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Amazon Health

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Re: Amazon Health

#31

Post by Thriptic »

padobson wrote: post #21
Thriptic wrote: post #17

Earlier quoted context omitted.

One avenue this entity could take is to offer itself as a non-profit third party administrator of a self-funded plan for other companies. Large companies typically put up the money for health insurance anyway combined with employee premiums and then pay a TPA company or health insurer to create the benefit plan and administer it for them. They don't actually buy insurance as a product from a health insurer for their…

you need to strike business agreements with literally countless small practices, hospital systems, lab service providers, drug companies, outpatient clinics, etc. This is why the aggregator model described in the article is relevant - the small practices will come to Amazon to plug into their aggregator and access their customers. In that scenario, Amazon opens up shop in a state, provides cookie cutter TOS agreement…

Totally dependent on the locale. If I recall correctly there are coverage laws in certain places which state that you cannot do business as an insurer in an area unless you provide physician and hospital access to people within a certain proximity. If you're a big hospital system or even a small place without much competition, you can tell Amazon to shove their TOS because they literally can't do business legally there without you.

Re: Amazon Health

#33

Post by aaavl2821 »

cosmie wrote: post #24
aaavl2821 wrote: post #12

Earlier quoted context omitted.

Many not for profit providers in the US are actually quite profitable, and insurance companies, even for profit ones, have regulations regarding their profit taking (they must pay out like 85% of premiums they receive to cover medical expenses). So while not having a profit mandate can certainly help Amazon / brk/ JPM, scale and negotiating leverage are probably bigger drivers Interesting point re increasing costs fo…

The cycle you mentioned is certainly a vicious one. But you missed another: their cap on profit is percentage based. This disincentivizes the insurer from truly attempting to contain costs, because while the percentage of income they can take as profit is capped, the absolute value is not. This leads to underinvestment in attempting to contain costs except to the level that they can retain as overhead and a cycle of…

That's interesting, hadn't heard that before. The combination of Amazon et als buying power could potentially drive out some of that inefficiency as they negotiate lower premiums and payers lower prices by cutting some of the "fluff"

Re: Amazon Health

#34

Post by perseusprime11 »

I look at this as a first step towards understanding the complexity of Healthcare in US with the goal to ultimately make health care more affordable to them and their employees. This may end up being nothing which is why the tone in the announcement was a bit on the “let’s see what happens”. This could also be a cool move by Bezo to bolster up his image as lately the media is hyper focused on tech companies.

Re: Amazon Health

#35

Post by pinot »

aaavl2821 wrote: post #5

The article makes the point that the companies have complementary business competencies that could help them deliver a better healthcare experience (tech, logistics and customer service at amazon; reinsurance at berkshire; capital at JPM), but there is another advantage to these three companies working together: scale. amazon and berkshire are in the top 10 employers, and JPM is in the top 25. while most of the talk…

Isn't this basically how Kaiser got started?

Re: Amazon Health

#36

Post by gowld »

watertom wrote: post #26

I think these 3 will no longer provide health insurance for their employees, they are going to create a new more affordable framework and they will allow any other large company to participate. The goal will be keep the cost of insurance the same for the employees, while eliminating the cost for the companies entirely, which is why this will take off. It’s crazy to have employers paying for healthcare, this I believe…

How will they move the payments from employers to employees? The insurance model and the tax treatment of benefits haven't changed.

Re: Amazon Health

#37

Post by gowld »

dv_dt wrote: post #23
adrianmonk wrote: post #16

Earlier quoted context omitted.

The article actually touched on scale when it talked about risk pooling. Its argument was that the three together are not big enough to have the same kinds of economies of scale as big health insurers, but I'm not sure I think it'll be a problem like they suggest. If the 3 are going to do their own insurance, all that has to happen is that the gains of cutting out a for-profit middleman need to exceed the losses of r…

The odd disconnect with the pooling notes in the article is that it seems like all the other insurers seem to delight in creating mini single business pools even though the mega insurers themselves have plenty of customers to create single large pools (and win a nice administrative simplification). None of the large insurers also seem effective in price controlling via pooling drug purchases of their customers either…

> other insurers seem to delight in creating mini single business pools

How so? How could they create a large pool? They can't force individuals to choose their company.

> None of the large insurers also seem effective in price controlling via pooling drug purchases of their customers either

How do you know what your insurance is paying vs what individuals pay?

Re: Amazon Health

#38

Post by gowld »

rezashirazian wrote: post #7
aaavl2821 wrote: post #5

The article makes the point that the companies have complementary business competencies that could help them deliver a better healthcare experience (tech, logistics and customer service at amazon; reinsurance at berkshire; capital at JPM), but there is another advantage to these three companies working together: scale. amazon and berkshire are in the top 10 employers, and JPM is in the top 25. while most of the talk…

If these companies get together and create a not for profit, how can for-profit providers even begin to negotiate with them. Also given the scale of these companies, wouldn't this raise healthcare costs for all others who don't work for one of them?

"Not-for-profit" simply means than profits pass through to management employees (who would otherwise be owners if it were for-profit) and supporting members (like the NFL). It says very little about overall revenue-vs-costs

Re: Amazon Health

#39

Post by yeukhon »

ihsw2 wrote: post #29
perseusprime11 wrote: post #27

Earlier quoted context omitted.

Interesting idea. Do you know what is the current overhead for Amazon in terms of $$$?

It's about $19K for employer-provided family-coverage. Considering the three companies have about 1M stuff in total, that represents ~$20B in annual recurring costs. This effort combined with accelerating automation will lead to a much better capital:labor cost ratio (and, depending on who you ask, reduction in labor costs is massively bad for wealth equality).

Do you have a source backing on $19K?

Re: Amazon Health

#40

Post by simonebrunozzi »

ihsw2 wrote: post #29
perseusprime11 wrote: post #27

Earlier quoted context omitted.

Interesting idea. Do you know what is the current overhead for Amazon in terms of $$$?

It's about $19K for employer-provided family-coverage. Considering the three companies have about 1M stuff in total, that represents ~$20B in annual recurring costs. This effort combined with accelerating automation will lead to a much better capital:labor cost ratio (and, depending on who you ask, reduction in labor costs is massively bad for wealth equality).

I guess you meant "staff", not "stuff".

BTW, I think that the 19k/year is not representative of very large companies, which usually negotiate better terms. Still, your point stands.

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