An announcement Tuesday morning that three of the richest, most powerful companies in the United States are launching a new effort to break the health insurance industry’s stranglehold on the economy was greeted with great excitement.
The new firm is the brainchild of Berkshire Hathaway tycoon Warren Buffett, JPMorgan CEO Jamie Dimon, and Amazon founder Jeff Bezos. Their goal is to break the age-old cycle of ever-rising health care costs in the United States, where people pay more to access health care but derive worse health outcomes than in many other countries.
It’s an age-old problem no company or policy has solved yet. The idea that three powerful, deep-pocketed companies are going to tackle it is understandably energizing.
But the effort is no vast sea-change to the heavily financialized way modern health insurance practices alter people’s relationship to their own bodies. The vague announcement says far more about how political and economic power has shifted in our new gilded age than it does about the future of medical care.
“The three companies, which bring their scale and complementary expertise to this long-term effort, will pursue this objective through an independent company that is free from profit-making incentives and constraints,” the trio’s press release said.
They’ll use “technology solutions” to deliver “simplified, high-quality and transparent healthcare at a reasonable cost.” Though the firm will start out serving only the three men’s companies, Dimon said the goal is to “create solutions that benefit our U.S. employees, their families and, potentially, all Americans.”
That is so vague a statement of purpose that it defies wonky analysis. It is impossible to make credible, specific predictions without knowing the ultimate shape of the blurry hydra the trio promise to summon. The new health care company could deliver positive if only marginal change for working-class families – the people who hustle for pennies in Bezos’ tidily exploitative warehouse empire – but none of them would be revolutionary.
Health insurance as legal gambling on human life
The sheer size of the firms involved provides the most obvious potential improvement over the status quo. With a combined market value measured in the trillions of dollars, the joint effort stands a good chance of bullying its way to better deals on prescription drug prices, for example. That would convey a raft of savings on basics like birth control or asthma medicine and on pricier, less common needs like cancer medicine.
The statement’s murky invocation of “technology solutions” invites similar guesswork. Under the current system, most individuals face an arduous bureaucratic process to find a specific doctor for an appointment that suits their schedule. If the new firm can de-clutter the sorting process that insurers offer to customers, that might make people happier with their health care overall.
But while brute-force negotiating power and vague “technology solutions” might disrupt the current price of medical care or streamline the navigation of the existing system, that is about all the change this proposed company can deliver. It will operate inside the same system people hate, working to bend the cost curve but not challenging the deeper policy assumptions underlying the market-based health care system Americans have been taught to accept.
No firm can change the fundamentally exploitative nature of a privately-managed, profit-driven health insurance economy by participating in it.
The private system of people buying limited coverage from an insurer to hedge against the risk of illness is deeply ingrained in U.S. society and economics. It is an ugly system. Companies are allowed and encouraged to treat the health and wellbeing of individual humans as a commodity to be traded for profit — amounting to human life being traded in a futures market, as leftist health economics wonk Tim Faust likes to describe the current system.
A futures market is essentially an opportunity for people with money to wager on faraway outcomes. The price of your insurance coverage is a reflection of a profit-motivated company’s wager on how much your future health is likely to cost them. It’s a big casino, where who wins or loses is based on people’s lives rather than cards or horses.
Keep the roulette table, move the chairs
The futures-market health care casino is a fixture of American economic life. Anything that suggests it might be possible to make a truly radical break from it sends traditionalists into a panic.
“There’s a fear that if you make getting health care cheap or affordable or even free, people might use it. And that’s hard to make a profit off of,” as Faust put it in a speech in Houston in the summer of 2017.
This fear is evident in the frenzied mainstream analysis of Tuesday’s news. Everyone is wringing hands about how the new players might shake up the way profits from the health care casino get divvied up, with much coverage noting that health insurer stocks dipped. The fear pops up in Reuters’ write-up in the form of an analyst saying the announcement “might spoil the strong investor sentiment towards managed care.”
But the fact that investors are pondering whether to move into or out of a given stock based on this news — rather than full-on bailing from the industry — reveals the con here. They have all correctly intuited that the betting window is going to remain open — it’s just a matter of figuring out how to change your strategy.
The Faustian fear gets a different voice in the New York Times, this time from an insurance coverage negotiator named Ed Kaplan. Kaplan “said larger insurers were frustratingly inefficient when it came to fixing problems like people visiting the emergency room when they did not need to,” the Times reports. “There should be a way to avoid things like that, but they’re not really innovating,” Kaplan told the paper.
Overuse of emergency rooms is a symptom of the current system. Poor people who can’t afford good coverage end up getting last-resort treatment where they can afford it – often urgent cares and emergency rooms.
The “way to avoid things like that,” then, is to decouple human health care from corporate profit-taking.
At a glance, it may sound like that’s these plutocrats are setting out to do. The press release does promise “an independent company that is free from profit-making incentives and constraints,” after all.
But that’s a dodge. The new standalone firm may not worry about profit or loss on its own books. But the firms backing it want to improve their own health insurance cost picture – or, better put, to drive up their own profit margins. The entire new, not-for-profit enterprise will be hitched to bottom-line concerns elsewhere. Whatever money they can save by their disruption will eventually be captured as profit by the finance and tech behemoths.
A fraying society ruled by business
There’s a case to be made for such pragmatically-minded doing-well-by-doing-good corporatism. The Democratic Party establishment has been making it endlessly for decades. After all, if some private bigshot wants to put their money to work for something socially beneficial, who is the government to discourage them? But that only makes sense if you’ve first ruled out more virtuous outcomes as politically impossible. Anyone who likes the idea of a Bezos-led health care superpower nonprofit should talk to the people organizing behind the Medicare-for-All banner.
One often-forgotten part of the argument surrounding Obamacare back in 2009 and 2010 involved the role of employers in ensuring access to medicine for workers. Criticizing the iniquities that result when a person is dependent on their job to afford insurance was a bipartisan sport. Leaders warned of “job-lock” artificially hemming in workers’ lives and choices. The way insurance is priced for individuals rather than employers generally forces people to grovel for the chance to land among the poker chips on the industry’s casino table.
Berkshire Hathaway, JPMorgan Chase, and Amazon have about 800,000 employees between them. To whatever extent the new effort delivers better outcomes for consumers of medical care – separately from the core business objective of lowering costs for the three titans – those workers will grow far more tightly bound to their bosses.
And if Dimon’s dream of expanding the firm’s offerings to the broader public comes true, the immense financial returns of having solved the cost-curve riddle will go to his new non-profit firm rather than to the public. The haves and the have-nots will slide further apart, and the finance and tech industries will take another lurch forward in their quest to replace representative democracy and its institutions as the true power governing people’s material quality of life.
In that sense, at least, Tuesday’s announcement is consistent with the accelerating social dissolution that’s defined American life for years.
The institutions of democratic society and federalist governance used to enforce clear constraints on the private economy’s howling drive for profit maximization. Corporations paid a healthy share of overall taxes as a result (a share since replaced, thanks to corporate tax avoidance, by the taxes workers pay). Unions ensured that those who worked weren’t doomed to die poor. It wasn’t old-fashioned decency that made sure a sensible share of economic profits got spent serving working-class interests. It was antitrust law, tax law, consumer regulation, and the organizing work of unions and community-based non-profits that kept the reins on capitalism.
Now, however, the power of those old institutions has eroded. Governments all across the federalist structure kowtow to corporate demands for tax relief and race each other to the bottom to lure, for example, Amazon’s second headquarters. Regulations get hollowed out or under-enforced by veteran ideologues who move freely from industry to government and back again. If you’re rich enough to have to think about how to manage interest earnings from your investments, this is a great system for you. If you’re anyone in the bottom 90 percent of the population as sorted by earnings or wealth, the institutions that used to stand up to monied power in your name are asleep at the switch.
In such a society, the tech-based disruption of health insurance’s sticky-handed chokehold on working people’s material well-being may be dramatic. People are thirsty for reasons to believe the future might get brighter, and the idea of supergenius tech bros and uber-savvy wealth managers turning their talents on one of late-stage capitalism’s major villains is understandably inspiring.
But when working people glance up to check who’s ruling their relationship to their own bodies in the future Bezos et al promise today, they will see something very familiar: A rich white guy in a nice suit lighting a cigar with a flaming hundred-dollar bill.