Walmart in Early-Stage Acquisition Talks with Humana | Hacker News Reader

Walmart in Early-Stage Acquisition Talks with Humana

wsj.com

133 pointsmudil74 comments

If any company is capable of stopping the trend to progressively more expensive US health insurance that gets progressively shittier in quality, I will support it. I don’t care what company, what monopoly, honestly it doesn’t matter. The situation is so horribly fucked that I automatically support any change whatsoever.

Problem is, Walmart basically invented the idea of making a product substantially worse in order to sell it at a lower price. Items in Walmart often aren't "the same product but cheaper" but many times are "a substantially reduced quality version of an item, sold at a cheaper price than the original". So you might get cheaper health plans... but it's likely going to come at a reduced quality, too.

https://www.fastcompany.com/54763/man-who-said-no-wal-mart

For many things, this is exactly what I want. Walmart has great prices for the same as their competitors and their service is ok.

They aren’t Costco, but they deliver exactly what they promise - minimal quality for the best price.

But I’d never buy non-consumables from them.

I agree with you. Walmart already revolutionized pharma once by offering a huge list of drugs for $4/30-day and $10/-90 day. Even if no one reading this buys those drugs from Wal-Mart, you get them cheaply because Wal-Mart forced everyone else to drop prices to compete. I wonder if it could be calculated how many lives have been saved by doing this. Anecdotally I know a lot of people whose lives have been improved by being able to take those cheap options. And I know a couple of doctors who say they point their patients in that direction to help them save money.

>But I’d never buy non-consumables from them.

I'm curious, would you get a Wal-Mart xray or MRI? Depending on the issue, I think I might.

Well, prescription drugs are one thing Walmart can't pressure the manufacturer to make worse. It has to be exactly what's printed on the label, nothing else. Many things aren't that way, including health plans.

Mostly agreed but be careful.. There have been incidents of generics that don't have as much active ingredient in them -- or have other quality control problems.

The other factor is packaging and longevity. Generics e.g. tend to have bits of foil that are too easy to detach and swallow.

And shelf life -- a quality of packaging and ingredients issue -- is less certain.

There are minimum requirements in the United States for health insurance plans. Pretty much every insurance provider already offers a barebones plan, and if Walmart/Humana could beat that on price, that would be a good thing.

The minimum legal standard to manufacturer is not the same thing as "safe". Cut too many corners and you ruin the medication before it arrives.

For instance, I would run the fuck away from a Muro 128 generic sold by Walmart.

https://www.fiercepharma.com/supply-chain/bausch-lomb-blames...

> Bausch + Lomb began recalling 850,000 tubes of Muro 128 ointment--plus 35,000 tubes of an unbranded sodium chloride product sold by Major Pharmaceuticals--after users complained of a "gritty, sandlike feeling" in the eye, The Wall Street Journal reports. The Valeant Pharmaceuticals ($VRX)-owned ophthalmic specialist was unable to find the source of the problem at the manufacturing plant, leading it to conclude that the extreme cold experienced over the winter may have caused crystals to form in the product during shipping.

Do you really trust the logistical capabilities of Walmart's supply chain to properly control for temperature?

>Do you really trust the logistical capabilities of Walmart's supply chain to properly control for temperature?

Countless people buy temperature controlled groceries from Walmart and I'm not familiar with rampant outbreaks of food poisoning.

Do you understand that is an easier problem to solve or are you just trolling?

> Walmart already revolutionized pharma once by offering a huge list of drugs for $4/30-day and $10/-90 day

I was shocked to find that some of my prescriptions that were costing me $20 out of pocket with insurance at Rite Aid where $4 cash price at Walmart. I've moved everything I can to cash at Walmart, even in some cases where the Walmart cash price is a little higher than my with-insurance price elsewhere, just on the general principle that I don't want my insurance company to know what drugs I take [1].

[1] This stems from a time once when a condition I had improved to the point that I could stop taking drugs for it. A few months later it returned, and I asked my doctor to renew my prescription. He did so...and the insurance company rejected it. They were treating it like I was a brand new patient, and they no longer allowed that drug unless you had first tried a couple other newer drugs and they were not acceptable. I'd never had those drugs, but I'd had others in their families and they were either not very effective or had annoying side effects. I was willing to try the new drugs eventually, if this relapse turned out to not be temporary, but in the short term I wanted what we already knew worked well.

You might look up the company IMS and the states with mandatory prescription surveillance. When I was in the “biz” we could get prescription data at least by county, in some places by pharmacy and/or prescriber and, of course, for some drugs the patient.

Wait, you thought that info was confidential? Ha, this is the USA!

It's still confidential as patient identify is hidden.

Did you read my comment? It ended with, "and, of course, for some drugs the patient." Sometime we could connect directly with patients. Sorry.

Knowing this changed my use of pharmacies.

I'm pretty sure that you signed something with your insurance company that allows them to get a list of your active prescriptions even if you don't file a claim...

I saw the same thing at Costco. The thyroid pills my cat needed were $60 at a CVS or the supermarket, but only $15 at the Costco pharmacy. People just don't shop around enough.

This may be more my emotional/irrational reaction than anything, and if so please correct me. Seeing how WalMart treats it’s own poeple, and the lack of concern they’ve ever shown to the impacts of their stores on communities, I kind of doubt their commitment to my health in this scenario. I wouldn’t trust them to deliver what’s best for me, just what’s profitable for them.

I think you're missing the market effects of having a Wal-Mart. If Walmart moves in and offers MRIs at half the price of everyone else, then everyone else will have to offer better prices to compete. Someone who might not have been able to get an MRI at all will now have the Walmart option, and you'll still benefit from lower prices at your "premium" option.

Have you ever worked retail? Retail is just kind of a bad industry that sucks to work in. It’s generally unskilled with high turnover. So while Walmart sucks compared to desk jobs, it’s pretty good for retail.

I think they are great for communities. I lived in a rural community as a kid for many years without Walmart. We had no book store, no music store. Small under 1k people and one stoplight. They literally had only one science fiction book in the library (broken lands from empire of the east by saberhagen, super awesome book. Weird that that was the one)

Walmart opened close-by and all of a sudden I could buy books. They had so many more options. We didn’t have to drive 40 minutes for groceries. About 1/3 of the Main Street stores closed but they really sucked. Interestingly their employees had zero benefits and zero sexual harassment protections.

It was a small town where if you worked for the dime store you got no vacation, no benefits, got paid 50% if you were black. Lots of lame stuff. At least wal mart paid you some benefits.

Walmart isn’t some all positive entity, there are negatives. But they aren’t horrible and are a huge positive force for the poor by lowering prices.

It’s very frustrating to hear a rich person complain about Walmart when they haven’t had to need their groceries being 20% cheaper than Kroger or 50% less than Whole Foods.

Couldn't agree more. Ultra cheap options is exactly what healthcare needs. 95% of medical issues don't require expensive equipment or highly trained practitioners to treat. Your broken bone doesn't require the very latest X-ray machine - the one from 20 years ago will do fine. The nurse practitioner can handle your UTI. You don't need someone who went through residency for that.

There is so much cost to be saved all over the system if we could break some of these anti-competitive thickets. Walmart is an excellent choice for doing that sort of thing.

I agree, cheaper health care is what we need, and hospitals can cut back on some unneeded expenses to make that happen... but my fear is we'll just see more low-cost low-benefit healthcare plans instead. I'd work with an older x-ray machine if it meant a little cheaper price. I wouldn't, however, buy a healthcare plan than didn't include x-rays just because it was cheaper.

Well, the hope is your plan would cover what is required to treat a given condition. I.e. if you have a simple broken bone, you get the cheap x-ray. If you have a complex fracture that requires fine resolution, they cover the brand new fancy x-ray. The problem right now is: Your doctor prescribes the fancy x-ray as a catch-all, for everything that requires an x-ray. The insurance company then gets billed for "x-ray", which the doctor said was necessary. There is no incentive pressure for you to choose the cheap one, because you're not paying. The doctor doesn't care because they're not paying. And the insurance company gets screwed - but they're a business, so what do they do? Raise rates for everyone, and pass it on down the line.

Someone commented but was downvoted (apparently because they work for an insurance company?), and they deleted their comment. I think it's informative enough to quote here for history:

> Actually, in many cases, we slap an authorization requirement on the fancy imagining or deny the claim for a lack of medical necessity. (Source: I work for an insurance company)

You want to improve healthcare? Fix drug prices, fix the adversarial model between insurers and providers and do whatever you have to to get patients more facetime with clinicians. Connect and coordinate care - especially post discharge. Worry about things outside of medicine like food or social isolation or financial health.

I think that's true when they can tell the difference. But a lot of times, the doctor is just "go get an MRI, and hey, why don't you go to the place in our building". The price will be 3x higher than the place down the street, but the patient doesn't know that or care. Now, some insurers do indeed have strict in-network requirements, where they approve each place and how it provides care, and that can be a reasonable solution to this problem, but patients hate it, so many of them don't do it, and instead absorb this cost.

> You want to improve healthcare? Fix drug prices, fix the adversarial model between insurers and providers

What does 'fix drug prices' mean though? And why would 'fixing the adversarial model between insurers and providers' help things? In every other setting, adversarial models push costs down. These seem more like aspirations than solutions.

Welcome to Costco. I love you.

Until you buy a box of crackers and realize the price per gram is higher than equivalents at the grocery store that just come in larger boxes. The more you investigate walmart, the more you find you're not actually saving much. It's not worth the sub par customer service, deceptive product offering and questionable quality to me.

How is it going to be worse? Are they going to save on sterilization and wash them in a kitchen sink ? Unless you have a very specific condition like a specific type of heart disease or rare cancer, you will be fine even without paying $50k for childbirth. Not to mention that for healthy people a nurse can tell you what you have and prescribe an anti-biotic.

Read some scary charges: https://www.rd.com/health/wellness/wildly-overinflated-hospi...

"Charge for a nurse to hand you medicine taken by mouth.

Charge to patient: $6.25 per instance, for a total of $87.50 during average patient stay"

Maybe. I have bought hunting gear from them and it’s substantially superior to the crap from, say, bass pro shops. WM are clearly selling to folks who plan to, or need to, eat what they catch so the gear has too be inexpensive and practical.

They have also been a major player in getting dairies etc to become organic.

On the other hand, they do have some good stuff, too.

For example, their "Great Value" brand LED light bulbs have been excellent for me. They would be great at their normal $2 price for 8.5 Watt 800 lumens with a claimed 18 year life bulbs. I happened to get them when there was some sort of instant rebate going on (sponsored by my power company, I think) where they were $0.17 per bulb. I got something like 30 and replaced pretty much every incandescent I had.

Only about 12 of these are in places where I use them heavily. Of those, I've had no failures [1], and no noticeable apparent dimming over the first year. I also have some Cree bulbs with similar specs that are a year older and cost an order of magnitude more than the $2 Walmart bulbs when I bought them (but now are only about 4x as much). The Crees lost a lot of brightness over the first year, and 2 of my 4 died within a couple months.

[1] I'm not counting one that I dropped onto concrete in my garage when trying to screw it into a fixture in the ceiling. The bulb is plastic and was not damaged, but it broke something on the circuit board inside.

Their LEDs have been great for me, but their CFLs were terrible. I have CFLs from Home Depot that are still going after 10 years. My Walmart versions often died in less than a year. Clothing is another thing -- I've gotten really good at supergluing their shoes back.

That said, I still buy from Walmart, but I'm much more careful about what I get. I've gotten good use out of kitchen ware, household goods, LEDs, etc.

This is actually fine for something like healthcare.

We get into this sacred idea that you _must_ have the best healthcare and treatment. Once you declare something as a _must have_, it becomes extremely expensive. Think education, healthcare, automobiles.

In reality, you don't need the best treatment, just very low cost "pretty good" treatment. Taking an IV shouldn't cost $900 using some advanced equipment. It should cost $50 with a cheap plastic bag hanging from a wall hanger.

We also need to scale medical malpractice lawsuits wayyyyy down. IMO doctors aren't out to get or harm you. Most of them want to help. It's impossible not to make mistakes as human beings. You should be able to take that risk, give that you're ok with driving on the road which is one of the riskiest things you have accepted

Yeah, the 'best' care is needed mostly for critical life threatening situations and for emergency situations such as accidents/fire etc. If one were to see the relief camps or first aid offered during war, it becomes pretty evident that a well sterilized plastic bag should suffice for IV. Probably not even costing 50$.

Getting to "good enough" touches right at the center of the healthcare problem.

But, aren't those things determined by medical boards and not insurance companies?

Yes, but someone has to translate a medical board's opinion into decisions about what is covered and what isn't. That's what insurance companies do.

I'm not sure you've personally used "'pretty good'" treatment. There's a reason why generics and off-branded items are so cheap, and it's not because they don't do marketing. If you don't know: they're shit and the FDA will not prosecute large equivalency discrepancies.

I'm also not sure you've visited small town/rural doctors. While perhaps in the city (and under private coverage), doctors have natural competition with other professionals to provide the best service. Whereas doctors under relatively "public" coverage and in small areas without competition/alternatives, they really don't need to offer good, or even ethical service. It may not even be hugely unethical, like pulling wisdom teeth, when they're not causing issue or doing unneeded surgeries for "preventative" measure, or liberally prescribing medication under the guise of "quality of life improvement."

This post gives off a very strong sense of disassociation from the reality of things for the not-so well-off, i.e more than 90% of the population.

> There's a reason why generics and off-branded items are so cheap, and it's not because they don't do marketing. If you don't know: they're shit and the FDA will not prosecute large equivalency discrepancies.

You need to back this up with some citations.

Sure, do you want evidence that generic manufacturers don't follow strict quality control and equivalency testing? I can dig those up from the FDA's database.

Do you want evidence that generics manufacturers fake their equivalency tests? This is going to be harder, because the FDA doesn't publish the private sector data. I can try to see what I have on hand.

Do you want evidence that the FDA doesn't prosecute these huge problems? I can only point to the routine handing out of the equivalent of "yellow cards," i.e warnings of misconduct, but still allowing repeat-offenders to sell in the U.S.

Considering the large degree to which your claims contradict the conventional wisdom of "generics are just as good as name brand drugs," it would be good if you actually gathered and presented some of this evidence (and demonstrated that these issues are prevalent/damaging enough to matter) instead of just threatening to do so.

Please feel free to provide some citations. I think if you make claims that you say are easy to dig up evidence for, it would be good if you did so.

That’s nice, but we all want you go dig that up.

I think the OP is overstating by calling generic drug "shit". However, generic drugs do not have to be identical to the branded versions. As measured by pharmacokinetics, they need to fall within 80% to 125% of the branded version. So there is some variation. This webpage does a nice job explaining.[1]

The generic drugs also do not have to have the same excipients (inactive materials used to make the final drug product like a pill or capsule). Normally this doesn't matter, but if you have an allergy to an excipient, the branded might be the only one you can take.

Finally, there have been issues with some generic drugs, namely generic Wellbutrin. The FDA asked for bioequivalence data on some dosage forms, but not the 300 mg pill. That pill released drug much faster than the branded and patients had some nasty side effects as a result. I've also heard the same with some generic anti-epileptics. Epilepsy is a disease where drug levels need to be very tightly controlled.

[1]http://www.pharmacytimes.com/contributor/timothy-o-shea/2016...

Why is pulling wisdom teeth unethical?

It's not.

Yeah, the pre-packaged Roblox toy my son got there for $5 cheaper was so much worse than the one at Meijer. j/k

Further consolidation is very unlikely to reduce prices.

I think this case will be an exception. Walmart values its pharmaceutical business as a transactional commodity, like much of the rest of its business. That said the primary concern is increasing quantity of transactions opposed to rate of return.

They are willing to lose money in the short term on price depreciating generic drug offerings provided that people will continue to consume those drugs well into the future. This is part of the solution to a problem of over-night skyrocketing drug prices from unethical drug companies. If that such model can be effectively applied to low-cost health insurance for low-income people then the country is much better for it.

I'd be happy to be proven wrong, but I remain skeptical.

I agree. If you graph performance (or quality) and it's a horizontal line, you're doing it all wrong. It needs to go up and down but generally up. It means you're trying things in order to improve. Sometimes you get it wrong but that's ok, as long as you fix it and get the trend going back up again.

I never understand the bickering about just trying something. It makes no sense. Everyone agrees it's broke, so pick something to fix and do it and monitor the results.

Walmart isn't a charity. They're not getting into this market because they want to cut prices.

I see we're moving along steadily towards corporation as nation-state. Hello, Snow Crash!

If corporations become nation-states it is simply because our government is drastically ineffective. Sad stuff, but it does seem to be happening.

It won't happen "simply" because our government is drastically ineffective. It will happen because there are a large number of Americans ideologically committed to the notion that government despite what the rest of us believe and know.

The problem with that is that it places a fiscal incentive on the companies to make the government as ineffective as possible, in hopes of exploiting regulations and quashing competitors.

The solution to corporations breaking the government isn't to just say "well, it was ineffective anyways".

I think you're correct. It does place that fiscal incentive. But can you honestly look at the last 20/30 years and say that private companies haven't tried to make the government as ineffective as possible?

Lobbying is huge. There are innumerable ways for incumbents to secure rents. Healthcare companies keep cashing blank checks from the government. Amazon also basically eliminated a huge chunk of tax revenue by turning retail into a profitless endeavor.

The solution is to make our government respected, effective, and intelligent. That's hard.

The solution seems like it should just be a given, yet at the same time is really asking a lot of America.

It's pretty crazy that the combined market cap of 5 companies: Walmart, Amazon, Google, Microsoft, and Apple [0] are essentially equal to the entire GDP of Africa [1].

[0] https://www.marketwatch.com/story/amazons-market-cap-falls-b...

[1] https://en.wikipedia.org/wiki/Economy_of_Africa

It's a meaningless comparison. GDP is annual. Market cap is supposed to represent all future income in perpetuity at a discount. It's like comparing the annual income of person A to the net worth of person B.

We live in a democracy. We pick our representatives. I suspect the East India Company would have not had much success lobbying John Adams, Ben Franklin, Alexander Hamilton, Thomas Jefferson, James Madison, ...

The problem is something probably much more insidious. A wide electorate of mostly uninformed voters selecting political representatives is not necessarily going to pick the best representatives. And I'm obviously not just talking about having a reality TV star as president. This deterioration of politicians has been going on each and every election for decades.

We've gone from having politicians who spend their time writing on political theory and philosophy to an era where the only writing they do is having ghost-written self indulgent biographies written for them followed by giving high dollar for-profit speeches in thinly veiled pay-offs making themselves multi millionaires in the process. And I'm also not just talking about Obama there. Paid speeches as a thing began with Gerald Ford. Prior to him presidents actively avoided the activity, considering it exploitative.

Perhaps this comment from one of Podesta's emails [1] from Bill Ivey sums up the situation quite succinctly:

"And as I've mentioned, we've all been quite content to demean government, drop civics and in general conspire to produce an unaware and compliant citizenry. The unawareness remains strong but compliance is obviously fading rapidly. This problem demands some serious, serious thinking - and not just poll driven, demographically-inspired messaging."

A democracy based on a society where most people are extremely ill informed is going to produce results that are not optimal. You need to either have a well informed population, or restrict voting to those that are. The former is probably impossible, and the latter is also now probably impossible due to the fact that it'd end up similar to gerrymandering - but orders of magnitudes worse. So now we get to see what happens when we set the inmates in charge of the asylum.

[1] - https://wikileaks.org/podesta-emails/emailid/3599

Years later, I still haven't decided if Snow Crash is utopian or dystopian.

I think the same of real life.

We’re already there.

Come to think of it, VR Chat is almost the Metaverse.

I think it's smart for Walmart to diversify it's business into something other than retail. They need to grow revenue for shareholders, I don't think there's any more large-growth opportunities for Walmart in that sector.

I do think this move is rather unoriginal, and is a 'me too' effort vs CVS & Aetna.

Walmart is the #3 largest Pharmacy in the US, so there are potential savings and efficiencies to be had with a health insurance merger.

I do think this move is rather unoriginal, and is a 'me too' effort vs CVS & Aetna.

There's probably a little CVS/Aetna in their decision making, but I'm pretty confident this is much more an "Oh crap!" response to the Amazon / Berkshire Hathaway / Chase Healthcare venture announced earlier this year.

Walmart sees Amazon already looking at its core markets: cheap Chinese crap, groceries, pharmacy. Its choices are to compete or to watch Amazon do to it what it did to downtown shops over the last 40 years.

It feels like everything Walmart does is in part a response to Bezos. And given Buffett's exit last year, maybe him too.

It's not a totally crazy response, though. Even considering Berkshire and Amazon haven't announced any real details and could basically just be self-insuring their workers through a nonprofit they fund to reduce administrative costs and taxes.

But it's like corporate Go. You so much as signal interest in a corner and the other side has to reposition itself so it could defend the possibility.

I'm assuming this might be a move to diversify knowing they will eventually be losing substantial market share to amazon. Kind of terrifying really, to think if they are going to apply the same business practices they've used in their retail stores to healthcare.

This really is an excellent addition to the horror show that we in America call a health system.

I bet this is an answer to the JPM + Amazon + Berkshire initiative

It's worth noting that Walmart already has some sales agreements with Humana. My in-laws, for instance, have a Walmart-Humana Medicare part D drug plan.

archive.is version https://archive.fo/5g19p

Why does people keep posting articles behind paywalls here on HN?

From the FAQ:

> "Are paywalls ok?"

> "It's ok to post stories from sites with paywalls that have workarounds."

> "In comments, it's ok to ask how to read an article and to help other users do so. But please don't post complaints about paywalls. Those are off topic."

https://news.ycombinator.com/newsfaq.html

The mods have commented extensively on this as well. Here's a Tell HN where 'dang explains:

https://news.ycombinator.com/item?id=10178989

And more comments, if you're interested:

https://hn.algolia.com/?query=author:dang%20paywall&sort=byD...

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