W^H? The Holmes Murphy Blog

  • Alexa, Can You Solve Healthcare?

    The health insurance world quaked last week from a vague announcement from Amazon, Berkshire Hathaway, and JP Morgan Chase. The announcement basically said the current health insurance system doesn’t work for them and they were coming together to form a non-profit entity to fix their healthcare cost problems. Within hours, the health insurance industry stocks dropped by about 5 percent.

    For purposes of this blog, I will refer to the proposed entity as ABC Health for Amazon, Berkshire, and Chase. ABC Health didn’t announce they were going to compete against other major insurers, they were entering the Obamacare exchanges, or they would offer a Medicare Advantage option. They simply said they were going to try to solve the problems for their own employees.

    So why the immediate market reaction? One word…hope! Even without detail, ABC Health is causing a stir because it provides a dim ray of hope for a market-based alternative that could shake the perceived cost collusion between the government, big insurance, big pharma, and big hospitals. The primary healthcare purchasers (that’s businesses and their employees) feel the system works for these other stakeholders but is unfairly stacked against them. Americans don’t believe the current high-cost system is sustainable.

    Politicians on both sides are trying to tap into the angst. Republicans campaigned against the Affordable Care Act, but haven’t been able to bring forth any meaningful alternatives. Democrats are gaining support for Bernie Sanders’ Medicare for All approach. Politically, both sides know the current system doesn’t work and will campaign against status quo. ABC Health potentially provides a market-based solution to what has become a political problem.

    So why these three?  

    • Amazon brings unrivaled distribution capability and web-based shopping with cost and quality transparency. Think of Amazon automatically delivering your prescription to your house after you leave the doctor’s office. Think of setting a doctor’s appointment with known cost and quality rankings via One-Click Ordering.
    • Berkshire Hathaway is an insurance giant. They own GEICO, among many other insurance holdings. They understand risk and how to make insurance marketable at a consumer level. Are you going to someday buy your auto insurance and health insurance from a lizard? Maybe!
    • JP Morgan Chase brings credit and transaction capability. What if your insurance card doubled as a credit card for healthcare expenses? What if the funding of your medical bills was as simple as any other credit card transaction? What if you could view your monthly statement online?

    These three entities provide the necessary business skills to transact healthcare financing in a new way. Healthcare financing is ripe for disruption, and this entity could be the best option as a market-based disruptor.

    Will ABC Health take over all health insurance before next year’s renewal? Will they provide universal access to affordable health coverage for all Americans? Will they hold off a government takeover of the entire system? Will they cure cancer? The bar is set very high for an entity that was only launched in a very short press release. So, while Alexa is great at turning on your favorite tune or finding that perfect quiche recipe, it’s clear she’s going to need some help when it comes to solving healthcare. Can the three do it together? Time will tell. The thing is, though, the market enthusiasm shows there’s hope and that’s always a good thing!

    Published on: 02.05.18

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