now the
payment processor is Discovery Benefits and the Dental/Vision are now in
Guardian. (So it went from Aetna to Aetna/Guardian and two other companies).

Since my wife is high-risk and I have thyroid issues, our best bet was COBRA
($1,000 / mo) because the new startup I joined did not offer group health
coverage.

What followed next was this:

\- The HR person who was handling my COBRA papers left during all of this.
Switched jobs.

\- Thanksgiving break

\- Weeks of "the system will update this weekend with your information."

\- "They were suppose to process your dental, but they never did"

My wife and I tried using our new AETNA IDs once we had gotten them and they
still told us that it did not work. I had to have an expensive thyroid blood
test pushed back. Multiple dentist appointments postponed. Everything.

FINALLY, once I got my SSN and ID for my coverage on AETNA, I had to pay back
premiums all the way back to August 2017 just to keep using my coverage. So
that's $4,000 USD for services I could not essentially render. $4000 of my
hard-earned money. Gone. For nothing -- basically.

They had the gall to tell me (AETNA did) "Sir, if you paid for anything out of
pocket during the time of your retroactive coverage, we can pay you back any
cost you incurred."

The whole reason we get insurance is to avoid those high prices.

I'm so spent. I'm not an angry man but these health insurance companies really
drove it home for me.

I feel taken advantaged of and it really stinks.

~~~
rsync
"The whole reason we get insurance is to avoid those high prices."

But only for unpredictable, irregular events. Anything else is uninsurable. If
someone sells you "insurance" for wellness checkups[1], regular, scheduled
screenings ... or tires on your car ... you can be absolutely assured that
they are taking from you as much, or more, in premiums than the cost of those
services.

What you are looking for is socialized, state sponsored medical care. There is
no problem in looking for that and I make no value judgement here on that.

The first step would be to stop mischaracterizing this as "insurance". It's
not. It can't be.

[1] Yes, certainly wellness checkups and things like them can be enormously
economically beneficial for the provider since they spend up front
preventative dollars instead of emergency, acute dollars later but it still
doesn't change the fact that those are not underwriteable as they are regular,
on-going expenses - very much like the tires on your car.

~~~
bostonpete
Your comment seems to overlook the fact that insurance companies negotiate
better rates on many (most?) services than an individual would get going at it
alone. From that perspective, I think it's reasonable to say that in our
current system, insurance can allow you to essentially avoid high prices even
for things that are predictable/regular.

~~~
djsumdog
I worked in health care and saw so much money wasted. The ACA was suppose to
bring the same risk factors to everyone, so you got the same premiums based on
age, gender and smoking status. Big companies got big breaks for employees and
the rich paid less.

This might have worked if everyone was required to buy from the market place
and there were no employer plans. Obama's famous "You can keep your existing
health coverage" was a terrible, terrible decision.

I watched the Medicare/Medicate group for my company and they might have
complained about not getting enough money, but I really think they did. Things
had fixed prices and there'd be plenty of money if BlueCross didn't spend
money on advertising, useless wellness programs and shitty IBM technology.

Everyone should just get Meidcare/Medicade. The government won't control
healthcare, it will just get contracted out to providers. They'll have to cut
costs and not waste so much money (they waste A LOT!)

Capitalism + Health care is a failed experiment. Socialized health care does
work, in every high income country that's not the United States. Australia
fought against the Abbot government when they wanted to introduce copays.
That's right, Australians don't have doctor co-pays (they kinda do now, but
wavers are in place and the plan was effectively defeated).

The fact that the US government requires us to buy private health insurance at
insane rates is absolutely insane and the Supreme Court should have struck it
down. You are not a car. Your body shouldn't have a fee for existing.

~~~
shanusmagnus
It shouldn't have a fee for existing so long as you're cool with me not paying
a fee for when your body breaks down.

------
dandare
27 days ago
[https://news.ycombinator.com/item?id=16060201](https://news.ycombinator.com/item?id=16060201)

> Could this problem be attacked by a goodwill billionaire with a long-term
> plan? Open several private medical schools that will offer "free" med
> education in exchange for multi-year contracts. Open many small copycat
> clinics. Manufacture your own generics if possible, import whatever is
> cheapest, focus on things you can do cheap, be transparent about pricing,
> build awareness and brand. McDonaldize/Amazonize American healthcare.

~~~
bpicolo
> McDonaldize/Amazonize American healthcare

CVS is sorta trying to do that (acquisition of Aetna is a big pointer)

~~~
xigency
After this deal was worked out, I could no longer fill prescriptions at
Walgreens. Not what I would call an improvement.

------
justjash
After my wife giving birth last year, I would say there is quite a bit of room
for improvement. The whole billing process is such a mess when you receive
different bills from doctors, the hospital, labs, etc. It seemed like the
bills rolled in for months afterward, some going through insurance and some
not even being billed to insurance.

Happy to have insurance after I saw the total bill, but man is it a huge
headache.

I hope they figure something out if we never make it to a single payer type
system.

~~~
shadyrudy
It's worse if you get the surprise "Out of Network" doctor that assisted in
the delivery. Nothing like getting a surprise $1,200 bill when you're sleep
deprived. Long story short, we didn't have to pay any of that $1,200. But the
last thing we needed with a new born was more stress.

------
victor106
Below is the spend by the major groups from
[https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4638261/](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4638261/)

All individuals with chronic conditions and functional limitations - $909
billion

Individuals aged ≥ 65 y with chronic conditions and functional limitations -
$543 billion

Individuals at the end of life - $205 billion.

I am not sure you can save any healthcare costs unless 1\. People change their
eating and lifestyle habits. 2\. End of life care is about 13% of the entire
cost. Not sure how it compares to other countries but I think it can be
optimized. 3\. Most of the costs are due to Medicare and Medicaid which due to
the volume set the prices for the entire healthcare market. Due to a law
passed by congress Medicare is prohibited from negotiating prices. The most
ridiculous thing I have ever heard.

~~~
pxlpshr
You're looking at top-line cost to provide care in a very convoluted market.
Take chronic for example, a huge chunk is spent on drug treatment. Incentives
to use generics are often misaligned from the needs of the patient.

Also, about 10-15% of the $3 trillion is administrative waste (payers). There
are a lot of areas that we can save.

------
banashark
A brief plug for anyone interested in starting in this space. I'm an engineer
at RedoxEngine[0] where we build a system to transform the many varying forms
of Healthcare data into an easy to use JSON API[1]. This has proven to reduce
development time and increase the available pool of Healthcare Organizations
that your product can connect with[2]. I'm pretty happy working here and
seeing the types of solutions that our product enables/expedites. If you're
interested in the space feel free to PM me regarding questions. It's an
exciting time to be working in the rewarding field of Healthcare Technology!

0: [https://www.redoxengine.com/](https://www.redoxengine.com/) 1:
[https://developer.redoxengine.com/](https://developer.redoxengine.com/) 2:
[https://www.redoxengine.com/customer-
stories](https://www.redoxengine.com/customer-stories)

------
noir-york
Three large employers, realising that for-profit healthcare is expensive and
inefficient, create a non-profit that pools healthcare and is driven by its
member's interests.

This is terrible if it works.

Imagine if other employers want to join it. And then even more employers...
and what if the scheme becomes so large and covering so much of the population
that it ... gasp... looks almost like a government-run non-profit health
insurance scheme! You know, like what those Marxists in Europe have.

And where it would it end - soon people would be demanding cheaper drug prices
and being able to negotiate prices for drugs! Insane

(In case its not clear, the above is written ironicly. I am all for a well
funded government-run health service)

~~~
dexterdog
Except that it's not a monopoly. There are still options that will compete
with each other.

~~~
noir-york
There will be economies of scale. The bigger the pool of employees the lower
the costs, so yes there are options but they could get fewer if this takes
off.

~~~
stale2002
Nobody opposes economies of scale.

What we oppose is being forced by the government to accept a 1 size fits all
plan, and not being allowed to buy the healthcare plan we want.

It is the difference between everyone using Facebook because they like the
product and the network effect, vs everyone using governmentBook because the
government outlawed all competing social networks.

~~~
FroshKiller
Everyone who says, "Why should I have to pay for poor people's health care?"
is opposed to economies of scale.

~~~
stale2002
If the US only allowed one grocery store to exist, that would have economies
of scale as well.

Shouldn't we then give everyone "food insurance" which you pay for with taxes,
and then are able to use that food insurance to get food from the store for
free? (well, not really free, paid for by your taxes). You'd pay a
predetermined amount of money no matter what you got from the store, but your
options would be limited by the government food insurance committee.

If you don't support this single payer food insurance solution to all of your
caloric needs, then my question for you is why do you hate poor people?

~~~
noir-york
Government provision does NOT stop the private sector from providing options.
It is not an either government OR private. But both. Your example does not
exist anywhere, nor is it what it is being advocated.

To be realistic your example would be as follows: what if the US provided a
grocery store that provided the basic necessities, free at the point of
provistion and paid for by common taxation. People are free to buy the nice
wine from the private provider next door BUT if you fall on hard times and you
need to put food on the table, the rest of your fellow citizens help pay to
make sure you, your partner, and your children have food to eat, and retain a
semblance of human dignity, until you can get back on your feet and pay taxes
that provide for someone else who needs help.

~~~
dexterdog
Where does it stop? If "healthcare is a right" and "food is a right" and
"shelter is a right" who is going to pay for all of these services for all of
these people when they have no vital need to go out and support themselves?
Who's going to maintain the sewers and take care of the trash and all of the
jobs that most people don't want to do?

------
gerhardqux
This might have sparked it: [https://qz.com/1090762/an-open-letter-to-jeff-
bezos-you-are-...](https://qz.com/1090762/an-open-letter-to-jeff-bezos-you-
are-needed-to-disrupt-the-health-care-sector/) (2017)

------
taurath
I’d join that company. First thing I’d do is properly line item every coded
expense and expose it to the end user, and compare it with averages of other
providers. Expose people to where they are being ripped off and where they can
get better prices.

------
enlightenedfool
Everyone focuses on the wrong problem - the insurance. Why do doctors and
hospitals charge exorbitantly? 10 - 25 times for the same quality, equipment
elsewhere in the world. There are just not enough doctors and they take
advantage of that. Let qualified doctors get in the country. When they
undercut these blood suckers, prices go down.

~~~
chrisan
Hospitals, at least, over charge to cover their losses with people without
insurance or inadequate insurance.

------
dawhizkid
These companies collectively have hundreds of thousands of employees that cost
many billions each year to insure. Large U.S. employers are what you call in
the industry "self funded", meaning they collect premiums from their own funds
+ employee contributions into a big pool and pay out claims from this pool
(i.e. they take on all the insurance risk). Any optimizations they can make to
plan administration, healthcare utilization (i.e. incentivizing employees to
choose less expensive forms of healthcare or get healthier), lower drug costs,
lower administrative cost, etc. will save them many billions of dollars
annually.

Saying this new venture is going to be free of profit-making is a bit like
saying water is "sugar free." This is all about lowering their own cost of
employing a massive workforce.

------
tabeth
I've always wondered what's stopping someone from creating a non-profit and
just having people join it in order to give the non-profit ability to
negotiate lower prices.

I imagine there's a cost to set this up, but is that cost less than the
marginal cost of each employee and the savings they would (presumably) receive
if enough people joined?

~~~
SkyPuncher
> I've always wondered what's stopping someone from creating a non-profit and
> just having people join it in order to give the non-profit ability to
> negotiate lower prices.

Likely the fact that many of these prices are basically standardized because
of CMS. Providers basically look to what the Medicare/Medicaid standard is as
a benchmark for pricing.

As a provider why accept a lower price from insurance when the gov't is
providing a backlog of people at predetermined prices?

\-----

Unless these companies are also looking to enter the provider space, they will
likely only competing on marginally better insurance rates.

~~~
chimeracoder
> As a provider why accept a lower price from insurance when the gov't is
> providing a backlog of people at predetermined prices?

This isn't even an option on the table. Private insurers are generally
required by law to pay more than Medicare does.

And besides, Medicare reimburses rates that are below COGS, so providers
charge private insurers more in order to make up the difference. Otherwise,
they wouldn't be able to accept Medicare patients at all; they'd literally
lose money on a per patient basis.

~~~
shanusmagnus
This is so important and so little understood: Medicare can demand the prices
that it does because other payers will be making up for it. Their low prices
create externalities in the rest of the insured market.

------
gigatexal
I work for a healthcare services company. The industry is ripe for disruption
just in the way data is handled and managed. What I found interesting in the
article is that the new firm would not be “profit seeking”. Interesting. I
wonder if Amazon would do what they did for years and put any and all profits
back into the new company. But then why partner with an investment bank?

~~~
efields
> But then why partner with an investment bank?

Financial security in exchange for points?

Amazon already did the profitless thing for a decade+. It's betting on its
ability to do it again in a bigger market, but a market with a ton of
unknowns. Having some financial backing by an investment bank might be
something of a safety net.

Maybe Amazon was never certain AWS would work out, but look where it is now.
If you could get in as an investor on Amazon's next AWS, wouldn't you take the
risk?

~~~
gigatexal
Of course I would. I think the world knows not to invest against Bezos.

------
tompetry
I am continually surprised with the focus on attacking the "packaging" of
healthcare at the insurance / network / reimbursement level. That isn't the
problem that needs to be solved. The problem with healthcare costs is that
there is a lack of competition of costly services provided by large hospital
and clinics. In many areas, there is a single provider that runs unchecked.
Two factors limiting competition are:

1) Huge barriers to entry. How do you start a new hospital or sizable clinic?
Regulation, costs, training, etc make it prohibitively difficult 2)
Science/data isn't good enough yet. There is not sufficient data to show which
providers (hospitals/clinics/treatments) are better than others, enough to
allow disruptive entrants into the system.

Only breakthroughs in biotechnology that displace incumbents in healthcare
services will move the need. Re-shuffling the insurance / network / payment
deck of cards aren't enough.

~~~
dragonwriter
> The problem with healthcare costs is that there is a lack of competition of
> costly services provided by large hospital and clinics.

That doesn't seem to be the problem. Particularly, it is _not_ a
differentiator between the US and many systems with better cost-for-outcome
profiles.

------
itissid
I think one of the big ideas that is being tested out there is getting rid of
the adversarial economics of insurance in general. The whole industry is
basically optimizing towards paying out as little while maximizing what they
can get. Such cynicism is being broken in some sectors. Like Lemonade is
really trying a radical new behavioral approach.

------
avocadoLife
I always think that it's only a matter of time before some company with vast
capital (looking at you Apple) finds their own way to set up a city/country
with their own ecosystem (healthcare, transport etc.), with less bureaucracy
and more efficiently.

~~~
oblio
Company towns are not a new thing:
[https://en.wikipedia.org/wiki/Company_town](https://en.wikipedia.org/wiki/Company_town)

Your idea was first attempted in the 1880's :)

~~~
zxcb1
This concept also seems appropriate (extrapolation):
[https://en.m.wikipedia.org/wiki/Corporate_republic](https://en.m.wikipedia.org/wiki/Corporate_republic)

------
yeukhon
I feel there will be a series of HC acquisitions ranging from unicorn startups
to major HC providers. I don’t have to name the qualified startups, they are
too well known... Great time to join an insurance startup!!!

------
CodeSheikh
It is a welcoming move. I hope they make it available for public sector as
well. I would be more than happy to have my prescriptions delivered using
Amazon Prime same day/2nd day service.

------
stevenkovar
I've long wondered how we've allowed insurance companies to operate as public,
for-profit entities—it's a complete conflict of interests.

Hopefully this deal creates a ripple effect non-employees of these three
companies can benefit from.

~~~
arbitrage
> how we've allowed

Personally, I've always wondered why we blithely accept having incredibly
expensive shit services and coverage dictated to us.

------
vpeters25
Rolling their own health care company might solve only part of the issue. I
think the largest driver of healthcare costs right now is price gouging by
providers with their charge masters, needless exams and procedures.

------
sixdimensional
"Amazon Prime, now with basic health insurance included in one low yearly or
monthly rate"!

~~~
ozten
AmazonBasics Chemotherapy - 3.8 stars at an unbeatable price.

~~~
bertil
With the reach that they would have at a low price point and the ability to
match that to your other purchase, I’d love to get that data and look into
behaviours that trigger cancer or are correlated with faster remission.

Cheap medicine is good medicine because it’s data-rich medicine.

------
brudgers
One reason this is likely to be less expensive is that the employees of those
companies tend to be well paid and to have had ongoing access to health care.
Essential tasks ordinarily done by the working poor are usually outsourced. In
the case of Amazon, it's not just things like facilities maintenance and
janitorial workers that won't fall under its health care umbrella, it's all
those warehouse workers engaged in physical work.

Essentially, the costs will be lower because the new company will cherry pick.
And again in the case of Amazon, the tendency to hire young workers also works
in favor of lower costs. This is disruption in the same sense that Amazon's
pillaging the public purse for its new headquarters is disruption.

------
rdm_blackhole
You guys can fight how to turn your money hungry insurance companies into
decent "patient caring" entities or you can do like the rest of the developed
countries and adopt a basic single payer system where everybody pays for
everybody and if you so which you can still purchase the best private health
insurance for a couple hundred bucks a month.

Example:

For my wife and I, one insurance company has quoted us $AU600 a month for the
top of the line health insurance with no deductible and very little waiting
periods.

Also if we decide to not go down that road, we can go to the doctor and the
hospital for free without any worries about money.

How about that?

------
jugg1es
I'm a lead dev at a small, but fast-growing healthcare IT company and I can
say that healthcare is _nothing_ like the markets that amazon is currently in.
It is so incredibly fragmented and the laws vary state to state. In Maryland,
where I live, we have a single, very competent and well-funded HIE called
CRISP. California, in contrast, has like 20 different regional HIE's with not
much support from the state AFAIK. I think they're going to be surprised how
crazy the healthcare markets are.

------
eanzenberg
We’ve moved from trying to get to single-payer government provided healthcare
all the way to tax cuts. This change of mindshare for the USA means more
believe that health issues are more self-inflicted than random unluckiness.

There is truth to both sides, and I am in the single payer camp. However, I
know that most doctors visits in the US are the result of obesity, lack of
exercise, and lack of education. These things need to change much earlier down
the funnel, but they don’t.

------
hickeygareth
As the FT reports
([https://app.newsoveraudio.com/article/3324](https://app.newsoveraudio.com/article/3324))
isn't this much the same as the Healthcare Transformation Alliance in which
IBM, Shell and Verizon (to name a few) are members of?

>> [http://www.htahealth.com/](http://www.htahealth.com/)

------
qaq
This sounds very promising especially considering Amazon's logistical
expertise and amount of financial resources these 3 companies have.

~~~
_r_o_y_
Hopefully it can materialize into something that can have an impact on the
healthcare industry, but it's disheartening seeing no doctors or anyone with
medical expertise in the mix.

~~~
criddell
I think you have more faith in doctors than me. The way the California Medical
Association (and the AMA) resist expanding the role of nurses really damaged
their reputation for me.

Rising medical costs and increased consumption of medical services is good for
physicians.

Freakonomics did a pretty good podcast[1] on the subject.

[1]: [http://freakonomics.com/podcast/nurses-to-the-
rescue/](http://freakonomics.com/podcast/nurses-to-the-rescue/)

------
wslh
Is there a new wave of innitiatives in the health sector? I was surprised by
hospitals working on producing generic drugs [1].

[1] [https://www.cnbc.com/2018/01/18/hospitals-plan-to-create-
the...](https://www.cnbc.com/2018/01/18/hospitals-plan-to-create-their-own-
generic-drug-company.html)

------
sasadw
“Success is going to require talented experts, a beginner’s mind, and a long-
term orientation.” - Jeff Bezos

Solid start-up tips

------
tw1010
I'm neutral on the particulars of this venture (it's probably positive). But
how can anyone argue that the market is efficient when it is possible for
companies that "is free from profit-making incentives" to exist? Just curious.
How does this example fit into that framework?

~~~
JumpCrisscross
> _how can anyone argue that the market is efficient when it is possible for
> companies that "is free from profit-making incentives" to exist?_

"Commoditise your complements" is an old and true business mantra. It's the
reason it's good business for Google to promote an open web or investment
banks to promote mutually-owned, virtually profitless settlement & clearing
organizations like the DTCC and SWIFT. Much of the robber baron era's drama
centred around steel trying to commoditise railroads, railroads steel, and oil
the whole lot.

~~~
dredmorbius
Doing some research, "Commoditize your complements" (American rather than
British spelling) seems to trace to Joel on Software, 2002:

[https://www.joelonsoftware.com/2002/06/12/strategy-
letter-v/](https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/)

------
leoharsha2
What if Amazon could launch a subscription-based Amazon Prime type healthcare
offering that would include: \- access to telemedicine service. \- low-cost
drug delivery service. \- access to wearables for remote monitoring of
patients. Let's see!

------
xir78
Since this a free market heath care, clearly it should have full bipartisan
support in Washington.

------
arcanus
> they plan to collaborate on a way to offer health-care services to their
> U.S. employees.

Is it clear that they will be offering these services to outside clients? Or
is this just a way to keep down Healthcare costs across their organizations?

~~~
janesvilleseo
I don’t know. But a quick Google search indicates that these 3 companies have
over 1 million employees. But that’s world wide. Still that’s an impressive
number.

------
kruhft
Just come to Canada.

We already figured out how to do Health Care where everyone pays.

------
bedhead
I have far more faith that these three companies, more than the government,
can improve the catastrophe that is our healthcare system.

------
NicoJuicy
So JPMorgan is helping to create a company "that is free from profit-making
incentives and constraints."

I don't buy it.

~~~
ThirdFoundation
Well, I think it could make sense in that this new healthcare company's goal
is to lower the costs Amazon, Berkshire, and JPMorgan pay for healthcare for
their respective employees.

So I think it's possible that the healthcare company exists "free from profit-
making incentives and constraints" while also aligning with JPMorgan's goal of
increasing profits by lowering their corporate healthcare costs.

If this also increases employee happiness by way of lower payments and better
service, I see a world where all of the above is possible and it works out
better for all (except rival healthcare providers).

Though I tend to side with you and am dubious until proven otherwise.

------
allengeorge
I could be wrong, but if I understand correctly this healthcare company is for
their employees only? (At least at first).

------
skynetv2
Tomorrow's news: Google announces a healthcare initiative where AI & bots will
drive consumers mad

------
sova
What about a series of free top notch clinics? Or do these three combined not
have enough global revenue yet?

------
s2g
Is it too much to ask that my health care isn't beholden to the whims of a
bunch of billionaires?

~~~
nevir
It's pretty difficult for anyone else to seriously enter the marketplace

------
iandanforth
I hope this new company has a huge lobbying arm from day 1.

------
coldtea
Why those weren't not split AT&T style to avoid the 100000ft pound corporatist
rule, I don't know.

Or rather, I know.

------
kikoreis
Tragedy of the commons much? It's disturbing to see corporations occupy the
vacuum US policy has left here.

~~~
jonwachob91
>> occupy the vacuum US policy has left

Others might argue this is free market at work.

~~~
ninkendo
It depends on whether or not you view healthcare as a basic right for citizens
(in the same sense as education and law enforcement etc.)

The free market coming up with a co-op approach that may only benefit the
handful of companies involved only benefits me if I’m in one of those
companies.

~~~
jumbopapa
Any one who is arguing that this is the free market at work doesn't believe
that healthcare is a right. You can have access to healthcare, but that
doesn't guarantee that you will.

~~~
grasshopperpurp
>Any one who is arguing that this is the free market at work doesn't believe
that healthcare is a right. You can have access to healthcare, but that
doesn't guarantee that you will.

 _This country has socialism for the rich, rugged individualism for the poor._
\- MLK

------
drawkbox
This move is very needed competition and is a start to fix pricing and
hopefully smarter grouping.

But, ultimately health insurance should be something people get on their own
like other insurance, healthcare needs to be unbound from employers in our
system.

Part of the problem with pricing is the health insurance companies are not
consumer focused due to their main customers being employers not individuals.
Other insurance industries (auto, home, life etc) have to be consumer
friendly, you can see it in the marketing you see, they need consumers to buy
on their own.

Health insurance companies like Aetna/BCBS/etc fix prices in backrooms with
employers, medical services, hospitals, doctors and more. Current healthcare
players actively price out individuals due to legacy grouping by companies not
individuals across many ages/spectrums. Grouping by employer leaves self-
proprietors, small companies and more with higher healthcare bills due to them
being more risky because they are small. Smart grouping would be across all
customers not just by employer/company, that is a game to get prices lower in
certain companies that are larger unfairly.

Employers should have zero involvement with your health other than paying you
enough to go get insurance on your own, whether that is single payer public
option or private insurance. Healthcare tied to employment has problems as it
makes it harder to change jobs, start a company, ageism, and if you ever do
need it, if you lose your job you are out of luck.

ACA started the process to unbind health insurance from employers and
hopefully this Amazon/Berkshire/JPM product/company will be consumer focused
unlike current health insurance companies, and start to fix healthcare to be
consumer focused like products should be.

At this point both the Amazon and CVS ventures are adding needed competition,
as healthcare costs are starting to cut into consumer funds heavily.
Healthcare is stealing other industries profits via this encroachment. Health
insurance companies used every excuse and love the legislative turmoil because
they can raise prices without checks in the chaos.

Hopefully the unbinding of healthcare from employment continues, whether
through better consumer focused healthcare companies or a single payer public
option like Medicare-for-all that the consumer can choose between, as that is
the only thing that will start to fix pricing and grouping.

This is very smart for Amazon as healthcare is still completely undisrupted
and ripe for competition, tons of technology and product opportunities and
literally any effort is better than what we currently have for health
insurance, the only product that gets worse every year and goes up by a
minimum of 20-30% yearly in some cases 120% which is impossible to continue.

------
a3n
The beginnings of enclaves.

------
lukeqsee
I read it as "Apple, Berkshire and JPMorgan" at first, and I was very excited
to see such a customer-first company finally taking on healthcare.

Then I read the top comment and saw Bezos. Oh. It's Amazon.

I do not want my medical provider and experience to be optimized to the point
of insanity.

Healthcare needs to be fixed, but I'm pretty sure these three companies will
create a monster worse than the one we currently endure. (Profits or not.)

~~~
praneshp
Yes, Apple is better. They'll slowly reduce dosage as you grow older so you
can get a more expensive medicine.

Amazon is much more customer-first than Apple is.

------
losteverything
When i think of disruption i think of uber. Rides where none could happen
before.

What will their disruption be?

How about delinking insurance to healthcare. Let me buy healthcare the day i
need it. And nothing the day after i dont.

No more having healthy people pay for sick people: no more young pay for the
old.

Create something we cant imagine; like uber; like Facebook

~~~
greysonp
I mean, you can always pay for healthcare the day you need it. It's just
incredibly expensive.

And don't forget, one day you'll be old or sick, so I hope you have a lot of
money saved :)

~~~
losteverything
Im talking about totally thinking differently, not the current situation.

About having a lot of money saved....after a prosthetic implant i added up
stuff. $143,000 spent on insurance since 2005. Part employer part me. Up until
the prosthetic less than $5k (if that) on health. $143k is almost 3 years pay.
I would have rather had it paid to me. Then i would have spent my money for my
healthcare

~~~
danans
> $143k is almost 3 years pay. I would have rather had it paid to me. Then i
> would have spent my money for my healthcare

What would you do in the unfortunate event that you required medical treatment
that cost 10x your annual pay (a real possibility)?

Absent an insurance policy, who would you expect to pay for that? Or would you
instead expect your employer to pay you (and everyone else) the maximum
theoretical health care costs you might incur? That's not possible in any
system.

The point of shared risk pools is to protect people against such extreme
outlier costs, and you've been the beneficiary of other people keeping up
their end of that contract.

