How does the richest man in the world become even richer?
Jeff Bezos, whose net worth totals $132 billion—$40 billion more than nearest competitor Bill Gates — looks to expand into a healthcare. For those in the business of making money, and most in business are in that business, healthcare makes sense. Americans spend upwards of $3.5 trillion on healthcare this year. This figures to balloon to $5.7 trillion, according to researchers working for the Centers for Medicare and Medicaid Services, by 2026. That roughly amounts to a fifth of the projected gross domestic product.
This crisis presents an opportunity, both for titans of industry looking to enrich themselves and beleaguered consumers looking to save on the one expense devouring more of personal budgets.
Amazon, which did books better than Borders and birthday presents better than Toys R Us, perhaps figures it can do healthcare better than Cigna, Aetna, Humana, and the rest. In the drive to make himself richer, Bezos, incidentally, may enrich the rest of us, too.
Amazon’s designs on healthcare, shrouded in mystery and speculation, revolve around its “1492” or “Grand Challenge” project. CNBC reports that Amazon holds periodic meetings, dating back to 2015, with the American Association of Retired Persons (AARP). “We have looked at the older population in the context of healthy… and we know this group has a lot of issues and unmet needs,” company vice president Babak Parviz explained at an event last month hosted by Klick Health. That vague statement ranks as one of the more definitive ones indicating the tech behemoth’s plans. Bezos joining Warren Buffett and Jamie Dimon to provide their workers with better healthcare for cheaper than they get through insurers — a drain on business rivaling taxes and regulation — ranks as a clearer, if unarticulated, statement of sorts regarding Amazon’s intentions.
Americans pay more than $10,000 annually per person on healthcare. This figure, subsidized by government and insurance companies, tends to inflate with age, which probably helps explain Amazon’s interest in the AARP.
If Amazon and the other tech companies believing they can streamline medical costs to offer cheaper, better healthcare, then government and personal budgets benefit, too. That’s where Jeff Bezos’s profit becomes ours. Reducing costs from around $10,000 per person to about $7,000 — which still makes us the biggest spenders on the planet — reduces government spending by close to $500 billion. It frees up a trillion dollars within the economy to spend on other priorities. It does more for the economy than the recent round of tax cuts. If Amazon can approximate something close to this, then it beats the competition — and nothing beats competition for satisfied customers.
Amazon streamlined retail. How do they go about doing this in healthcare?
Some natural areas Amazon may venture into include delivering prescriptions, providing healthcare wearables and apps, and storing records in its cloud. The company’s partnering with J.P. Morgan Chase and Berkshire Hathaway to cut out the middleman of insurance companies to provide “simplified, high-quality, and transparent health care at a reasonable cost” to employees strikes as the project with the biggest upside. If the trio of titans succeed in doing better for less, then the group, or, perhaps more likely, Amazon alone, seeks to go large and offer its services to other companies and state governments.
And who do you trust more to provide more convenient, higher quality, cheaper health care: Amazon or the Department of Health and Human Services?
Hunt Lawrence is a New York-based investor. Daniel Flynn is the author of five books.