Three giant
Stock prices in top health companies fall in wake of news
and influential employers — Amazon, Berkshire Hathaway and JP Morgan Chase — announce that they will create an independent company aimed at reining in health care costs.
Three giant and influential employers — Amazon, Berkshire Hathaway and JP Morgan Chase — announced Tuesday that they were partnering to create an independent company aimed at reining in health care costs for their U.S. employees.
There were almost no details available about what the innovators in finance and technology would do to simplify U.S. health care. But there’s no doubt the companies, which collectively employ more than 1 million workers worldwide, have an interest in ratcheting down their spending on health care.
Major health company stock prices tumbled on the news. The sector finished with a loss of 2.1 percent.
The Dow had its biggest decline since May, losing 362.59 points, or 1.4 percent, to 26,076.89. The Standard & Poor’s 500 index fell 31.10 points, or 1.1 percent, to 2,822.43. The Nasdaq slumped 64.02 points, or 0.9 percent, to 7,402.48.
Express Scripts slid $2.61, or 3.2 percent, to $79.31. Cigna tumbled $16.01, or 7.2 percent, to $207.89. UnitedHealth Group lost $10.76, or 4.3 percent, to $236.65. Anthem fell $13.58, or 5.3 percent, to $243.44.
HCA bucked the trend after the hospital chain posted better fourth-quarter results than analysts had expected.
The stock gained $3.83, or 3.9 percent, to $101.45.
The news gave Amazon shares a lift. The stock added $20.14, or 1.4 percent, to $1,437.82.
The venture was announced by Amazon founder Jeff Bezos; Warren Buffett, the investment wizard of Berkshire Hathaway; and JP Morgan Chase CEO Jamie Dimon.
The announcement from the three companies stirred excitement — and questions — about how they could bring their clout to containing costs in the massive employer-sponsored health insurance market, which provides coverage to about 160 million Americans.
According to the Kaiser Family Foundation’s survey of employer health benefits, health insurance premiums have been rising faster than wages.
Between 2012 and 2017, workers’ earnings grew by 12 percent, while premiums went up by 19 percent.
“To have three of the most respected CEOs in the world step up and say that their companies are going to work together to focus on the real issues, of how do you make the U.S. health care system sustainable and a better delivery of service than what we have today ... it’s very positive,” said John Sculley, chief marketing officer of RxAdvance, a health tech company.