America’s healthcare system is, simultaneously, the best and the worst, says JPMorgan Chase CEO Jamie Dimon.
Its dichotomy, in which state-of-the-art equipment and innovative treatments have failed to prevent the development of a population for whom 25 percent of medical costs are related to lifestyle choices like smoking and overeating, shows “there’s something wrong,” Dimon explained in a discussion of the company’s healthcare partnership with Berkshire Hathaway and Amazon, all among the biggest firms in their industries. “We need to fix it.”
That’s the ultimate goal of the venture announced at the end of January, said Dimon, who met with New York-based JPMorgan’s investors Tuesday during an annual strategic update. JPMorgan, Omaha, Neb.-based Berkshire Hathaway and Seattle-based Amazon are building an independent firm that will use technology to provide the companies’ U.S. employees with simplified, high-quality healthcare for a reasonable cost.
Their partnership, still in the formative stages, comes amid a broader debate over access to healthcare in the U.S. and its cost. President Trump, who had promised to repeal the Obamacare program established by his predecessor and replace it with a better and cheaper system, hasn’t been able to do so yet. Congress did, however, overturn the system’s “individual mandate” that required all U.S. residents to have health insurance under the premise that premiums paid by healthy customers would subsidize high payouts to older, sicker clients.
While news of the partnership rattled U.S. healthcare stocks, “it’s not for or against anybody,” Dimon said Tuesday.
“At a minimum, and this is early on, I think we’ll have a much better outcome for our people,” he said, noting that wellness programs promoting preventive treatment and exercise are saving an estimated 50 to 75 lives a year at JPMorgan alone. “At a maximum, maybe we can figure out how to do something better for our country overall.”
The venture was formed through contacts between Berkshire Hathaway investment officer Todd Combs, a member of JPMorgan’s board and Dimon, who counts Amazon CEO Jeff Bezos as a family friend.
“I love the idea of tackling what I regard as the major problem of our economy,” Berkshire CEO Warren Buffett told CNBC’s Becky Quick in an interview Monday after his company’s annual report. “You had healthcare costs go from 5 percent of gross domestic product in 1960, they were $170 per person annually. And now they’re over $10,000, and they’re closing in on 18 percent of GDP.”
With other industrialized countries posting healthcare costs of only about 11 percent of their economy, the situation creates “a huge competitive disadvantage in American businesses far more important than any tax change,” he added.
The next step will be finding a CEO for the company the three businesses are creating, Buffett said, which is a crucial move.
In the end, the goal is to create something not just for the three partners but a model that other businesses can use, and stop the constant increase in healthcare costs.
“There are only 100 cents in the dollar,” Buffett said. “And if you’ve got 18 cents, which we’re approaching, going to healthcare, you’ve only got 82 cents left.”
