Bezos, Buffett & Dimon: Healthcare Super-Group?

by: The Knowledge Group

February 06, 2018


Investors ditched their shares in some big pharmaceutical and health insurance companies recently, reacting to an announcement from Amazon CEO Jeff Bezos, JPMorgan Chase’s Jamie Dimon, and Warren Buffett of Berkshire Hathaway on their plans to disrupt the health insurance industry.

Stock fell for drug companies and insurance providers Pfizer, Aetna, Cigna, UnitedHealth Group, and Anthem. Same for pharmacy chains Walgreens, CVS, and RiteAid, and benefit management groups such as Express Scripts.

An industry so highly regulated would have to be a complicated area to enter. Yet this trio claims a powerful policy motive, and a combined financial strength of $1.6 trillion.

Cure for Tapeworm?

To date, the U.S. drug industry has exerted effective lobbying pressure, and enjoys returns from an exceptionally high per capita price for prescriptions. The average U.S. consumer’s cost is $1,100 per year, which is very high by global standards.

Memorably, Berkshire Hathaway’s Warren Buffett called healthcare costs “a hungry tapeworm” on the U.S. economy.

Is There an App for That?

Bezos et al. hope to create an independent, non-profit group to focus on “technology solutions” to improve accessibility of healthcare coverage for U.S. workers, starting with the more than 1.1 million employees at their own firms.

Somehow, it seems plausible. Amazon is already a familiar, user-friendly presence in our daily lives and transactions.

The Amazonification of healthcare, if you will, could get quick traction. And Amazon’s involvement raises possibilities of transparency that would pose a serious challenge to current hospital billing methods. Today, it can be hard to bargain or even understand the costs we face when we’re most vulnerable.

New Force

How doctors would be brought into this will be a big question mark. But the three companies could have success in lowering costs at hospitals, retail care providers, and drug companies.

And if they can channel cost-effective health insurance to employers, we’ll see a new kind of force applied to an entrenched industry, potentially benefiting many employers and employees, and, ultimately, the U.S. populace.

It’s hard to imagine any possible tax change with the same economic potential.


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