(CNN Money) — Can Jeff Bezos, Warren Buffett and Jamie Dimon fix health care?
Amazon is partnering with Buffett’s Berkshire Hathaway and JPMorgan Chase, the nation’s largest bank, to get into the health insurance business.
The three companies unveiled a yet unnamed company to provide their U.S. workers and families with a better option on health care. The statement said the new company will be “free from profit-making incentives and constraints.”
As of a year ago the three companies had 840,000 global employees between them, though they did not breakdown how many of those are in the U.S. As of now the companies are concentrating on a product for their own employees and family members, not a product to offer to other companies.
“The ballooning costs of health care act as a hungry tapeworm on the American economy,” said Buffett. “We share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes.”
The three leaders of the companies – Buffett, Amazon founder Bezos, and JPMorgan Chase CEO Dimon, are all friends who have talked for years about the problems involved with providing health care to their employees, especially those based in the U.S., according to an executive familiar with their discussions.
“It wasn’t they saw each other one place and a light bulb went off,” said the executive. “These guys talk all the time. It’s the result of a lot of talk they’ve had both formally and informally over the years – ‘No one has to deal with buying a product like this other than health care.'”
The joint effort will look to find a more efficient and transparent way to provide health care services to their employees and families, the companies said.
“The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” said Bezos. “Hard as it might be, reducing healthcare’s burden on the economy while improving outcomes for employees and their families would be worth the effort.”
Even with the companies saying that they’re aimed at providing the service for only their employees at this time, Amazon’s reputation of disrupting the markets it enters helped to shake up investors in the health care sector.
Shares of established health insurers such as UnitedHealth, Anthem, Aetna and Cigna opened sharply lower Tuesday following the announcement, as did shares of Humana, a hospital operator, drugstore retailers CVS and Walgreens and prescription service Express Script. Shares of Amazon opened slightly lower, while JPMorgan and Berkshire Hathaway were unchanged.
The companies said their efforts are only at an early stage. While each named one executive to work on the effort, they have yet to decide on a longer-term management team, a headquarters location or other operational details.hile improving outcomes for employees and their families would be worth the effort.”
One of the executives name to the effort – Todd Combs, an investment officer of Berkshire Hathaway, also serves on the board of JPMorgan Chase.
“The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans,” said Dimon.
Berkshire Hathaway, which owns the auto insurer Geico, is a major player in the insurance and re-insurance business but it hasn’t offered health insurance.
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