Imagine if three of the world’s most powerful companies joined forces to attack one of the most difficult problems facing their businesses and American society: the suffocating costs of health care. What could they achieve?
Imagine, furthermore, that these companies – led by wildly successful business professionals who are wholly committed to the cause of capitalism – wanted to pursue their long-term venture “free from profit-making incentives and constraints.” Then what?
It’s hard not to think that such an effort might achieve something substantial in the effort to purge what one of them colorfully – and correctly – identified as “the hungry tapeworm on the American economy.”
It turns out the only imagining that needs to happen will be on the part of the men and women who undertake this hopeful project, announced Tuesday by leaders of Amazon, JPMorgan Chase and Berkshire Hathaway, whose chairman and CEO, Warren Buffett, is the author of the tapeworm analogy and who is also chairman of The Buffalo News.
In a time of global economic disruption, this is disruption of the most welcome kind. Health care is, often enough, a life-or-death issue for workers whose access to quality care is threatened by rising costs and for businesses that pay much of the freight in subsidizing health insurance as an employee benefit.
It’s a problem that persists, despite close monitoring of care by traditional insurers, despite the influence of laws such as the Affordable Care Act and despite the well understood fact that rising health care costs are an open drain on the economy. Consider: health care in 2017 accounted for 17.9 percent of gross domestic product, according to the Center for Medicare and Medicaid Services. By 2025, it is expected to reach 19.9 percent: One of every five dollars spent will be on health care.
That’s unsustainable. It’s money that isn’t going to food or housing or the military or salaries or infrastructure or anything other than health care. And it doesn’t have to be that way. According to a 2013 review by 24/7 Wall St., Sweden spends less per capita and has higher life expectancy. Canada’s per-capita cost was less than half that of the United States and, again, with a longer life expectancy.
Government-based systems in other countries have their own problems and, today, are politically impossible to implement here. But never mind: The example of those countries unmistakably demonstrate that the health care system under which this country labors is radically inefficient.
It’s also accidental. Employer-paid health insurance is a relic of World War II, when wages freezes and tax policy made pay raises impossible. Instead, employers offered what, at the time, was inexpensive health insurance. That cost has metastasized into a threat. Business would surely fight it hammer and tongs if it were being proposed today.
Something has to change and it is all to the good that Buffett, Jeff Bezos of Amazon and Jamie Dimon of JPMorgan Chase have chosen to take on this fight. As Ed Kapan, who negotiates health coverage for large employers told The New York Times: “Those are three big players, and I think if they get into health care insurance or the health care coverage space they are going to make a big impact.”
A big impact is what we need.
The project, at least immediately, is meant for the benefit of these men’s businesses and their employees, but the rest of the country should pay close attention. It’s fair to expect innovation, beginning with technology. That’s where the focus is initially planned in an effort to streamline and improve health care while lowering costs. On its own, that’s a rich field to till.
This is not the only way health care is changing. In another move sure to shake the industry, CVS Health announced in December that it would buy the insurer Aetna. Such efforts are significant and, despite the anti-competitive risks of consolidation, generally welcome as the country seeks to avoid a crisis in health care.
But few other efforts portend the earthquake suggested by the partnership of Amazon, Chase and Berkshire Hathaway. With more than 1 million employees around the world, this project stands to shake things up nicely.