A step from three united states giants to create company with aiming of health care costs for their employees

Washington: it was announced on Tuesday about the partnering of three giants and influential employers, Amazon, Berkshire Hathaway and JP Morgan Chase to create an independent company aimed at reining healthcare costs for their US Employees. Though currently there is almost no details pertaining about the company would do or how it would use technology to disrupt and simplify the complicated fabric of American healthcare but leaves’ no doubt as the companies, which collectively employ more than 1 million workers worldwide, have a real interest in ratcheting down their spending on health care. Health-care premiums are split between employers and employees and have been growing much faster than wages. Well this announcement major health company stock price vibrated on this news release and it bought quite excitement and questions as to how the three companies could bring their clout to containing costs in the massive employer-sponsored health insurance market which covering approx. to 160millionn Americans.

However as per record of Kaiser Family Foundations it show employer health benefits health insurance premiums have been rising faster than wages itself, as from 2012 and 2017  workers earning grew by 12% while premium went up by 19% which is premiums increased twice as fast as workers earning. John Sculley who formerly led Apple and Pepsi-Coal and is now chief marketing officer of RxAdvance a health tech company said “The U.S. health-care system is unsustainable in terms of its costs, and the entire debate by political leaders — whether it is Democrats or Republicans — has focused on repairing and replacing Obama care and the ideological differences, “To have three of the most respected CEOs in the world step up and say that their companies are going to work together to focus on the real issues, of how do you make the U.S. health-care system sustainable and a better delivery of service than what we have today… it’s very positive.”

Though announcement just came as rampant rumors and anticipated that Amazon could particularly in the business of selling prescription drugs. A person at one of the companies who is familiar with the matter said that this is day one of the joint venture and that specific plans will take shape over time. The person said that the joint venture is not currently expected to be a new health insurance company or a hospital or a pharmaceutical company, but a company that can bring technology tools to bear on making health care more transparent, affordable and simple. The person warned that could change.

While Warren Buffett, Berkshire Hathaway chairman stated “The ballooning costs of healthcare act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable”. We can analyst it not for the first time that first big employers have tried to tackle health-care costs.  Back to two years ago, 20 major companies including Verizon, American Express, IBM and Shell Oil joined in a Health transformation alliance to improve the way health care is purchased for employees. Mercer, a human resources consulting firm, runs several collectives of employers that join forces to purchase prescription drugs, using the extra leverage from having a larger group to wring better prices.

According to Brian Marcotte president of the National Business Group on Health said that one of the problems of employers purchasing coalitions is that the exciting health care market remains much centered on the providers while this new efforts he said might able to change “When you think about the collective resources of these three companies, with Amazon’s customer obsession and supply-chain savvy, there’s an ability to create a more consumer-focused model”. As of October Amazon, with 541,900 employees globally as is known for transforming industries, For months, rumors that it could enter health care have sent shudders through the stock prices of companies whose business models might be threatened. Some see the biggest health-care deal in years — a merger between CVS and Atena announced last year — as partially fueled by the threat that Amazon could start selling drugs. Amazon, already one of the country’s largest employers, has been expanding ever since as to Last year, the company announced plans to hire 50,000 warehouse workers, staging a one-day blitz dubbed “Amazon jobs day.”  As to company also is on verge to deicidethe sites for second North American headquarter  where it plans to employ as many as 50,000 full time workers with high paying office jobs.

Berkshire Hathaway is an Omaha-based conglomerate employing approximately 367,700 employees across a variety of industries including insurance, candy manufacturing, electric utilities, newspapers, fractional jet ownership, ice cream, bricks and furniture. Its longtime chairman, Buffett, said last year at his shareholder meeting that health-care costs were a bigger impediment to American competitiveness than taxes. As Buffet said “Medical costs — which are borne to a great extent by business — have gone from 5 percent to 17 percent” of the economy since 1960, “Our health costs have gone up incredibly and will go up a lot more.” The holding company is one of most valuable in the world in terms measured by market capitalization, were Berkshire Hathaway earned $24 billion in net profit in 2016 with more than $24 billion in cash on hand.

JPMorgan Chase is the largest bank in the country with more than $2 trillion in assets and what its chief executive, Jamie Dimon, calls a “fortress” balance sheet. It is unclear what specific expertise the bank will bring to the effort, but the company has a lot at stake in reining in health-care spending. The company last year spent $1.25 billion on medical benefits for 300,000 U.S. employees and family members. With powerful business head Dimon emerged as one of the most vocal and visible chief executive pushing for the changes to the corporate tax code last year. Though he has not spoken as often or as forcefully about the problems in the health-care system remark it only briefly in annual letter to shareholders last April “Our nation’s healthcare costs are essentially twice as much per person vs. most other developed nations,” Dimon said.

It said that the independent company which would be jointly led by executives from all three companies, although a chief executive has not yet been announced. It will be free from the need to deliver a profit. Todd Combs, an investment officer of Berkshire Hathaway, Marvelle Sullivan Berchtold, a managing director of JPMorgan Chase and Beth Galetti, a senior vice president at Amazon will manage the company in its early stages. Benjamin Gomes-Casseres, a professor of strategy at Brandeis University International Business School said “They are all companies who know well about profit. Their expertise is managing profit in their core operations. If it does what they want to do, which is lower health care costs for employees that goes to their bottom line— lowering the health-care costs of employees lowers the cost of employment”.

Whether and how that will benefit employees directly — and whether solutions the company develops will scale and be a model that could be used by other employers — remains uncertain, he said.

But Bezos relayed statement that “The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty, “Hard as it might be, reducing healthcare’s burden on the economy while improving outcomes for employees and their families would be worth the effort. Success is going to require talented experts, a beginner’s mind, and a long-term orientation” as per American media reports.