Amazon (NASDAQ: AMZN), Berkshire Hathaway (NYSE: BRK.A), and JPMorgan Chase (NYSE: JPM) are joining forces to try to improve health care. The three companies announced that they would be forming an independent health care company for their employees in the United States. The alliance will apply only to their employees.
The companies said the initiative would be “free from profit-making incentives and constraints.” Berkshire CEO Warren Buffett said in a statement, “The ballooning costs of health care 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.” The announcement sent stocks for insurers and other major health companies reeling, dragging down the broader stock market.
Health care premiums have been growing much faster than wages. According to the Kaiser Family Foundation, average premiums for family coverage for employees rose to $18,764 last year, a 19 percent rise since 2012. Workers now pay 30 percent of the premium, plus high deductibles and growing co-payments.
American businesses are frustrated with the state of the nation’s health care system. Major employers have tried to tackle the high costs and complexity of health care for years. The rapidly spiraling cost of medical treatment, along with an inefficient web of doctors, hospitals, insurers, and pharmaceutical companies, have made health care a nightmare for many Americans.
The details on how the three partners would overhaul their employees’ existing health coverage is unclear. In the beginning, the initiative will focus on using technology to simplify care. In a statement, Amazon’s founder and chief executive Jeff Bezos said, “The health care system is complex, and we enter into this challenge open-eyed about the degree of difficulty. Hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort.”
The three companies combined employ more than one million people. Jamie Dimon, the chief executive of JPMorgan Chase, is hopeful that the effort could eventually be expanded to benefit all Americans. The employer-sponsored health insurance market provides coverage to approximately 160 million Americans.