Hacker News new | past | comments | ask | show | jobs | submit login

The article actually touched on scale when it talked about risk pooling. Its argument was that the three together are not big enough to have the same kinds of economies of scale as big health insurers, but I'm not sure I think it'll be a problem like they suggest.

If the 3 are going to do their own insurance, all that has to happen is that the gains of cutting out a for-profit middleman need to exceed the losses of reduced economies of scale (compared to the insurance giants).

Based on some quick Google searches (queries like "amazon number of employees"), it seems like the 3 together have a total of over 1 million employees. That seems like a large enough risk pool to me.




That is true, but I was referring more to scale as relates to negotiating leverage around PBMs or negotiating with payers

The negotiating leverage piece is a more acheivable near term benefit. Creating their own insurance company would be complicated and actually maybe not the best idea. There are tons of regulations that would hinder this, but also the local nature of healthcare markets dilutes the power of their scale if the try to start an insurance company

Amazon, Berkshire and JPM have employees scattered all across the country. However, they'd likely not have greater leverage than a given payer or provider in any specific locality as they wouldn't be a major employer in most areas. If they want to own physicians, in order to attract more physicians than the most locally powerful provider, they'd have to pay above market rates and would not have a large enough patient pool in most areas to justify this. In order to create a network as a payer, they'd need to spend a lot of money getting providers onboard but won't have a local network as large as that of leading payers, so they won't be able to reimburse at competitive rates.

So arguably the biggest challenge to the uber aggregator model laid out in the article is that they have lots of national power but dilute local power in most markets, and since healthcare delivery is local, they can't win

Edit: conciseness


Many companies “do their own insurance”, outsourcing the administrative part (sometimes to insurance companies under a “administrative services only” contract): https://en.m.wikipedia.org/wiki/Self-funded_health_care


The odd disconnect with the pooling notes in the article is that it seems like all the other insurers seem to delight in creating mini single business pools even though the mega insurers themselves have plenty of customers to create single large pools (and win a nice administrative simplification). None of the large insurers also seem effective in price controlling via pooling drug purchases of their customers either - so it seems curious if this combination of businesses will be able to succeed. Good luck to Amazon and co, I hope they succeed at this venture.


> other insurers seem to delight in creating mini single business pools

How so? How could they create a large pool? They can't force individuals to choose their company.

> None of the large insurers also seem effective in price controlling via pooling drug purchases of their customers either

How do you know what your insurance is paying vs what individuals pay?




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: