America spends almost three times as much on health care as other developed countries but on average people here still live shorter, less healthy lives. Our health care system clearly needs a major overhaul.

Who better to do it than the recently announced partnership between Amazon, Berkshire Hathaway, and JPMorgan Chase? Amazon has already disrupted how we buy just about everything else, and Berkshire Hathaway has long-standing expertise in the industry. Expectations for their effort to provide their employees with better health care options are even high enough that stocks of other health care companies fell on the news Amazon and friends were entering the fray.

Given all this, surely the combined efforts of these three behemoths should yield some interesting innovations, right? Actually, don't hold your breath, responds Harvard health care policy expert Bob Laszewski on his blog.

"It's the prices, stupid."

Why is longtime industry insider Laszewski so skeptical of the companies' efforts? First and most basically, because this is far, far from the first time big companies have promised to finally bring some sense to America's crazy health care situation.

"I have seen this movie before. Dozens of times over the last 25 years," Laszewski writes. "The first time was when the leading employers in the Minneapolis-St. Paul market began the same effort in the early 1990s. That, and any other such initiative I have seen over the decades, went essentially nowhere."

But it's not simply that Laszewski is a jaded, been-there-done-that industry veteran. He's also got specific reasons to be skeptical of Amazon and friends' efforts. Their approach, he explains, is to use data to give patients and providers more information and reduce the amount of medical care people consume, or, in the lingo of the industry, "utilization."

It's an approach experts have been pursuing for years, Laszewski explains in his jargon-heavy post, but it's yet to yield significant returns.

Why? Because despite the hype (and my father's endless grumbling about unnecessary tests and scans every time he sees a doctor), the main trouble with American health care isn't how much we consume. That's not significantly different from other wealthy countries. The problem is how much we pay for that health care.

"If we compare the U.S. systems' costs to the more affordable costs in other industrialized nations, the glaring difference is price, not utilization (Uwe was right 15 years ago, 'It's the Prices, Stupid')," declares Laszewski.

"Unlike the other industrialized health care systems, the U.S. health care system...had access to unlimited money and kept building...until we had created a huge, self-perpetuating health care industrial complex demanding more and more cash," he writes. "By comparison, the other industrialized nations decades ago put and kept their systems on global budgets that have kept their costs affordable."

So what will work?

Those looking for a deep dive into what Laszewski thinks will actually work can check out the complete post, but for non-wonks, his bottom line seems to be this: To fix health care we need to control costs overall, and to do that, the industry as a whole must be forced to stay within a set budget rather than gobbling up more and more of the nation's money. As large as the new Amazon initiative is, it's not large enough to accomplish that.  

"Somebody should tell these newbies their ideas about health care data are already ancient," Laszewski grumpily concludes.

Of course, Amazon has been wildly underestimated before. It just might be that Laszewski is underestimating the industry-devouring giant again. But health care is also a rock against which bright-eyed enthusiasm and well-meant plans have smashed many, many times before. So before you get too excited that Amazon is finally going to fix health care, it's probably worth thinking hard about whether, in tackling our nation's soaring doctor bill, Bezos and company have finally met their match.

'Obamacare' and the Healthcare Industry
Published on: Feb 2, 2018