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The news that Haven, the healthcare joint venture between Amazon (AMZN), Berkshire Hathaway (BRK-A, BRK-B) and JPMorgan (JPM), is going to dissolve next month has come as no surprise to many health experts. health.
The company that formed in January 2018 has driven healthcare stocks down in anticipation of a large-scale cost-cutting strategy, largely driven by belief in Amazon’s potential to disrupt another industry. But the disbandment proves what some opponents said up front: employers, regardless of their size, do not have enough leeway to put pressure on the system.
“Hospitals in the United States are paid a lot of money because of their market power, the employer-based health insurance model, consumer demand for a wide choice of providers and a fragmented system. Said Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy.
Another problem noted by experts is that Haven has never had a visible impact, although companies claim to have gained knowledge that can be applied in the longer term.
Haven’s failure is “not so much because employers or insurers never tried to contain costs. We still didn’t know what new added value Haven was bringing to the table, ”Adler told Yahoo Finance.
Larry Levitt, executive vice president of health policy at the Kaiser Family Foundation, said Haven was only the latest victim in an area of attempts to shoulder the costs of health care.
“Health care providers and insurers have tremendous influence in the market, and it’s hard to overcome when trying to control costs,” Levitt told Yahoo Finance.
Insurers have come up with plans with narrower option sets for health departments and health care providers to keep costs down, but for larger employers this translates into unattractive health benefits for health care providers. employee retention, Levitt said.
“These were three very powerful companies that seemed to have common goals of reducing healthcare costs, but these companies had their own individual ambitions and bureaucracies that Haven failed to break through,” he said. .
Adler also pointed out that while the bottom line benefit is an incentive, employee retention and the tax credits employers get for the benefits serve to maintain the status quo.
“It doesn’t surprise me that (Haven) failed,” Adler said.
Dr Howard Forman, a health policy expert at Yale University, told Yahoo Finance he was initially very confident that big employers like the three who formed Haven were being incentivized – with so much money at stake – to be able to impact change. But he also had doubts when Dr Atul Gawande, a famous speaker and thinker on health policy, was appointed CEO, largely because Gawande was not known as a manager, and a white paper qu ‘he submitted as a potential solution to the never-published problem.
“I no longer believe that employers can fill that void right now,” Forman said, indicating that government entities and innovation in the government space is likely to have more impact.
“Even though they don’t control the vast majority of (health care) dollars, they control the vast majority of profits,” Forman said, noting that the most profitable patients for health systems are those covered by the commercial insurers.
Medicare and Medicaid are generally less reimbursable, often covering less than the cost of the services. For this reason, commercial insurers are seen as the bridge to the income gap, and more. Employer-sponsored insurance remains the majority of coverage in the country.
But the federal government, both as a payer through Medicare and as the nation’s largest employer, could move the needle, Forman said.
I still hope that large and influential employers will become more involved in the fight against health care costs. But, as the failed Amazon-Berkshire-JPMorgan effort illustrates, political engagement may be more effective than trying to disrupt the healthcare system. https://t.co/2tMLgpXOWI
– Larry Levitt (@larry_levitt) January 4, 2021
Reality check
The Haven news comes amid the coronavirus pandemic, pressure from the Trump administration for greater transparency, and a new Congress and executive administration.
“Trump certainly deserves credit for breaking the deadlock” on pricing, KFF’s Levitt said, but it will be up to the new Biden administration, which has been in contact with Gawande, to bring about further changes.
It remains to be seen how the transparency of hospital prices could impact the healthcare sector. On the one hand, some say it will exert pressure like transparency in any other industry, while others say it could confuse consumers further.
“At the end of the day, what really matters is what the insurer pays and what the person’s co-pay and deductible is,” said Michael Maron, CEO of Holy Name Medical Center in New Jersey. .
That’s why experts say healthcare is still in urgent need of reform, but when and how it remains a question – even though the pandemic has served as a catalyst for dealing with change.
“We all know the health care system needs to be transformed,” Maron said. “The question is where and how, and how painful is it going to be?”
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