By Richard Master
USA Today, Feb. 7, 2018
Amazon, Berkshire Hathaway and JPMorgan Chase announced last week that they would be forming a new company aimed at reducing employee health care costs. This decision was a response to what small, mid-sized and large business owners and CEOs have known for a long time: The private insurance system is strangling the U.S. economy.
As the founder and CEO of a mid-sized company that employs 180 people in the United States, I know this well. In 2018, we will pay $2.8 million to insure our workers and their families. Year after year, we have wrestled with the costs of our health care plans. And despite trying every trick in the book, our per-employee costs have tripled over the past 14 years.
A family plan in 2018 will cost us $27,000, which is higher than the annual salary of one-third of all working Americans. To put it another way, we are paying $13.50 per hour per employee just to cover the health care benefit. It’s a model that’s completely unsustainable, and needs to change.
According to their statement, this new health care company will pursue technology solutions to provide health care and lower costs. The real game-changer is that the company will be “free from profit-making incentives and constraints.”
They’re inches away from a major revelation: The way to fix health care for all people — not just those who are employed by monolithic corporations — is to de-commercialize the health insurance system.
In announcing the new partnership, Berkshire Hathaway Chairman Warren Buffett called the costs of healthcare “a hungry tapeworm on the American economy.” He’s right. But, combined, these three companies employ about 1.1 million people. Even accounting for dependents, this new company will, at best, serve 1% of the population. I’m looking for a solution that would help the other 99%: Medicare for All.
In the United States, we rely on private, for-profit insurance companies to finance our health care system. Over 157 million Americans are getting their coverage from employer based plans. Another 21.9 million have purchased insurance individually.
In theory, an insurance company exists to help negotiate with providers, and minimize the amount that patients and families are paying for healthcare. However, health insurance executives have the same motivation as the leader of any other company: profit.
That motivation is holding patients, workers and every other sector of our economy hostage to high premiums, and large out of pocket expenses. It is no coincidence that while health insurance companies are using hundreds of billions annually for their own sales and marketing, administrative overhead and profits, we are suffering under the most complex and expensive system in the world.
This is an existential threat to our businesses and our economy.
The high costs of health care, fueled by the profit motivation in the private insurance system, can be directly linked to the decreased take-home pay for workers; businesses not having capital to expand to new markets, create new jobs, or invest in new technologies; and medical bills as the number one cause of bankruptcy in the United States.
While some companies have the resources to do what Berkshire Hathaway, Amazon and JPMorgan Chase are doing, most don’t.
I certainly couldn’t do it for my employees, even though I wish I could. That’s why, if we are going to achieve an improved system for all of our citizens, what we really need is Medicare for all. Whether they know it or not, the leadership of these three companies made a strong case for removing profit from our health care system, and I hope our politicians are listening.
Richard Master is founder and CEO of MCS Industries, executive producer of multiple documentaries on the U.S. health care system, and founder of the Business Initiative for Health Policy.
