Updated at 11:17 a.m. ET
Health care costs are “a hungry tapeworm on the American economy,” Berkshire Hathaway Chairman and CEO Warren Buffett says, and now his firm is teaming up with Amazon and JPMorgan Chase to create a new company with the goal of providing high-quality health care for their U.S. employees at a lower cost.
The new company will be “free from profit-making incentives and constraints” as it tries to find ways to cut costs and boost satisfaction with the health care plan for employees of Amazon, Berkshire Hathaway and JPMorgan Chase. The trio unveiled their new venture in a news release
“The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost,” the companies said.
The enterprise unites three of the largest and most envied companies in their respective sectors — from retail to banking, and including Berkshire’s wide portfolio of companies such as Geico and Fruit of the Loom. And in Buffett, Amazon’s Jeff Bezos and JPMorgan’s Jamie Dimon, the companies also have veteran leaders who have shown an ability to solve vexing business problems.
According to recent annual reports, taken together the three companies employ more than 950,000 people worldwide.
The three CEOs say they’re aware of the enormous challenges they face.
“The health care system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” said Jeff Bezos, Amazon founder and CEO. “Hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort.”
Responding to the announcement Tuesday morning, White House economic adviser Gary Cohn told CNBC “we agree in that philosophy. We think that individual workers should have to pay less for health care.”
Still, the Trump administration already “created association health-care plans, which is the exact same thing that those companies did,” Cohn said, referring to an executive order last October that sought to make it easier for employers to combine efforts in offering insurance. That order also opened the possibility some groups could get coverage across state lines — “a move that Republicans have long advocated as a way to lower costs,” NPR’s Scott Horsley explained at the time.
“Smaller businesses could pool their employees together to get more purchasing power,” Cohn added Tuesday, “so they could save money on health care.”
NPR’s Scott Hensley tells Morning Edition there is precedent for the case of a non-health care company wading into the health care business — “in fact, it has happened repeatedly.”
“One of the most prominent examples is what is now Kaiser Permanente, a big provider of health care in this country. It started with the Kaiser shipyards and providing, first, workers comp kind of care and, later, more integrated health care for employees,” Scott explains. “So it is possible.”
The particulars remain scarce at the moment, though. Details such as the company’s name, base of operations and long-term leadership weren’t included in a joint news release about the new company that was sent out Tuesday morning.
At the start, the new company will be led by executives from each of the troika of giant firms: Marvelle Sullivan Berchtold, a managing director of JPMorgan Chase; Todd Combs, an investment officer of Berkshire Hathaway; and Beth Galetti, a senior vice president at Amazon.
JPMorgan’s Dimon said, “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.”