If Jeff Bezos and Warren Buffett lift the veil on health prices, insurers are in trouble

“News that Jeff Bezos’ Amazon and Warren Buffett’s Berkshire Hathaway are forming their own healthcare company with JPMorgan Chase to increase transparency for their employees could be bad news for insurers and pharmacy benefit managers,” Bruce Japsen writes for Forbes. “Health insurance companies and PBMs have long said they want to bring more transparency to the U.S. healthcare system, yet consumers often don’t know the true cost of healthcare. Prices are negotiated in secret and doctors don’t often know what their own services cost or what their patients will be charged.”

“Details of the new company Amazon, Berkshire and JPMorgan want to create remain sketchy, but the idea that they want to bring more transparency is one of the disclosed goals. ‘Our people want transparency, knowledge and control when it comes to managing their healthcare,’ said Jamie Dimon, Chairman and CEO of JPMorgan Chase,” Japsen writes. “‘Resistance to transparency in healthcare remains high,’ says Network for Regional Healthcare Improvement CEO Elizabeth Mitchell, who welcomes Amazon, Berkshire and JPMorgan’s new company. ‘Employers who pay for this care still don’t have insight into the relative value of what they are buying. They are looking for a way to have assurance that they are paying a fair price for a high quality service.'”

“The Network for Regional Healthcare Improvement has long said any health reform effort needs to look closely at transparency because data that reveals the total and true cost of care is difficult to find. In a report last year, NRHI said health spending by U.S. commercial insurers can vary by $1,000 or more per year per patient, depending on where enrollees live,” Japsen writes. “Shares of health insurers like Aetna, Anthem and UnitedHealth Group lost 5% to 10% of their value while pharmacy chains CVS Health, Walgreens Boots Alliance and drug makers with expensive medicines like Abbvie also took a hit on Wall Street. And the big PBM, Express Scripts, also lost more than 2% of its value Tuesday.”

Read more in the full article here.

MacDailyNews Take: Yup. ‘Bout time, too!

Obviously the health insurance system in the United States of America is FUBAR and an unspeakably massive drag on the economy overall.

The basic problem is that the prices of healthcare are not defined. They are elastic. What else do you buy without seeing the price upfront? Without knowing the hourly rate upfront? Or the cost of typical procedures? You go to a garage and it says on a board the labor cost per hour. It shows the cost of an oil change, brake services, a tune-up, etc. You go into Target and the price is on the product. You can compare that price with Amazon’s and Walfart’s and then decide where to buy. Not so with medical services, tests, and procedures.

Ever wonder why a new doctor asks what your insurance plan is upfront? It’s not just to determine that you have insurance, it also determines how much you’ll pay. The prices change based on the insurance company/plan. Ever wonder why, when you have “good insurance,” the doctor’s office seems excited to hear it? Or how well you’re treated over others with lesser (read: less profitable) insurance companies/plans? They want to keep you happy. You’re a high-value patient. If you’ve ever gone from crappy insurance to good insurance or vice versa, you know what we mean.

Until the medical costs are displayed upfront and everybody is charged that rate, regardless of their plan, this mess will continue. You can’t have real competition that drives down costs until the actual costs are clearly known by all parties and uniform per person regardless of their insurance or even lack thereof.MacDailyNews, March 7, 2017

25 Comments

  1. Go to a big city ER and look at the 0eople waiting. Try to guess how many have no insurance, and no ability to pay. The ER is their Doctor’s Office and the minimum charge will be $1,000. Any tests or imaging simply adds to that.

    Now face reality – that care will cost a lot on a national level and those costs will be sifted to higher fees, higher insurance premiums and no improvement in care.

    The only answer to stop Cost Shifting would be to go to a combination of private health insurance and universal care. The system I used was Australia where I traveled 5 times a year.

    Costs? While my US policy was $550 each (with no dental)
    for the wife and I the Aussie policy was $88 a month and included Dental. That’s right $88 for a better policy. Best of all there is universal care so if you do not want to pay for private insurance you are still covered. There is no Cost Shifting which avoids the US snake pit of uncontrolled costs.

    And Australia is rated higher than the US in terms of outcomes.

  2. “This is not to bash the US health system…”

    Why not? It remains disgusting that the richest country in the world is WAY down the scale on the quality and effectiveness of its “health” care system.

  3. The brutal reality is that all citizens with money pay for healthcare or sick care (however you define it). All citizens with money pay for the poor who can’t pay for it themselves. All citizens with money pay for it because of fraud, waste, and incompetence in the system. The big question is if you want to go to a single payer system what happens to the insurance companies, private providers, etc? A single payer system would likely be less expensive, but at the cost of hundreds of thousands of current workers. You want the federal government to manage a single payer system? Go look at the VA, Indian Health Service, and Bureau of Prisons.

  4. To visit the ER, it costs 70 times more than a regular doctor visit. One night stay in ER is $3000. The bulk of unpaid ER visits is to the homeless. It’s cheaper and healthier for hospitals to rent a room for one month and give the homeless room and board than one night in ER.

    If you don’t like the sound of giving homeless freebies, then the cost of medical care has to come down, substantially.

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