Last month, Jeff Bezos, Jamie Dimon and Warren Buffett when they agreed to throw in together to try to improve the healthcare for nearly 900,000 combined employees. While this is a task of gargantuan proportions, these leaders have the knowledge needed to make meaningful changes. Here’s what you should know.
The US healthcare markets “sneezed” last month when Jeff Bezos, Jamie Dimon, and Warren Buffett agreed to throw in together to try to make some sense of what it would take to change the upward spiral of healthcare costs and improve the health outcomes for their nearly 900,000 combined employees. And while this is a task of gargantuan proportions, these three leaders have impressive track records engineering the type of massive improvements needed to make meaningful change.
While details are sparse, Buffett shared some common goals for the new triumvirate. First and foremost: they are seeking to reduce costs while reducing overall utilization of the current system. Next would be to improve services available to their employees. Most compellingly, both of these are to be accomplished without “profit-making incentives and constraints.”
Later in February, this sneeze developed into a full-blown “cold” for health insurance carriers when Apple announced a major corporate effort to improve the health of their employees by adding advanced clinics to two of their largest corporate campuses.
Apple’s intent was clear evidence of the growing impatience of many major employers in dealing with the bloated, inefficient healthcare system that has shown little empathy for employers and employees that are footing the massive national healthcare bill. The initiative of these few may very well motivate hundreds of other companies to explore a way of absorbing some of the risks associated with providing insurance to employees either by taking Apple’s approach of onsite clinics or self-insuring risks which allows companies to participate in the profits. While this phenomenon is primarily coming into focus with our nation’s larger employers, smaller companies should be encouraged that any spotlight shown on these issues will surely benefit all.
These actions by four major U.S. corporations has and will continue to set off reverberations in health insurance company boardrooms across the country. With their collective stocks losing 4-8% with these revelations, healthcare executives are being forced to re-examine and refocus on how to improve or at least explain the unencumbered and profitable path they have been on since the passing of the Affordable Care Act in 2010.
The best example of this is the March 1 announcement from Blue Cross Blue Shield of Texas that they intend to invest $1.5 Billion over three years in a program deemed “Affordability Cures.” This endeavor is aimed to address “the root causes of a high-cost health care system.” Innovation, investments, and partnerships are the tools touted by BCBS TX to fulfill their goal. I predict more health insurers will follow this action because the scales are being tipped by employers that “are mad as hell and not gonna take it anymore.”
This could be the beginning of a movement to revamp and rethink how many of the costly abuses and practices got started and how these company users can revise and reduce those same features in the future. Over-testing, tort reform, malpractice insurance, opioid abuse and many other issues have garnered attention in years’ past without resolution. It’s hard to extrapolate at this point how these actions may help smaller companies because of the infancy of the movement.
Action taken by the companies above have stirred similar feelings among other major corporate employers in the US. The frustration with healthcare costs, medications, and associated expenses is palpable with both employers and employees. The generalized feeling that healthcare profits for carriers, hospitals, doctors, and specialists are exorbitant makes the common person feel they are being taken advantage of.
In an interview last week with CNBC, Buffett indicated over 400 companies have indicated their willingness and enthusiasm to join these cost-saving efforts. While these interested companies span many industries and geographic areas, the common theme is the desire to increase employee benefits at lower costs with attention given to new areas such as wellness and expanded Employee Assistance programs (EAP) that include fitness, diet, nutrition, parenting, relationships and so on. The common goal that is constantly espoused is the corporate desire to have a healthy workforce free from fear of inadequate healthcare.
Meanwhile, in the halls of Congress, ideas are surfacing on how to incorporate industry associations into the marketing of health insurance to industry groups. Stronger regulation of pharmacy costs is another idea whose time may have come. Americans are finally figuring out that the government may not be the answer and that corporate innovation may very well provide an interesting alternative to the many issues plaguing the healthcare industry.
With the rewards unknown at this point, we can dare to dream of a day when healthcare costs in our country drop below 10% instead of the current 18% of GDP. If costs must stay at these historically high levels then, if nothing else, these efforts will help us spend our healthcare dollars more wisely.
It is my sincere hope that not only these companies but many others will join in the exciting process to discover ways to lower our healthcare costs and “cure” our dependence on an out-of-control portion of our economy. Like in many things, if you want something done right, you have to do it yourself. Let’s wish these corporate leaders success in their endeavors! The proverbial train is starting to leave the station and this is one journey I don’t want to miss.