Buffett, Bezos and Dimon give up their health project

Berkshire Hathaway founder Warren Buffett, Amazon CEO Jeff Bezos and JP Morgan boss Jamie Dimon

Together, the entrepreneurs wanted to set up their own health insurance with their own highly digitized doctor system and direct access to medicines.

(Photo: AFP)

New York With great fanfare, Warren Buffett, Jeff Bezos and Jamie Dimon announced their ambitious project in February 2018: The CEOs of the investment holding company Berkshire Hathaway, the online retailer, wanted to go under the name Haven Amazon and the largest US bank JP Morgan join forces to set up their own health system. Now they cancel the project again. At the end of February, the joint company with currently 57 employees will close its doors in Boston.

This means that three of the biggest and most experienced names in the US economy are also failing because of the difficult and expensive healthcare system in the US. Together they wanted to set up their own health insurance with their own highly digitized doctor system and direct access to medication. All of this at reasonable prices because those involved do not want to make a profit with it.

They had put the surgeon and Harvard Medical School professor Atul Gawande at the helm, although he had already left the joint venture last May.

First, Berkshire, JP Morgan, and Amazon employees should benefit from the new healthcare system. Later the whole thing should also be made available to the wider population.

Observers had hoped for a blueprint for a US-wide solution

The project was followed with excitement. Many observers hoped that Haven could be an alternative to the complicated and overpriced prevailing healthcare system. But these hopes have now been dashed.

“In the past three years, Haven has researched a wide range of healthcare solutions and tried new ways to simplify access to doctors, make insurance benefits easier to understand and simplify, and make medicine cheaper,” Haven said on his website in just nine lines. The three companies involved would use these insights in the future and continue to cooperate to develop “programs tailored to their needs for their employees”.

The big cross-company litter, which could serve as a blueprint for a national solution, does not materialize. Jamie Dimon, CEO of JP Morgan, wrote in an email to employees: “Haven has worked best as an incubator for ideas, as a place to try, test and learn – and as a way to share best practices from our companies” .

In fact, the requirements and demands of the two financial companies Berkshire and JP Morgan and those of the online and logistics giant Amazon are likely to have been different. In most cases, employees in the financial sector get significantly better health insurance from their employers than warehouse workers from Amazon.

Then there are the regional differences: Amazon has its headquarters in Seattle, JP Morgan in New York and Berkshire Hathaways with its many companies is present in many different places.

In the US, health insurance is in most cases dependent on the employer. Insured persons often have to accept a high deductible. This also applies to the policies introduced under Obama.

Buffett describes the players in the health market as “voracious tapeworm”

The US spends $ 3.8 trillion annually on health, and the number is rising. This corresponds to an average of $ 11,600 per person and about 18 percent of the gross domestic product. Nevertheless, only a fraction of it goes to doctors or nurses.

The majority goes to the administration of the many different health insurance companies and intermediary institutions. In the USA, for example, there is the figure of Pharmacy Benefit Managers (PBMs), who theoretically should negotiate the best prices for drugs for health insurers. But these are also profit-oriented and thus drive prices up.

Investment guru Warren Buffett once described the many players in the expensive American health market as a “voracious tapeworm” that does nothing to improve the health of Americans. Buffett had justified his original involvement in the community project Haven with the fact that he saw many people of the same age around him who, thanks to their excellent care, are far better health than many less well-off people. But even he could not defeat the voracious tapeworm.

More: Amazon or Apple policy? Alternative providers are becoming a threat to established insurance groups

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