With the smaller networks we are currently seeing, they are paying the doctors and hospitals less, with the hope of driving more volume. With that, we are starting to see a reverse effect with doctors. More and more doctors are doing away with taking insurance and going direct to the consumer. So if that trend continues, the Amazon, JPMorgan, Berkshire move will have no effect on that facet of the business.
Fourth, currently, the health insurance industry is highly regulated. Sadly regulation adds costs.
Fifth, it is complicated. It will take, in all likelihood, at least three years to implement. The way the health care world changes (it seems like daily), in three years we could be looking at a totally different cost structure.
Where I do think an impact can be made is if Amazon does get into the pharmaceutical industry. Mail order saves clients time, and if they can eliminate the "middleman" by not only shipping the medications, but also becoming the administrator, that will eliminate some additional costs.
Also, the Trump administration has said it would like to allow medications from other countries to compete with our U.S. pharmacies. Amazon is already doing business worldwide and could possibly dominate that sector, especially if they can use fast delivery with services such as Amazon Prime. While Amazon Prime might not be available for a medication from, say, London, it still could provide quicker service than current mail order companies.
In summary, while the recent partnership from these big three carriers may seem like it will have a big impact on the market, I believe it will have little impact on the current state of health care affairs.
Eric Wilson is principal of Wilson Associates, a leading insurance broker.Back to HCB News
