It’s no secret that health care, and its related costs, is a pressing problem for many countries and their economies. Some recent estimates suggest that health care spending in the United States is close to $3.4 trillion, and the costs show no signs of decreasing anytime soon. Uncertainty about the future of Obamacare and Medicaid and the rapidly aging population make these cost concerns even more pertinent. In response, three well-known names from other fields—retailing, investments, and banking—have joined forces to propose an innovative, unconventional approach to health care and insurance markets. They hope to create a nonprofit conglomerate that can provide health care services to their millions of employees. Although still in the planning stages, the proposed initiative, nicknamed Project Lincoln, has already exerted an influence in the market, because the people behind it are in charge of Amazon, Berkshire Hathaway, and JPMorgan Chase. Jeff Bezos, Warren Buffett, and Jaime Dimon reportedly knew one another before, but their consensus opinion about the damaging effects of healthcare costs—which Buffett descriptively referred to as “a hungry tapeworm on the American economy”—has led them to make their collaboration more formal. In these early stages, they have indicated that one of their first goals is to establish a data warehouse. With vast amounts of health care data, they ideally would be able to design revised agreements with health care providers and insurance companies, which might reduce costs by avoiding payments for unnecessary features. Furthermore, the plan would encourage physicians to turn to digital tools, so that more data can be collected over time and shared across various health care providers. These tools also would support expanded care options, moving some non-critical services outside hospitals and clinics. Finally, Project Lincoln has a goal of eliminating intermediaries, such as pharmacy benefit managers and distributors, which often add costs without providing much in terms of value. Firms in these industries are understandably concerned, and stock market investors indicated their expectations by lowering the price of shares in existing insurers and pharmaceutical firms.

 Source: Anna Wilde Mathews, Emily Glazer, and Laura Stevens, The Wall Street Journal, January 30, 2018