If America’s Largest Companies Can’t Shop For Better Health Insurance, No One Can
Last week, to great fanfare, Amazon, Berkshire Hathaway, and JPMorgan Chase announced they will work on a new health care program for their employees “free from profit-making incentives and constraints.” The response to this announcement unintentionally produced some remarkably insightful conversation about American health care reform.
What exactly this new company will be and what it will do is anyone’s guess. Not even the executives involved know.
To assuage fears of JP Morgan Chase’s health care clients, CEO Jamie Dimon said the plan was probably going to be like a “group purchasing organization,” a longstanding practice among big companies which would have minimal impact. Berkshire Hathaway CEO Warren Buffett said, “Our group does not come to this problem with answers.”
Since there is no actual plan or policy to analyze at this point, this big, bold, nebulous announcement has served as an interesting blank slate. For the past week, experts, analysts and economists projected their honest assessments of the current state of our health care system, free from partisan concerns.
Among seasoned health care economists and business analysts, the majority believe this new company will have little or no broad impact. Numerous large companies have tried similar team ups before and failed.
Even with a combined 1 million employees spread over the country, several experts think the three massive companies aren’t sizable enough to really negotiate much lower prices with the monopolies (patented drugs) and de facto monopolies (consolidated hospital networks) that make up the United States health care system.
Take a moment to consider what these economists and health care experts are saying about this new private effort and what that implies about recent health care reform efforts.
Three of the largest companies in America run by arguably three of the most effective CEOs on the planet plan to join forces. Yet many health care economists contend they will not have the knowledge, skills, and power to effectively negotiate for lower health care costs.
It is remarkable what a more honest and pessimistic assessment one gets on the ability of market mechanisms to bring down health care costs when freed from the partisan fight over the Affordable Care Act (ACA).
If Amazon CEO Jeff Bezos cannot shop around for a better health insurance deal for his employees, there is no way a 45 year-old taxi driver can do so on Healthcare.gov. If three of the largest and most innovative companies with a pool containing over a million people are unable to use market principles to drive down prices, there is no way Rhode Island’s ACA exchange with a mere 30,000 enrollees stands any chance.