JPMorgan, Amazon, and Berkshire Team Up on Health Care

[Guest]

Jamie Dimon, Jeff Bezos, and Warren Buffett. None are certified doctors, but together they’ll give Gregory House a run for his money: JPMorgan (-0.94%), Amazon (+1.42%), and Berkshire Hathaway (-0.15%) are in the beginning stages of creating a new company to offer lower-cost health care to their hundreds of thousands of U.S. employees. An entity, they say, that will be “free from profit-making incentives and constraints.” 

The trio will leverage data and bargaining power to negotiate better costs across the health care ecosystem, offering a different, tech-focused model for health care in the U.S.

Because as Warren Buffett elegantly puts it, “The ballooning costs of health care act as a hungry tapeworm on the American economy.”

And why does Buffett believe health care reform is good for the economy, while bashing large tax cuts—a measure backed by most corporate titans? As he sees it, health care costs, not taxes, are the No. 1 ailment hurting U.S. businesses. 

While corporate taxes only represent 2% of GDP—down from 4% in 1960—health care costs have risen from 5% to 18% over the same period. 

And the U.S. spends far more on health care compared to other powerful countries: 

• China—5.5% of GDP
• Japan—10.2%
• UK—9.9% 

So what does this announcement mean for other health care providers?

More or less what you’d expect. CVS, Cigna, and Anthem all watched shares drop in early trading. It might not be a long dip, but it’s a telling one. Aka, traditional health care isn’t safe. 

CVS already made a blockbuster $69 billion acquisition of insurer Aetna to better prepare itself for Amazon’s entry into pharma, while other health care providers across the board are flirting with fusion. 

Because they (and investors) know health care is changing fast...just consider the tech and resources a group like JPMorgan, Amazon, and Berkshire bring to the table.

That, and we hear Buffett has a warm bedside manner.

http://morningbrew.cmail20.com/t/j-l-bltojd-yhyuhjkhdk-m/

[admin]

Berkshire, Amazon, and JPMorgan Announce CEO for Healthcare Initiative

In January, the real Avengers (Warren Buffett, Jeff Bezos, and Jamie Dimon) slapped on their skin-tight spandex and promised to take down the rising cost of healthcare in America. What's the plan? Offer a better health insurance program for their U.S. employees, built from the ground up and "free from profit-making incentives." The details of what that'll look like are still foggy, but one thing's clear: re-imagining healthcare (with its sky-high drug prices and misaligned incentives) is a task for no ordinary CEO. Which is why the Avengers just announced their Super CEO: Dr. Atul Gawande  Dr. Gawande is everything we're not: A general and endocrine surgeon, professor at Harvard Medical School, staff writer for the New Yorker, author of four books (including the best-selling The Checklist Manifesto), and director at the World Health Organization. Besides having little business experience, Dr. Gawande seems to fit the bill to lead this long-term initiative—he's often highlighted the unnecessary rise of healthcare costs in his work. In one New Yorker piece, he wrote: "In just a single year, the researchers reported, twenty-five to forty-two per cent of Medicare patients received at least one of the twenty-six useless tests and treatments." A 2010 study showed "waste accounted for thirty per cent of health-care spending." He even called out his own clinic for unnecessary spending. Not the hero we want, the hero we need Here's the deal with misaligned healthcare incentives: Now that more people have insurance under the ACA, there are more doctor visits. The docs can order more tests and treatments because they make more money and insurance will cover the costs. Insurance providers don't care, because they just raise the premium families pay. And the cycle goes on...and on... The average yearly premium for a single worker in 2000: $2,500. The average in 2017: $6,700.  The only question that matters: Can Amazon, Berkshire, JPMorgan, and Dr. Gawande (a world-renowned thought leader in the healthcare space) finally break the cycle?

[Money & Finance]

Warren Buffett's Berkshire Hathaway (-0.87%) added more than 35 million shares of JPMorgan (+1.56% after hours) to its portfolio last quarter.