Will Amazon save our broken health care system?
This past January, three large corporations -- Amazon, Berkshire Hathaway, and JP Morgan Chase -- announced a joint venture that will create a new company to provide health care for the (almost a million) people they employ. "The initial focus of the new company,” they said,” will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost." Warren Buffett, the CEO of Berkshire Hathaway, lamented that “growing health care costs act as a hungry tapeworm on the American economy.”
We feel the effects here in Adams County. Every year, local school boards divert more and more of your school tax dollars away from educating our children to cover increases in employee health care. Townships and boroughs spend more and more of your property tax dollars to provide their share of health insurance for their employees. And too few of these dollars actually pay for health care. Jamie Dimond, the CEO of JP Morgan Chase, estimates that 25-40% of what we spend actually goes to cover the cost of administering our complicated system -- and to fund the fraud it seems unable to stop.
Why are the CEOs of these large corporations doing this? Shareholders hold them accountable for generating profits, not for fixing a broken health-care system. Do they secretly intend to make employee health-care into a profit center? They claim not. Their aim will be twofold: to provide better health care for their employees AND to control the ever-rising amounts that both the companies and their employees must contribute toward covering their health care. If they succeed, Dimon explained in his April letter to JP Morgan Chase shareholders, they would also hope to “inform public policy for the country.”
Can corporate America succeed where government has failed? President Obama’s efforts to create an Affordable Care Act quickly ran into a wall: special interests brought the full weight of their lobbying efforts to protect the status quo. Hospitals, health insurance companies, large pharmaceutic companies, health insurance brokers, and organizations of health care professionals spent millions protecting their share of the health care dollar. President Trump promised during his campaign that he would allow Medicare to negotiate drug prices from the large pharmaceutical companies. In the months that followed his election, the drug companies set their lobbyists to work, and the President’s recent proposals to reduce drug costs do not allow Medicare to negotiate drug prices.
How would the new company operate? Details are scanty. Dimon’s April letter promised that the new company will apply "top management, big data, virtual technology, better customer engagement, and the improved creation of customer choice" to a number of healthcare problems. Among the problems he identified were misaligned incentives, waste and fraud, over- and underutilization of specialized medicines, and the rising cost of end-of-life care. Recall that President Obama, too, made efforts to address end-of-life care; critics called them “death panels,” and his efforts went nowhere. But a company formed to serve three enormous corporations will be free from the need to move legislation through a bitterly divided Congress. Able to draw on the best health-care minds around, it should be in a position to experiment with radical new solutions to even the largest health-care challenges. At first, whatever new plan results will be available only to the employees of the three corporations, but if it results in better care at less cost, other companies are certain to want to get on board.
Two observations seem in order. First, the initiative provides conclusive evidence, if more were needed, that our present health-care system isn’t working. As a country, we spend far more on health-care than do other industrialized nations, yet our health-care outcomes rank well below the best of theirs. Corporate America is stepping in because businesses are having to pay too much for health-care that does not meet the needs of their employees. [For a similar look at the quandary businesses face, check out the movie “Fix It” in which the CEO of an Allentown company tackles the impact of our existing health-care system on his employees]
Second, the people who should be fixing our health-care system have lost their way. As good as the new corporate initiative may be, its parameters will be set not by those we have elected to serve us, but by a small group of experts whose performance will ultimately be judged by the executives who hired them. With all its faults, the Affordable Care Act was a legislative effort to address a serious problem. It is now being gradually dismantled without any reasonable alternative in sight. Those presently running for elected office too often try to avoid taking any position at all on crucial health-care issues. For all the promise that this new company holds out, its creation is an indictment of the unwillingness of our state and federal governments to take their appropriate responsibility for the health of their citizens.
Baird Tipson formerly served as provost at Gettysburg College and as president of Washington College. He is a member of Democracy for America’s Healthcare Task Force.