Sunday, February 4, 2018

Top CEOs Aim to Disrupt Health Care Market.

Since the infamous memo released this week by the chairman of the House Intelligence Committee has taken up so much oxygen, other newsworthy events were relegated to a lower priority by the media.  In my view, many of these second tier issues deserve Page 1 coverage, but our media in general has decided that potential or actual scandal must lead their coverage. 

Can anyone defend, for example, the prominent and repeated coverage that Stormy Daniels has received?   If CNN received a lurid videotape of Stormy and the president on the same day that North Korea declared that it wanted to denuclearize their country, which would be the lead story?  The editors would be agonizing!

Tell the truth, would your rather be reading about Stormy?*

A bombshell announcement in health care came this week when when 3 titanic corporations stated they aimed to reform health care coverage from within.  Amazon, JPMorgan Chase and Berkshire Hathaway will combine their resources, ingenuity and mammoth leverage to bend the cost and quality curves in opposite directions.  While this will undoubtedly be good news for their million or so employees, will it be good news for the rest of us?  Hard to say.

Amazon inspires a range of emotions in businesses and individuals across the nation.  Their economic triumph is iconic, but this success has had great costs for businesses and individuals across the country.  Have you seen many small hardware stores, book shops, music shops, clothing retailers or any of the small businesses that used to be dotted across the land?   If you want a closer glimpse of the culture of working at Amazon, I suggest that readers view the 2014 documentary Amazon Rising, or peruse a 2017 book called Nomadland, by Jessica Bruder, which chronicles what life is like inside Amazon’s walls.
Just today, I read about an Amazon patent that can track workers' location and even what they are doing with their hands, unwelcome technology for workers who have nasty habits.

I have no doubt that these companies can fashion a health care system that would correct many of the health care system’s deficiencies at large.  Here’s why.
  • They have unlimited cash
  • They are aiming to provide coverage to employed people, and do not need to address the uninsured or unemployed.
  • They have stratospheric expertise in finance and technology.
  • They can exert enormous leverage over insurance companies, hospitals and the pharmaceutical companies. 
  • If they can track where an employee’s hands are, imagine how they can track health care expenditures and outcomes and have incentives in place.
  • They are large and rich enough that they could self-insure their employees, which would whittle away administrative costs. 
What is less clear, is what the effects of this disruption would be to the health care system at large.   Would hospitals and insurance companies and drug companies who are excluded survive?  Would medical costs on the rest of us be raised in order to offset the Trio’s discounts?   Is their true intent, despite their denials, to become a profit center for medical care in the United States?  

I thank readers who have made it this far.  Those who didn’t likely clicked off in search of a morsel on Stormy.  I'm sure that Amazon is tracking them.

*Photo credit:  Glenn Francis
Attribution :  © Glenn Francis,


  1. Actually the thought of the three, companies working together creating a healthcare system for their one million employees may not be such a bad idea. When you look at the cost of medicines in the United States versus lets say Canada, I can buy a medicine there for about a third of what it costs in the US. That's using the same pharmaceutical company, same medicine and same brand of pill. Now look at the healthcare systems around the world. The US ranks last in countries i.e., Canada, Germany, France, England, The Netherlands, etc. Maybe if the three companies did come up with a healthcare system that did what the US healthcare doesn't. Maybe that would cause our existing insurance companies to better tune there plans so that the American people could enjoy a better healthcare system. We can't wait for congress to help, they seem to only care about their party and not working together for the better of the American people.

  2. @Larry, excellent points. I agree with you. Why is the same drug so much cheaper in Canada? Look forward to your comments. MK

  3. it will only take a average smart person at one of these companies to implement an internal plan that will save them money for just the reasons that have been stated, less administrative costs, cutting out the middleman, buying power, and no need to pay for the unemployed. If they are really as smart as most people think these three titans of business are then what I would expect is that they will have someone figure out a way to motivate the stake holders in their insurance plans to stay healthy in the first place and not need the expensive medical care. How do they motivate or incentivize their employees and families to stop smoking, exercise, eat right, get off sugar, brush their teeth and wash their noses?

  4. @Alyssa, thx for the comment. I think these 3 companies have the money, the expertise and the incentive to make it work. We will see. Be prepared for lots of broken (medical) china across the country!

  5. As alluded in your blog, these companies get to cherry-pick their “insurables” — employees. The US is behind in health outcomes compared to say, the social democracies of Scandinavia because government-sponsored healthcare starts in utero and ends at the grave just be being a tax-payer.
    God help you if you lose your job or are underemployed in the US.