Amazon, Berkshire Hathaway and JP Morgan Chase join forces to tackle employees' health-care costs

  • By Carolyn Y. Johnson,
  • The Washington Post
  • Health Care Sector
  • Health Care & Wellness
  • Markets
  • Technology
  • Health Care Sector
  • Health Care & Wellness
  • Markets
  • Technology
  • Health Care Sector
  • Health Care & Wellness
  • Markets
  • Technology
  • Health Care Sector
  • Facebook.
  • Twitter.
  • LinkedIn.
  • Google Plus
  • Print

Three major employers, Amazon, Berkshire Hathaway and JP Morgan Chase, announced Tuesday they were partnering to create an independent company aimed at reining in health-care costs.

There were almost no details available about how the company would function — whether it would seek to integrate into existing markets or try to disrupt the complicated fabric of American health care.

But major health company stock prices tumbled on the news, and the announcement stirred excitement and concern among industry leaders that the three companies could bring their clout to containing costs in the massive employer-sponsored health insurance market, which provides care to approximately 160 million Americans.

"The U.S. health care system is unsustainable in terms of its costs, and the entire debate by political leaders — whether it is Democrats or Republicans — has focused on repairing and replacing Obamacare and the ideological differences," said John Sculley, who formerly led Apple and Pepsi-Cola. "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."

The announcement comes amid rampant rumors and anticipation that Amazon could disrupt health care as it has in other industries, particularly in the business of selling prescription drugs. A person at one of the companies who is familiar with the matter said that this is day one of the joint venture and that specific plans will take shape over time.

Multimedia center

Find more videos and infographics covering important investing and financial topics.

The person said that the joint venture is not currently expected to be a simple replacement for existing health care companies. It would not be a new health insurance company or a hospital or a pharmaceutical company, but a company that can bring the power and scale of the three organizations to bear on making health care more transparent, affordable and simple. The person warned that could change.

"The ballooning costs of healthcare act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable," Warren Buffett, Berkshire Hathaway chairman said in a statement.

Amazon reported in October that it had 541,900 worldwide employees globally. Berkshire Hathaway employed about 367,000 people worldwide at the end of 2016. JP Morgan Chase said in a news release last week that it last year spent $1.25 billion on medical benefits for 300,000 U.S. employees and family members.

The independent company would be jointly led by executives from all three companies, although a chief executive has not yet been announced. It will be free from the need to deliver a profit.

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Google Plus
  • Print
© 2018 The Washington Post
Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness. A percentage value for helpfulness will display once a sufficient number of votes have been submitted.
close
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.
close

Your e-mail has been sent.

You May Also Like...

Behind the rising costs of long-term-care insurance

Long-term-care insurance was supposed to help seniors pay for costly nursing homes and personal aides. Now the industry is imploding. Here's what's at stake for more than 7 million Americans who own the policies.

Why retirees shouldn't let market volatility scare them

What should retirees or soon-to-be retirees do during times of market volatility? Here's how to deal with an unpredictable market and the anxiety that comes with it.

Pros and cons of federal vs. private student loans

Both have advantages and drawbacks. Here's how to decide what's best for you—which could be both.