We asked Jamie Dimon why JPMorgan is forming a new healthcare company with Amazon and Berkshire Hathaway — here's what he said
Grant Eizikowitz and Lydia Ramsey
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- JPMorgan CEO Jamie Dimon thinks the US has an issue when it comes to spending on healthcare.
- It's what he hopes to change with a new independent nonprofit venture announced in January with Amazon and Berkshire Hathaway, aimed at lowering healthcare costs for their employees.
- Dimon said he started chatting with Warren Buffett and Berkshire Hathaway investment officer Todd Combs, who also sits on the board of JPMorgan, and Amazon CEO Jeff Bezos.
- "We said, we know we can do more," Dimon said. "We know we can do more just thinking through every single part of it."
- One way to improve, Dimon suggested, is by bringing wellness more into the healthcare picture.
- We also talked to Dimon about the bank's $20 billion investment in the US, the economy, and why he won't run for office. You can read the full Q&A here.
Jamie Dimon is fed up with the way America does healthcare.
In a conversation with Business Insider's Matt Turner, the JPMorgan CEO explained why he,
along with Amazon and Berkshire Hathaway, are banding together to form an independent nonprofit venture to lower healthcare costs for their employees.
When it comes to how the US spends on healthcare, it often doesn't make a lot of sense.
"Look, America has an issue, OK? We spend 17% of our GDP in healthcare. You know we have the best of all worlds, some of the best healthcare in the world. And the worst of all worlds. We don't do very good preventive medicine. It costs too much," Dimon said.
The rising spending is something Berkshire Hathaway CEO Warren Buffett has called the
"hungry tapeworm on the American economy."
And getting people to be more active consumers in the healthcare system with health plans that feature
deductibles—the amount of money paid out of pocket before insurance kicks in — hasn't gone over as well as expected.
"Going into deductibles was important to get you to shop a little bit but hasn't really worked really well," Dimon said.
The three companies are
self-insured employers, which means that when you're an employee going to a doctor's appointment, your employer is ultimately footing the bill for the MRI you receive, rather than a health insurer. The insurance companies are there in the middle to handle the logistics of getting the claim from one place to another.
"So I tell people, JP Morgan Chase already buys a $1.5 billion of medical, and we self-insure," Dimon said. "Think of this, we're already the insurance company, we're already making these decisions, and we simply want do a better job."
JPMorgan for example has lowered deductibles for employees who make less than $60,000 a year. The deductible can also be tied to lifestyles as well, bringing that deductible even lower.
"If you do your wellness stuff now, if you take care of yourself, if you don't smoke, we give you benefits and the deductible effectively goes to zero," he said. "So we've kind of really made it easier for folks to get proper medical care."
Dimon said he started chatting with Buffett and Berkshire Hathaway investment officer Todd Combs, who also sits on the board of JPMorgan, and Amazon CEO Jeff Bezos.
"We said, we know we can do more. We know we can do more just thinking through every single part of it," Dimon said. Whether that be giving employers more information on their phones, which could in turn help with their overall wellness. Keeping employees healthier for longer in turn could cut down on healthcare spending by preventing patients from getting sicker.
"There are ways that, when you face this, maybe we can change things to make it much better for everybody," Dimon said. "We want happier employees, better medical outcomes, and I do think at the end of the day that'll actually be cheaper."
Following is a full transcript of the conversation.
Matt Turner: JP Morgan announced
an initiative with Amazon and Berkshire Hathaway. How did that come about, and what are you hoping to achieve there?
Jamie Dimon: Look, America has an issue, OK? We spend 17% of our GDP in healthcare. You know we have the best of all worlds — some of the best healthcare in the world. And the worst of all worlds. We don't do very good preventive medicine. It cost too much. Warren Buffett calls it the tapeworm of corporate America.
Going into deductibles was important to get you to shop a little bit but hasn't really worked really well. So I tell people, JP Morgan Chase already buys a billion and a half dollars of medical, and we're self-insured. Think of this: We're already the insurance company, we're already making these decisions, and we simply wanna do a better job.
And in conversation with Warren, and someone who works for him called Todd Combs, who's one of my board members, who's exceptional, and Jeff Bezos, we said we know we can do more. We know we can do more just thinking through every single part of it. Both the customer-facing part so you might be able to get look at more data on your phone and stuff like that, getting you do wellness.
I mean, 20% of our medical expense is at end of life, and a lot of people don't want to go through it — they go through it in a hospital. So maybe we need a legal change of that. A lot of people over-utilize certain medicines, but they also under-utilize it. And it's also silly they have no wellness. Like, if you take care of yourself, I think
smoking and obesity — I forgot the number — account for 25% of all medical expenses. Well, that's us!
So, you know, there are ways that when you face this maybe we can change things to make it much better for everybody. We want happier employees, better medical outcomes, and I do think at the end of the day that'll actually be cheaper.
