NEW YORK – Can Jeff Bezos, Warren Buffett and Jamie Dimon fix health care?
Amazon is partnering with Buffett’s Berkshire Hathaway and JPMorgan Chase, the nation’s largest bank, to get into the health insurance business.
The three companies unveiled a yet unnamed company to provide their U.S. workers and families with a better option on health care. The statement said the new company will be “free from profit-making incentives and constraints.”
As of a year ago the three companies had 840,000 global employees among them, though they did not break down how many of those are in the U.S. The statement said their insurance effort could eventually benefit workers at other companies. But as of now the companies are concentrating on a product for their own employees and family members, not a product to offer to other companies.
“The ballooning costs of health care act as a hungry tapeworm on the American economy,” said Buffett. “We share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes.”
“The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” said Jeff Bezos, Amazon founder, CEO. “Hard as it might be, reducing healthcare’s burden on the economy while improving outcomes for employees and their families would be worth the effort.”
The companies said their efforts are only at an early stage. While each named one executive to work on the effort, it has yet to decide on a longer-term management team, a headquarters location or other operational details.
“The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans,” said JPMorgan Chase CEO Jamie Dimon.
While Berkshire Hathaway is a major player in the auto insurance business with its GEICO unit, but it has not offered health insurance.
While the effort is clearly at an early stage, the news was enough to shake up investors in the health care sector. Shares of established health insurers such as UnitedHealth, Anthem, Aetna and Cigna were all down in premarket trading immediately following the announcement, as were shares of Humana, a hospital operator, drugstore retailers CVS and Walgreens and prescription service Express Script. Shares of Amazon and JPMorgan were also slightly lower, while Berkshire Hathaway was unchanged.