Silicon Valley, Not Capitol Hill, Where Healthcare Reform Happening

CNBC reported on Tuesday that Amazon seeks to hire an expert in Health Insurance Portability and Accountability Act (HIPAA) privacy regulations.

The job listing notes, “The HIPAA Compliance Lead is an experienced HIPAA professional who will own and operate the security and compliance elements of a new initiative. You will work alongside product managers, software developers, bizdev, and legal teams to ensure that our services are in compliance with HIPAA security and privacy requirements.”

How does an online bookseller end up as a digital doctor’s office?

Americans spent about $30 billion on books last year. They spent more than 100 times that on health care. Jeff Bezos, like Willie Sutton, goes where the money is.

So do Google and Microsoft, two tech behemoths making forays into healthcare that appear as the harbingers of something grander. Amazon’s super-secret “1492” project, as its name implies, seeks to revolutionize everything — or at least healthcare, which acts as a rather big thing. Americans spend more on healthcare than everyone, save for the Chinese, Japanese, and Germans, spends on everything. The figure now hovers around $3.5 trillion annually. And as Americans grow older (average 2017 age 38; average 1970 age 28) and fatter (1970 obesity rate 15 percent; 2014 obesity rate, 37 percent), we figure to require more care and medicine and much else.

Just as these demographic realities nudge the tech giants into a sector beyond their comfort zone, they inevitably increase pressures on employers, states, and the federal government — those tasked with providing medical coverage — to turn over the reins to entities better suited to efficiently deliver and manage healthcare. Microsoft, Google, Amazon, and others believe this means them.

Who can gainsay them?

We don’t get as much bang for our buck as other similar nations. Canada, for instance, spends less than two-thirds of what we spend per capita and an even smaller percentage as a percentage of GDP. Canadians live more than three years longer.

A perfect storm of capitalistic greed and government inefficiency mars our mixed private-public healthcare system. With about the same number of people covered by Medicare and Medicaid as covered by employer plans, Americans get the worst of both worlds — capitalists charging $30 for an aspirin and socialists demanding we pick up the tab for strangers.

This does not work. Americans disagree why this does not work. But a consensus seems to agree this does not work. And a consensus seems to agree that Amazon, Microsoft, and Google do work.

State governments taxed by all the spending, and taxing to cover all the spending, appear open to try something radically different. Employers, who provide insurance to about 150 million employees, naturally appear eager to pay less for more as well.

The tech giants, masters at efficiency and generally held in high regard by consumers, figure to give them just that. How will this work?

Amazon, Google, Microsoft, and others may compete to manage those covered in bulk. This may mean, for instance, monitoring blood pressure, heart beats, and blood sugar levels for patients by remote through devices. The Apple Watch, for instance, could monitor this information. Alexa looks to direct patients to the appropriate care facilities. The cloud services offered by the various tech companies already replace folders and file cabinets. Hospital bills, drug delivery, and doctors’ efforts will likely be sourced and paid for through Amazon’s super-secret project.

Change, despite Congress fumbling on reform this past summer, may yet come. When it does, Silicon Valley, not Capitol Hill, appears as the most likely agent of change.

Hunt Lawrence is a New York-based investor. Daniel Flynn is the author of  five books.

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