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Employee benefits - grow-your-own healthcare

Penny Brooks

31st January 2018

How often do you hear a CEO saying that 'our most important asset is our people'? If that is the case, then keeping those people in good health is critical to the success of the business, which means they need good healthcare. But if you are employing them in the US that healthcare costs approximately $10,000 per person a year, roughly double what it costs in other developed countries, and it is expected to rise by another 50% over the next six years. The US Congressional Budget Office (CBO) has forecast that the cost of a medical insurance policy would increase by 25% in 2018 and double by 2026.

Hence, three major employers in the US are working together to develop their own healthcare firm, to cut those costs. Take a look at who the three are, and you can feel a shiver running through the established US health insurers - Warren Buffet's Berkshire Hathaway, JP Morgan and Amazon are a formidable combination. As the BBC reporter says, "the announcement sparked fears that tech giant Amazon could disrupt the healthcare sector in the same way that it has the retail sector." Not surprisingly, shares in US health insurers UnitedHealth, Anthem and Cigna Corp all fell over 5% in early trading following the announcement.

There are some interesting quotes from Amazon's Jeff Bezos , which I think gives an insight into his entrepreneur's approach to new ventures: "Success is going to require talented experts, a beginner's mind, and a long-term orientation." 

Finally, a general thought about questioning the data: the article refers to Amazon, Berkshire Hathaway and JP Morgan as 'the three largest private employers in the US, collectively employing over 500,000 staff'. This made me pause, as I would have thought that a list of the US's biggest employers would be headed by Walmart, whose website says they employ more than 1.5 million people in the US. So, it depends on how the number has been calculated and exactly how 'private employer' is being defined - but remember, reading case studies, to be wary of the data!

Penny Brooks

Formerly Head of Business and Economics and now Economics teacher, Business and Economics blogger and presenter for Tutor2u, and private tutor

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