The announcement by Amazon, Berkshire Hathaway and JP Morgan Chase to form a company to contain health care costs for their employees has generated considerable attention – and for good reason.
The leaders of these companies are renowned for their ability to innovate. We certainly agree with them that health care costs are unsustainable and need to be lower. We’ve been saying that for years. How they plan to accomplish such a monumental task remains to be seen. Warren Buffett, the chairman of Berkshire Hathaway, said the companies don’t “come to this problem with answers. But we also do not accept it as inevitable.”
It’s an admirable goal and one that comes with a lot of work ahead. Jeff Bezos, the head of Amazon, acknowledges the truth by saying “the health care system is complex.”
How the companies go about cutting costs and improving results is something that many will watch. Companies like Amazon self-insure for their employees’ health care and are not subject to regulation by this office.
The companies have yet to provide details on what they are considering. But we think it’s safe to assume they may have a focus on the direct purchase of health care – contracting directly with medical providers, including hospitals, and finding an imaginative way around the gnawing issue of soaring costs for prescription drugs. We will pay attention to their efforts to see what effect it has on the health care landscape and the companies we do regulate.
We hope they will build on some the key successes of the Affordable Care Act to date – greater coverage, more focus on costs and results that benefit patients. Regulators stand ready to offer the benefit of their experience in this effort.
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