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What Happens When Amazon Takes on Health Care

What Happens When Amazon Takes on Health Care
From TIME - February 4, 2018

What happens when a company defined by utterly ruthless efficiency sets its sights on the flabbiest part of the U.S. economy? We shall see, now that Amazon has announced that italong with Warren Buffetts Berkshire Hathaway and the banking behemoth JPMorgan Chasewill be entering the dominion of health care.

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, said JPMorgan chairman Jamie Dimon on Jan. 30, treading lightly (potentially) on the enormous implications (all Americans) that were apparent. As it takes shape, the as-yet-unnamed joint enterprise will nominally serve, without seeking profit, only the 1.2 million people who work for the three companies.

But the clear and worthy goal is to confront the Gorgon that has stymied politicians for decades.

The triumvirate combines the savvy integrity of the Oracle of Omaha, as Americas most admired investor is known; the leadership status and financial muscle of the countrys largest bank; and, crucially, Amazon. The retail and tech giant has flourished by innovating relentlessly and expanding omnivorously. Word that Amazon was entering health care immediately depressed the value of old-school health-insurance companies. Anyone who has been a customer of either knows why.

The U.S. health care system is the antithesis of Silicon Valley. Grossly inefficient and user-unfriendly, it may be the least transparent enterprise outside the Kremlinand just as awash in money. The $3.3 trillion that Americans spent on health care in 2016 was close to Germanys entire GDP that year. It accounted for an astounding 18% of the U.S. gross domestic producttwice the share other developed countries typically spend on healthand produced a return on investment that would get any CEO fired. Life expectancy in the U.S. is actually going down.

The ballooning costs of health care act as a hungry tapeworm on the American economy is how Buffett put it in the six-paragraph news release that offered no blueprint but what Amazon founder Jeff Bezos called talented experts, a beginners mind and a long-term orientation.

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