The recent announcement that e-retailing giant Amazon, investment bank JP Morgan Chase, and multinational holding company Berkshire Hathaway are starting a health insurance company has incited mixed emotions among public health professionals.
For workers who already “owe their soul[s] to the company store,” the news that they may have to start paying their employers directly for health insurance probably isn’t exactly welcome.
However, the lyrics to the Tennessee Ernie Ford classic “Sixteen Tons” may need a reboot, as large corporations enter the health insurance marketplace with an eye toward controlling costs, with the future of the Affordable Care Act (ACA) up in the air and health care expenditures in the United States continuing to spiral out of control. The latest example of such efforts is the recently announced alliance between e-retailing giant Amazon, investment bank JP Morgan Chase, and multinational holding company Berkshire Hathaway.
The companies generated blaring headlines and sent insurance stock prices tumbling when they went public on January 30, 2018, with their plans to essentially start an insurance company to offer health benefits to all their employees. Presumably, benefits packages would cover all full-time employees and their families; however, to date, the 3 companies have been vague about what exactly the resulting insurance business will look like, and the type of health plans and coverage it will offer.
“Most large employers are already self-insured, [in that] they contract with an insurer to handle claims but can set their own coverage policies,” David Himmelstein, MD, Distinguished Professor, School of Urban Public Health and the Roosevelt House Public Policy Institute at Hunter College in New York, told Contagion®. “[However], a return to the old system of company doctors raises concern about to whom the doctors are accountable, and whether patients’ interests will take second place to employers’.”
According to Dr. Himmelstein, who has written extensively about health care payment models and issues related to access to care and coverage, the Amazon/Chase/Berkshire initiative is hardly the first foray by non-insurance players into the health care insurance marketplace. As NPR reminds us in its report on the news from Amazon et al, insurer Kaiser Permanente, now one of the biggest providers in the industry, started as an offshoot of the Kaiser Shipyards, owned by multimillionaire industrialist Henry J. Kaiser. Initially, it offered company employees workers compensation coverage before adding health care insurance.
More recently, companies such as Boeing, Walmart, and, as of February 1, 2018, Walt Disney have attempted to bypass the traditional insurance industry by essentially creating their own health maintenance organizations (HMOs) for employees. The Disney plan, which garnered much less attention than the Amazon/Chase/Berkshire initiative, likely because Jeff Bezos and Warren Buffett aren’t involved, will only be offered to the company’s staff in Central Florida. The Orlando Sentinel reports that Disney has contracted with the Orlando region’s 2 largest health systems, Orlando Health and Florida Hospital, to create 2 distinct and “affordably priced” health plans for employees, each limited to the respective systems’ networks of doctors, hospitals, and facilities. Employees who opt to see an out-of-network provider won’t be covered—except in “special circumstances,” the newspaper reports.
“Some large companies are already directly contracting with hospital systems, bypassing the insurance middlemen,” Dr. Himmelstein said. “[To date], none of these initiatives has had a very big effect, [and] insurers pretty much toe employers’ lines already.”
Even in its infancy, though, the effort by Amazon et al has already caused a stir, sending stock prices for major insurers as well as pharmacy benefits managers such as CVS Health and Express Scripts plummeting. Interestingly, although most industry observers agree the primary motivation is to gain some measure of control over the costs of coverage for employees’ health care, the 3 companies seem bent on portraying their initiative as altruistic, describing their insurance company as “free from profit-making incentives and constraints.” Whether that means it will be a non-profit entity remains unclear.
“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,” Bezos, Amazon’s founder and chief executive, said, per The Times.
Although Dr. Himmelstein sees “no reason to mourn for insurers” in the aftermath of the Amazon/Chase/Berkshire news, he’s hardly sanguine about the possible effects on the companies’ employees and their families either. Keep in mind, the 3 employ some 1 million workers collectively worldwide—so any impact on their workers’ health outcomes would potentially have a significant impact on public health overall.
Which makes this a story worth watching.
Brian P. Dunleavy is a medical writer and editor based in New York. His work has appeared in numerous health care-related publications. He is the former editor of Infectious Disease Special Edition.