USA TODAY International Edition
Our view: Alexa, please fix the U.S. insurance system
The CEOs of Amazon, Berkshire Hathaway and JPMorgan Chase certainly got America’s attention with their recent announcement of a joint health care initiative. Their immediate goal is to lower the costs of covering the 1.2 million people they collectively employ. But Wall Street quickly concluded that their creation — whatever it turns out to be — could resonate beyond their companies.
The stocks of major health insurers and benefit managers sold off. And pundits started speculating on how BBD (Jeff Bezos, Warren Buffett and Jamie Dimon, three of the brightest minds in American business) might create a giant HMO or find new ways to mine medical data that would enable early interventions.
To BBD we say: Go for it. If you can come up with ways to provide your employees with better health care for less money, more power to you.
To the rest of the country: Don’t get too excited. Not even a company as crafty as Amazon, or a bot as all-knowing as Alexa, can fix our nonsensical health care system.
The problem with America’s largely employer-based health insurance system for workers is not something these companies can necessarily fix. The problem is that its basic architecture is upside-down.
The health care system has neither market economics nor budgets to contain costs, so prices go up willy-nilly.
At the heart of America’s system is the central feature of patient and provider conspiring to spend what is mostly other people’s money. Though that is not unique to America, what is unique is that those other people have virtually no power to set limits.
While providers, such as hospitals and drug companies, often have monopoly or near-monopoly powers, the people who foot the bill are fragmented into thousands of insurance pools run by dozens of insurance companies, all but one of which — UnitedHealth Group — has a national market share in the single digits.
That’s why prices keep going up faster than inflation. It’s not a fair fight.
The three companies now working together, particularly Amazon, are known for their ability to disrupt industries. But in health care, they aren’t up against an old-school industry fallen behind the times; they’re facing monopolies or near-monopolies brimming with technology of their own.
Amazon, JPMorgan and Berkshire Hathaway might get some marginal advantage for their own employees, or come up with some new technologies that improve health care at the margins. Some of their good ideas might even spread more widely, but they are unlikely to make the dramatic changes that are desperately needed.
Costs won’t be brought down until we move away from our employersponsored system and toward one where the Americans who pay for costly coverage are consolidated into larger, more powerful pools that can say no to price increases.
That won’t come from three companies tinkering at the edges.