The announcement by Amazon's Jeff Bezos, Berkshire Hathaway's Warren Buffett and JPMorgan Chase's Jamie Dimon, about a new health care company they were forming to address rising health care costs, enraged some health insurance companies. Some of these insurers were clients of JPMorgan Chase so Dimon assured them that only employees of the three companies would benefit. But Dimon recently admitted feeling annoyed by the response of the health care companies. He expected "a lot of these people we already do business with to call us up and say, ‘What can we do to help?" He expected a partnership.

So far the public response from big health insurance company CEOs has been diplomatic. Cigna CEO, David Cordani, stated in multiple interviews with the financial press that he sees the venture as "an opportunity." Aetna's CEO, Mark Bertolini, also to the financial press, said, “There is an unmet consumer need in health care." And UnitedHealthcare CEO, David Wichmann, said, "We invite innovation in health care." But Wichmann also said, "Our goal is to help people and make the health system work better for everyone. If Amazon can contribute to that, they should bring it." This refreshingly honest statement from Wichmann and his singling out of Amazon, implies that at least one big insurer considers the new company to be a competitor. But it is the sentiment expressed by outgoing CareFirst BCBS CEO, Chet Burrell, when he said, "What exactly are they going to do differently?" that is mostly likely what the big insurers are all thinking.

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How long did health insurers think they could hand-deliver products that cut costs by shifting it to employers and their employees? Large employers were early adopters of skin-in-the game cost-cutting strategies like PPO and HDHP plans and know the limits of these schemes. Now, these employers want to see lower health care prices, which means health care insurers have to step up their game. To lower health care prices for their employer groups, insurance companies have to get greater price discounts from hospitals, doctors and pharmacy benefit managers, not just focus on employee behavior. Continue Reading...

Tags: Amazon, Jeff Bezos, Berkshire Hathaway, Warren Buffett, JPMorgan Chase, Jamie Dimon, health care