This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2018/02/02/opinion/healthcare-berkshire-amazon-chase.html

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
A Good Health Care Deal, but Only for Some A Good Health Care Deal, but Only for Some
(about 2 hours later)
Here’s the good news about the announcement this week that Amazon, Berkshire Hathaway and JPMorgan Chase are forming a new company to cover health care for their employees: If you’re one of the million-plus people who work at these companies, or a family member, you’re likely to get cheaper, better health care pretty soon. Here’s the good news about the announcement this week that Amazon, Berkshire Hathaway and JPMorgan Chase are forming a new company to cover health care for their employees: If you’re one of the million-plus people who work at these companies, or a family member of one, you’re likely to get cheaper, better health care pretty soon.
Here’s the bad news: If you’re one of the other, approximately 300 million Americans, you might not see savings for a long time, if ever. And in the short term at least, you could be more vulnerable to bigger medical bills. Here’s the bad news: If you’re one of the approximately 300 million other Americans, you might not see savings for a long time, if ever. And in the short term at least, you could be hit by bigger medical bills.
Together, these three brand-name behemoths will be able to wrest great deals and discounts in their negotiations from hospital systems, drug manufacturers, medical device makers and doctors’ groups, among other sectors of the health care industry. These are likely to be better deals than what lesser companies can wrangle. Together, these three behemoth corporations will be able to wrest great deals and discounts in their negotiations from hospital systems, drug manufacturers, medical device makers and doctors’ groups. These are likely to be better deals than what lesser companies can wrangle.
A consolidating health care industry has become a land of giants. Health care systems have gobbled up smaller hospitals at a record pace, and now many places have just one monopoly provider. In the device industry, there have been two major mergers and acquisitions in the past seven years, leaving only four companies that supply virtually all of America’s hip and knee replacements. There are also just a handful of health insurers in the United States, compared with more than 100 in Germany. The health care industry has become a land of giants. Health care systems are gobbling up smaller hospitals at a record pace, and now many places have a monopoly provider. In the device industry, there have been two major mergers and acquisitions in the past seven years, leaving only four companies that supply virtually all of America’s hip and knee replacements. There are also just a handful of health insurers in the United States, compared with more than 100 in Germany.
Now, with Warren E. Buffett, Jeff Bezos and Jamie Dimon forming a new health care company, employers will have an intimidating proxy warrior in their battles over the $3 trillion United States health care market. Now, with Warren Buffett, Jeff Bezos and Jamie Dimon forming a new health care company, employers will have an intimidating proxy warrior in their battles over the $3 trillion United States health care market.
Medicare, by law, is not allowed to negotiate discounts on drug prices. But you can bet Amazon-JPMorgan-Berkshire will. Millions of American companies do not have the power, knowledge or data to drive down prices charged by labs or hospitals. But this newly formed company most likely will. Medicare, by law, is not allowed to negotiate discounts on drug prices. But you can bet Amazon-JPMorgan-Berkshire will. Millions of American companies do not have the power, knowledge or data to drive down prices charged by labs or hospitals. But this new company most likely will.
Recent history shows that when the medical system loses income from one sector (in this case, three huge corporations), it is agile at making up for it in another. As the Goliaths wrestle over how much they should pay or be paid, the Davids — small companies, individuals who purchase their own insurance and the uninsured — are often left footing the bill. Recent history shows that when the medical system loses income from one sector (in this case, three huge corporations), it is adept at making up for it in another. As the Goliaths wrestle over how much they should pay or be paid, the Davids — small companies, individuals who purchase their own insurance and the uninsured — are often left footing the bill.
Those astronomical bills? The $5,000 MRI scan. The $100,000 for knee replacement surgery. Hospital systems argue that they have to charge such prices because government insurers — Medicare and Medicaid — don’t pay enough to cover their costs. Medicare disputes that. And “covering their costs” is a fungible calculation that can include multimillion-dollar executive salaries. Those bills can be astronomical, like $5,000 for an M.R.I. scan or $100,000 for knee replacement surgery. Hospital systems argue that they have to charge such prices because government insurers — Medicare and Medicaid — don’t pay enough to cover their costs. Medicare disputes that. And “covering their costs” is a fungible calculation that can include multimillion-dollar executive salaries.
Commercial insurers negotiate down from those high prices. But while good negotiators can get great deals, others will miss out. And the uninsured often get bills — and collection notices — asking them to pay the highest prices of all.Commercial insurers negotiate down from those high prices. But while good negotiators can get great deals, others will miss out. And the uninsured often get bills — and collection notices — asking them to pay the highest prices of all.
Some big companies have made efforts to curb prices, with some effect. Safeway has deployed a technique called “reference pricing,” in which it calculates a price sufficient to pay for a high-quality lab test and radiology test. Employees must select a provider that comes in under that bar or pay the difference. Providers are incentivized to drop prices for this big pool of employees. Doing so, the company saved $2.6 million on lab tests over three years. Some big companies have made efforts to curb prices, with some effect. The supermarket chain Safeway has deployed a technique called “reference pricing,” in which it calculates a price sufficient to pay for a high-quality lab test and radiology test. Employees must select a provider that comes in under that bar or pay the difference. Providers have an incentive to drop prices for this big pool of employees. With reference pricing, Safeway saved $2.6 million on lab tests over three years.
Boeing also contracts directly with health systems in Washington and California for some employee care, bypassing insurers. But neither company is likely to have the fearsome arm-twisting clout of this new conglomerate. Boeing also contracts directly with health systems in Washington and California for some employee care, bypassing insurers. But neither Boeing nor Safeway is likely to have the fearsome arm-twisting clout of this new conglomerate.
The pharmaceutical industry knows it will need Amazon to deliver drugs. Hospitals might want Chase to finance equipment purchases and the like. And who will dare alienate Warren Buffett, who has called health care costs “a hungry tapeworm on the American economy.” The three titans are also likely to insist that the best hospitals — the Sloan Ketterings and Cleveland Clinics — be available to their workers. The pharmaceutical industry knows it will need Amazon to deliver drugs. Hospitals might want Chase to finance equipment purchases. And who would dare alienate Warren Buffett, who has called health care costs “a hungry tapeworm on the American economy”? The three titans are also likely to insist that the best hospitals — the Sloan Ketterings and Cleveland Clinics — be available to their workers.
Yes, they may deploy technology in smarter ways to benefit patients. This might include home monitoring of heart rhythms and blood sugar; diagnosing via telemedicine and iPad; delivering prescription medicines to doorsteps; and bringing medicine into the 21st century with online billing and payment. They may also be able to provide patients some degree of pricing transparency so that employees can make better choice. Yes, they may use technology in smarter ways to benefit patients. This might include home monitoring of heart rhythms and blood sugar; diagnosing via telemedicine and iPad; delivering prescription medicines to doorsteps; and bringing medicine into the 21st century with online billing and payment. They may also be able to provide employees some degree of pricing transparency so that they can make better choices.
In doing so they will probably be able to reduce some of the high administrative costs associated with our health care system, an estimated 25 percent of hospital spending, and give patients more control of their care. In doing so they will probably be able to reduce the high administrative costs associated with our health care system, an estimated 25 percent of hospital spending, and give patients more control of their care.
But how can the rest of us get in on the deal? If the new company permits other companies or individuals to buy into whatever they create, that could spark a revolution. They would, essentially, become a novel insurer — although one that is cheaper, more efficient and patient-friendly. And that could be good for the entire health care system. How can the rest of us get in on the deal? If the new health care company permits outside firms and individuals to buy into whatever they create, that could set off a revolution. That new company would, essentially, become a novel insurer — although one that is cheaper, more efficient and patient-friendly. And that could be good for the entire health care system.
But what if the three corporations try to turn their health care company into a profit center? This week’s announcement said the new company is “free from profit-making incentives and constraints.” That doesn’t quit say “nonprofit.” If the long-term game plan of the Amazon-JPMorgan-Berkshire offshoot is to function as a business that is sold to the rest of us to please shareholders, then we are vulnerable to ending up pretty much back where we started. And that is not where we want to be. But what if the three corporations try to turn their health care company into a profit center? This week’s announcement said the new company is “free from profit-making incentives and constraints.” That doesn’t quite say “nonprofit.” If the long-term game plan of the Amazon-JPMorgan-Berkshire offshoot is to function as a business that is sold to the rest of us to please shareholders, then we may end up pretty much back where we started. And that is not where we want to be.