Amazon, Warren Buffett and JPMorgan Chase are forming a new company to address the health care costs of their employees, sending shares of health care companies down sharply across the entire sector despite the vague nature of the announcement.
Amazon’s Jeff Bezos said that he, along with Buffett and JPMorgan Chase, would attempt to make health care better for hundreds of thousands of their employees, and perhaps, eventually, the country.
There were few details, and those involved said the project is in the early planning stage.
“The ballooning costs of [health care] act as a hungry tapeworm on the American economy,” said Buffett, the head of Berkshire Hathaway, in a prepared statement. “Our group does not come to this problem with answers. But we also do not accept it as inevitable.”
The new company will be independent and “free from profit-making incentives and constraints.” The businesses said the new venture’s initial focus would be on technology that provides “simplified, high-quality and transparent” care.
The potential disruption from three renowned innovators in technology and finance sent a shock wave through the health care sector, erasing tens of billions in market capitalization in seconds.
Almost all companies in the health field were in retreat after the announcement, leading the entire market downward.
The need for a solution to the health care crisis in the U.S. is intense. With about 151 million nonelderly people, employer-sponsored coverage is the largest part of the U.S. health insurance market.
Health care costs for companies routinely rise faster than inflation and eat up bigger portions of their budgets.