New Year, New Ideas: Warren Buffett, Jeff Bezos, and Jamie Dimon Create New Health Insurance

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Warren Buffett talks with President Obama in 2011 (credit Wikipedia)

Buffett, Bezos, and Dimon are set to create the largest “self-funded” health plan in the United States. If you don’t happen to work for a large company or organization with a self-funded health plan, these terms might be unfamiliar to you. Basically, it means a company runs its own medical insurance. In essence – it insures its own employees. Representatives working directly for the company manage the benefits of the employees, and negotiate with the health care providers. There is no middle man. There are no mysterious and added costs. This concept is actually not new at all.

What is new is how large this tri-company plan will be. Warren’s Berkshire Hathaway, combined with Dimon’s JP Morgan Chase and Bezos’ Amazon, will be a massively large health plan. This is ground-breaking because the plan will be so large that it will cause waves in the current medical insurance industry. If other companies begin to follow suit, insurance companies might find their ability to “manage” your relationship with your doctor begin to wane. They will have serious competition.

Hospitals – even the large conglomerates with monopolies over their regions – will also be wise to pay close attention to this new plan. In the future, they may lose their ability to use the “same old” secretive, strong-arm tactics that keep their prices high, because that would mean losing the business of the BH/Amazon/JP Morgan Chase alliance.

Why else can we have hope that this particular alliance will send shockwaves through the industry? Because Warren Buffett has been outspoken about the excessively expensive and inefficient state of the American medical insurance system for years. He frequently cites how costly the system is for all American businesses, and what a shame it has such a giant drag on our economy. Plus, who enjoys living in the most economically rich country in the world when the vast majority of your fellow citizens are suffering around you? We can do better than that.

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