Bezos and Buffet just launched a nonprofit company that may revolutionize US healthcare

- Januari 30, 2018

During his State of the Union address tonight President Trump will trumpet his achievements during the past year, but many Americans might prefer to hear about something that hits home for them, which is one of his biggest failures – his repeated campaign promises to lower the cost of prescription medicines.

Trump will certainly crow about the huge rise in the stock market since he took office, but is unlikely to mention that yesterday and today the market fell sharply in the wake of  an announcement yesterday by Amazon’s Jeff Bezos, Berkshire Hathaway’s Warren Buffet and JP Morgan Chase’s Jamie Dimon that they launching a new company “free from profit-making incentives”  to do what Trump has failed to do – bring down the high care of health care in America. 

“The deal suggested that the ‘Amazon effect’ – the impact of deep pockets and massive online scale the company brings to its efforts –  could begin to assert an impact on health care and insurance industries, the way it has on retail, shipping and other markets,{” reported Investors Business Daily. 

“If this winds up being the low-cost provider to make insurance more affordable at the employer level, it could wind up being a real disruptive competitor to an industry that has not seen any new players in years/decades,” Jefferies & Co. stock market analyst Jared Holtz told CNBC. 

That news sent the publically traded share of the hugely profitable healthcare companies into a tailspin – including drugmakers like Pfizer and Aetna, insurance companies, wholesalers, and drug store chains including industry giants UnitedHealth Group, Anthem and Cigna, all down sharply in trading yesterday and today.

The shares of the big drug chains CVS, Walgreens, and RiteAid also fell about 5 percent each. Benefit managers also fell, including Express Scripts, down 9 percent.

The new independent company will start by servicing the hundreds of thousands of employees of the three companies providing backing – which will provide them with a large scale test – but there were few details in the announcement.

The only details were that it would take advantage of new technology to lower costs (Amazon’s specialty), provide insurance reforms (Berkshire Hathaway’s area of expertise) and look for ways to be more efficient.

“The ballooning costs of health care act as a hungry tapeworm on the American economy,” Buffett said in a joint statement. “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.”

During the 2016 campaign, Trump talked tough about standing up to big pharmaceutical companies and their well-heeled and powerful lobbyists. In his December 2016 Time Magazine Person Of The Year interview, the then-president-elect again promised to “bring down drug prices,” adding, “I don’t like what has happened with drug prices.”

Trump promised to authorize negotiations between the government and the drug companies to get a discount for Medicaid and Medicare patients, addressing the terrible burden many seniors feel even with they have some insurance.

Other countries have done that for years but in the U.S. the lobbyists call the shots.

The U.S. has the highest cost per person for drugs on an annual basis of any major country, according to Vox. The average American spends about $1,100 per year on drugs, while a Canadian with national health care pays $800, in the U.K. it is about $500, and in Denmark about $400 per person.

After all his fake news promises during the campaign, Trump met with the CEOs of the big healthcare companies in January 2017 and came away sounding like one of their lobbyists.

“Coming out of that meeting,” reports Vox, “Trump was using language that sounded much more familiar – and much more comfortable – to drug companies. He was talking about increasing competition and lightening the regulatory burden to get drugs approved.”

“Trump’s campaign pledge to have Medicare directly negotiate drug prices never seriously resurfaced after that meeting,” added Vox. “A promised executive order on drug prices never materialized; Politico reported in June that a list of the possible policy changes that had been pulled together “included policies that read like gifts to the drug industry.”

If there was any question that Trump was never going to seriously address the problem that is a huge burden on workers, employers, seniors, and others, it was put to rest when Trump tapped Scott Gottlieb, a former drug industry executive, to head the Food and Drug Administration.

After Gottlieb was forced out in yet another charter air travel scandal, Trump appointed Alex Azar, who headed U.S. operations for Lilly when they were jacking up drug prices. Of course, Trump promised Azar would bring drug prices down – which truly is fake news.

Bezos and Buffett both bring reputations not only for being successful change-artists to the industries that they have touched – even if at times it cost thousands of jobs – but also have shown a willingness to take a long-term approach, which is what this will take.

The nature of drugs is that one company gets a patent and then has years when they can charge exorbitant prices, saying the huge profits are necessary to cover the cost of research. There is always some room for negotiations but it will be by inches, not miles.

Some are calling the announcement yesterday an economic “Black Swan event,” referring to a phrase coined by finance professor and former Wall St. trader Nicholas Taleb in his book “The Black Swan.”

It refers to something which occurs that is far different than what would normally be expected of a situation and that would be very difficult to predict.

“I’m not going to call this a black swan event yet because there are few details and it would be making too many assumptions,” said Jeffries Holz, “but it has potential to be.”

No matter how much Trump boasts in his speech tonight – and he will – it is clear he is not going to be the one who helps the sick, the elderly and the working man who pays for health insurance, so it is up to efforts like the one Bezos, Buffett and Dimond are leading that could be a black swan which we can all ride on. 

Until then, lowering the cost of health care is just another lie by Trump and another of his huge failures, showing that his populist rhetoric is a cover-up while he enriches the rich and the big companies who back the Republicans with billions.


The post Bezos and Buffet just launched a nonprofit company that may revolutionize US healthcare appeared first on Washington Press.


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