Amazon, Buffett and JPMorgan Join Forces on Health Care
Health care costs are "a hunger tapeworm on the Amercian economy" - Warren Buffet
(AP) – Three of corporate America’s heaviest hitters — Amazon, Warren Buffett and JPMorgan Chase — sent a shudder through the health industry Tuesday when they announced plans to jointly create a company to provide their employees with high-quality, affordable care.
The announcement was short on details about precisely what the independent company will do. But given the three players’ outsize influence — and Amazon’s ability to transform just about everything it touches — the alliance has the potential to shake up how Americans shop for health care, and the stocks of insurance companies, drug distributors and others slumped in reaction.
Employers are up for trying almost anything to control rising health care costs, which have been consuming bigger portions of their budgets for years and burdening their employees.
The venture was announced by Amazon founder Jeff Bezos; JP Morgan Chase CEO Jamie Dimon; and Buffett, the investment wizard of Berkshire Hathaway. The three companies have an estimated 1 million employees in the U.S.
The three businesses said their new venture will be independent and “free from profit-making incentives and constraints.” It will have an initial focus on technology that provides “simplified, high-quality and transparent” care.
Health care costs — branded by Buffett “a hungry tapeworm on the American economy” — routinely rise faster than inflation. Employers have been reacting by asking their workers to pay more of the bill and to shop around for better deals, something many people find hard to do.
The potential disruption from three renowned innovators in technology and finance sent a shock wave through the health care sector on Wall Street, erasing billions in value in seconds.
Several of the biggest losers on a down day for the market Tuesday were health care companies. They included the insurers Anthem and Cigna and the pharmacy benefits manager Express Scripts.
