9 ms·

I think these 3 will no longer provide health insurance for their employees, they are going to create a new more affordable framework and they will allow any ot

I think these 3 will no longer provide health insurance for their employees, they are going to create a new more affordable framework and they will allow any other large company to participate. The goal will be keep the cost of insurance the same for the employees, while eliminating the cost for the companies entirely, which is why this will take off. It’s crazy to have employers paying for healthcare, this I believe will be the beginning of the end of employer paid healthcare. It won’t happen overnight but it will go fast because every employer wants to drop that overhead cost.

perseusprime11 9y ago
Interesting idea. Do you know what is the current overhead for Amazon in terms of $$$?
- ihsw2 9y ago
  It's about $19K for employer-provided family-coverage. Considering the three companies have about 1M stuff in total, that represents ~$20B in annual recurring costs. This effort combined with accelerating automation will lead to a much better capital:labor cost ratio (and, depending on who you ask, reduction in labor costs is massively bad for wealth equality).
  - yeukhon 9y ago
    Do you have a source backing on $19K?
    - vadym909 9y ago
      I've seen and paid employer health benefits bills- $15K-$24K is the range depending on the quality of healthplans. About 10-25% of this is what employees pay as their part of the premium normally, the rest is employer paid. Stingier companies cover 75% of the employee cost and 50% of dependents cost.
    - adventured 9y ago
      "Annual premiums reached $18,764 for 2017, up 3 percent from 2015 for an average family coverage" http://www.ncsl.org/research/health/health-insurance-premiums.aspx http://www.ncsl.org/research/health/health-insurance-premium... "According to the KFF 2016 survey, the average family coverage premium is $18,412 per year and single coverage is $6,435 per year." https://www.groupmgmt.com/blog/post/2017/09/05/How-Group-Health-Insurance-Premiums-Are-Calculated-and-How-You-Can-Manage-Them.aspx https://www.groupmgmt.com/blog/post/2017/09/05/How-Group-Hea...
  - simonebrunozzi 9y ago
    I guess you meant "staff", not "stuff". BTW, I think that the 19k/year is not representative of very large companies, which usually negotiate better terms. Still, your point stands.
    - secabeen 9y ago
      Depends. The largest companies often self-insure, where they pay the insurance companies a fixed rate for administration, but the costs of the actual health care come out of the company budget.
    - maxerickson 9y ago
      Overall US healthcare spending is ~$10k per person, so it is probably at least in the ballpark.
      - deleted 9y ago
        [deleted]
    - adventured 9y ago
      It's quite close, it's probably over $17,000 for 2018: https://kaiserfamilyfoundation.files.wordpress.com/2016/02/8833-figure-6.png https://kaiserfamilyfoundation.files.wordpress.com/2016/02/8...
gowld 9y ago
How will they move the payments from employers to employees? The insurance model and the tax treatment of benefits haven't changed.
- deleted 9y ago
  [deleted]
sjg007 9y ago
What is the mechanism? I don't think it is realistic to assume that health care can run on employee premiums alone. In fact we know it can't b/c individual premiums are outrageous. So I don't think your premise is realistic. These billion dollar companies self insure and Buffet's companies offer reinsurance for the most costly million dollar claims. Even though they self insure, they will pay a company like Cigna a percentage to manage the claims and get access to their negotiated prices. All I can think of is that this is a play to get Cigna and other insurance companies to lower their management fees. Companies have to offer insurance and pay it because no one will work for them otherwise. And companies of a certain size have to offer health care by law so it's not going away.
- yarg 9y ago
  Premiums are as high as they are because health care is run as a for profit industry - health care in America is orders of magnitude more expensive than in other countries. If you remove the profit motive prices will drop down towards something more reasonable, in this situation it's not unreasonable to expect that the system could be maintained with employee premiums. The cost of initialisation of services will be huge however, it will be interesting to see how they spread it out - they may bear the costs for now, and seek to recoup them providing excess capacity for service to other companies.
  - donw 9y ago
    As always, things are a bit more complicated. Being largely for-profit is part of the problem with healthcare in the United States, but plenty of other countries have privatized healthcare that works, Japan being the first that comes to mind. The difference being that, in the US, the long-term dysfunction of our political system has allowed the regulatory framework for healthcare to be built to service its own industry, rather than the needs of individual citizens or society at large. As one example, regional hospitals used to band together in groups to bargain collectively when purchasing supplies. This arrangement was formalized, legislated, and then warped, so that rather than the hospitals controlling the organization, it was instead controlled by the suppliers, driving the cost to the patient up, rather than down. There is no easy solution here, without first fixing our broken political system, and I see no evidence of that happening.
make3 9y ago
maybe if health insurance becomes one large monopoly, they can have enough leverage to force the health care providers to lower their prices to a reasonable level similar to that of countries where the government has that role (of being a monopoly payer, and forcing the costs to be lower by negotiation leverage)
- URSpider94 9y ago
  That is what’s called “single payer” healthcare, and indeed that’s the idea.
  - refurb 9y ago
    I chuckle at the "negotiation leverage". It's not a negotiation it's the gov't setting payments by fiat. Healthcare workers in the US clearly have concerns with that.
ransom1538 9y ago
It reminds me of the destruction of pensions. Putting on my tin foil hat, the main killer for health insurance companies is pre-existing conditions -- I wonder if they are confident it wont be in issue soon.
dba7dba 9y ago
This is how Kaiser Permanent got started. A major US rail company found it was cheaper and better to hire own doctors to take care of employees.
- dredmorbius 9y ago
  Water projects. Colorado River Aqueduct, Grand Coulee Dam. https://news.ycombinator.com/item?id=16274478g https://news.ycombinator.com/item?id=16274478g https://share.kaiserpermanente.org/article/history-of-kaiser-permanente/ https://share.kaiserpermanente.org/article/history-of-kaiser...
deleted 9y ago
[deleted]
URSpider94 9y ago
Unless they can reduce the cost of coverage by 75% or more (the portion of coverage that an employer typically pays), they had better keep providing health care for their employees, or their employees will be out a lot of money. Also, they are required to provide coverage under the ACA.
atopuzov 9y ago
Amazon just wants to screw over it's employees and save money.
kalleboo 9y ago
> every employer wants to drop that overhead cost One thing I've always wondered is why aren't the large unionized companies heavily lobbying for socialized healthcare and pensions, with a clause sneaked in there absolving them of their preexisting liabilities?
- walshemj 9y ago
  Yes struck me as odd too, one of the few times that the CWA and the motor manufacturers would be singing from the same hymn sheet.
losvedir 9y ago
I'm incredibly excited to see what they come up with, but if it's just some tooling that further entrenches healthcare-via-employers then I'm going to be disappointed (for the reasons you point out about how crazy and stupid that system is). These are all very smart people, so I have to assume that they have realized that insurance is a fundamentally flawed mechanism for providing the kind of health care we want, without a universal mandate - which, as private companies, they're not able to issue. If they instead tackle health care via some other mechanism than insurance - say trying to drive down prices to make it more affordable via transparent pricing in a competitive marketplace (e.g., like the diagram in the article where doctors, pharmacies, etc, list their services) then that has a potential to be a huge, positive change. That said, they're still operating in our regulatory framework, so they still do need to provide insurance to their employees. So I hope they're able to dual-band it - provide a high-deductible, low-premium HSA with contributions from the company, and let the employees shop on this marketplace from their HSA, while still being covered in the catastrophic case by the insurance plan.

perseusprime11 9y ago

Interesting idea. Do you know what is the current overhead for Amazon in terms of $$$?

ihsw2 9y ago
It's about $19K for employer-provided family-coverage. Considering the three companies have about 1M stuff in total, that represents ~$20B in annual recurring costs. This effort combined with accelerating automation will lead to a much better capital:labor cost ratio (and, depending on who you ask, reduction in labor costs is massively bad for wealth equality).
- yeukhon 9y ago
  Do you have a source backing on $19K?
  - vadym909 9y ago
    I've seen and paid employer health benefits bills- $15K-$24K is the range depending on the quality of healthplans. About 10-25% of this is what employees pay as their part of the premium normally, the rest is employer paid. Stingier companies cover 75% of the employee cost and 50% of dependents cost.
  - adventured 9y ago
    "Annual premiums reached $18,764 for 2017, up 3 percent from 2015 for an average family coverage" http://www.ncsl.org/research/health/health-insurance-premiums.aspx http://www.ncsl.org/research/health/health-insurance-premium... "According to the KFF 2016 survey, the average family coverage premium is $18,412 per year and single coverage is $6,435 per year." https://www.groupmgmt.com/blog/post/2017/09/05/How-Group-Health-Insurance-Premiums-Are-Calculated-and-How-You-Can-Manage-Them.aspx https://www.groupmgmt.com/blog/post/2017/09/05/How-Group-Hea...
- simonebrunozzi 9y ago
  I guess you meant "staff", not "stuff". BTW, I think that the 19k/year is not representative of very large companies, which usually negotiate better terms. Still, your point stands.
  - secabeen 9y ago
    Depends. The largest companies often self-insure, where they pay the insurance companies a fixed rate for administration, but the costs of the actual health care come out of the company budget.
  - maxerickson 9y ago
    Overall US healthcare spending is ~$10k per person, so it is probably at least in the ballpark.
    - deleted 9y ago
      [deleted]
  - adventured 9y ago
    It's quite close, it's probably over $17,000 for 2018: https://kaiserfamilyfoundation.files.wordpress.com/2016/02/8833-figure-6.png https://kaiserfamilyfoundation.files.wordpress.com/2016/02/8...

gowld 9y ago

How will they move the payments from employers to employees? The insurance model and the tax treatment of benefits haven't changed.

deleted 9y ago
[deleted]

sjg007 9y ago

What is the mechanism? I don't think it is realistic to assume that health care can run on employee premiums alone. In fact we know it can't b/c individual premiums are outrageous. So I don't think your premise is realistic. These billion dollar companies self insure and Buffet's companies offer reinsurance for the most costly million dollar claims. Even though they self insure, they will pay a company like Cigna a percentage to manage the claims and get access to their negotiated prices. All I can think of is that this is a play to get Cigna and other insurance companies to lower their management fees. Companies have to offer insurance and pay it because no one will work for them otherwise. And companies of a certain size have to offer health care by law so it's not going away.

yarg 9y ago
Premiums are as high as they are because health care is run as a for profit industry - health care in America is orders of magnitude more expensive than in other countries. If you remove the profit motive prices will drop down towards something more reasonable, in this situation it's not unreasonable to expect that the system could be maintained with employee premiums. The cost of initialisation of services will be huge however, it will be interesting to see how they spread it out - they may bear the costs for now, and seek to recoup them providing excess capacity for service to other companies.
- donw 9y ago
  As always, things are a bit more complicated. Being largely for-profit is part of the problem with healthcare in the United States, but plenty of other countries have privatized healthcare that works, Japan being the first that comes to mind. The difference being that, in the US, the long-term dysfunction of our political system has allowed the regulatory framework for healthcare to be built to service its own industry, rather than the needs of individual citizens or society at large. As one example, regional hospitals used to band together in groups to bargain collectively when purchasing supplies. This arrangement was formalized, legislated, and then warped, so that rather than the hospitals controlling the organization, it was instead controlled by the suppliers, driving the cost to the patient up, rather than down. There is no easy solution here, without first fixing our broken political system, and I see no evidence of that happening.

make3 9y ago

maybe if health insurance becomes one large monopoly, they can have enough leverage to force the health care providers to lower their prices to a reasonable level similar to that of countries where the government has that role (of being a monopoly payer, and forcing the costs to be lower by negotiation leverage)

URSpider94 9y ago
That is what’s called “single payer” healthcare, and indeed that’s the idea.
- refurb 9y ago
  I chuckle at the "negotiation leverage". It's not a negotiation it's the gov't setting payments by fiat. Healthcare workers in the US clearly have concerns with that.

ransom1538 9y ago

It reminds me of the destruction of pensions. Putting on my tin foil hat, the main killer for health insurance companies is pre-existing conditions -- I wonder if they are confident it wont be in issue soon.

dba7dba 9y ago

This is how Kaiser Permanent got started. A major US rail company found it was cheaper and better to hire own doctors to take care of employees.

dredmorbius 9y ago
Water projects. Colorado River Aqueduct, Grand Coulee Dam. https://news.ycombinator.com/item?id=16274478g https://news.ycombinator.com/item?id=16274478g https://share.kaiserpermanente.org/article/history-of-kaiser-permanente/ https://share.kaiserpermanente.org/article/history-of-kaiser...

deleted 9y ago

[deleted]

URSpider94 9y ago

Unless they can reduce the cost of coverage by 75% or more (the portion of coverage that an employer typically pays), they had better keep providing health care for their employees, or their employees will be out a lot of money. Also, they are required to provide coverage under the ACA.

atopuzov 9y ago

Amazon just wants to screw over it's employees and save money.

kalleboo 9y ago

> every employer wants to drop that overhead cost One thing I've always wondered is why aren't the large unionized companies heavily lobbying for socialized healthcare and pensions, with a clause sneaked in there absolving them of their preexisting liabilities?

walshemj 9y ago
Yes struck me as odd too, one of the few times that the CWA and the motor manufacturers would be singing from the same hymn sheet.

losvedir 9y ago

I'm incredibly excited to see what they come up with, but if it's just some tooling that further entrenches healthcare-via-employers then I'm going to be disappointed (for the reasons you point out about how crazy and stupid that system is). These are all very smart people, so I have to assume that they have realized that insurance is a fundamentally flawed mechanism for providing the kind of health care we want, without a universal mandate - which, as private companies, they're not able to issue. If they instead tackle health care via some other mechanism than insurance - say trying to drive down prices to make it more affordable via transparent pricing in a competitive marketplace (e.g., like the diagram in the article where doctors, pharmacies, etc, list their services) then that has a potential to be a huge, positive change. That said, they're still operating in our regulatory framework, so they still do need to provide insurance to their employees. So I hope they're able to dual-band it - provide a high-deductible, low-premium HSA with contributions from the company, and let the employees shop on this marketplace from their HSA, while still being covered in the catastrophic case by the insurance plan.