So Megan McArdle reports today that
A partnership of Amazon.com Inc., Berkshire Hathaway Inc. and JPMorgan Chase & Co. is forming an independent company, “free from profit-making incentives and constraints” to “provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.”
and, as you might suspect, I have something to say about that.
Now, I should say that I’m not a healthcare actuary, and my experience in that field is limited to the reading required for the subject-matter actuarial exam, attending training sessions, and being guinea pigs, since my employer, as a benefits consulting firm, in addition to advising its clients on pensions, also advises on employee benefits in general.
Which means that, when I started, we had “flexible benefits” with a pool of money that was intended to be usable for healthcare, dental, vision, and so on.
And we had HMOs, and “wellness credits” which we earned by pledging not to smoke, and getting our cholesterol checked.
Which later on became high-deductible Consumer-Driven Health Plans and ever-more involved questionnaires on health habits.
And now the wellness credits are gone, and we’ve got “private exchanges” and “defined contribution” benefits.
And, mind you, this is all within the context of employers providing benefits to their employees on an administrative-services-only basis, in which they pay the benefits plus a small fee to the insurance company for administering the plan. There’s no “profit” in the system, in the form of hidden costs coming from how the insurers underwrite the benefits, because there is no underwriting, not in the way that premiums are set for individually-purchased policies, anyway. (What the level of ASO fees is, I couldn’t say any longer, though I used to know this.)
So Bezos, Buffet and co. are not doing something brand-new, in attempting, as an employer, to make another attempt at controlling healthcare costs.
Maybe they’ll be the ones to figure it out, as McArdle reports that they’ll going to use all their technological prowess — but the portion of the overall healthcare dollar, when it comes to employer-sponsored plans, that’s going to administration, is relatively small in the grand scheme of things, and I don’t see how their tech prowess would be enough to bargain down rates at their employees’ hospitals, especially when these corporations have employees spread across the country. One item where there is room for improvement is the fact that companies want us to act as “consumers” and comparison-shop, but it’s still very difficult to do that, except to a very limited degree for certain procedures. Even the websites that claim they’ll help you do this, don’t really help you find out what you need to know, in making a decision about where to have a test or elective procedure — but little of this is due to tech limitations; to a much greater degree it’s a matter of the unwillingness of providers to provide this information.
And, of course, my pet solution to healthcare costs, the staff-model HMO in which insurer-provider entities compete to provide healthcare based on cost and quality, only work if individuals are buying health coverage as individuals, so that a local healthcare provider can get customers from the local area, rather than, at present, large companies contracting with national providers to cover their employees nationwide.
The bottom line is that they’re not the first employer that’s tried to transform healthcare and they won’t be the last. But, hey, good luck to them! Maybe they’ll solve one piece of the puzzle.
Image: https://commons.wikimedia.org/wiki/File%3ADoctor_examines_patient_(1).jpg; By Unknown photographer [Public domain], via Wikimedia Commons