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Their notion was to reduce costs, not (necessarily) to earn more profit.

They wanted to reduce medical costs, and therefore their insurance costs, basically. I worked in a health tech company when this news broke years ago and was skeptical then. Health care is a hard industry with tons of perverse incentives and opposing interests. Any solution for our health care costs will include government regulations and laws. The private sector cannot, on its own, do it.

The existing profit margins are a rough measure of how much you can expect them to reduce costs, absent any technological advancements that lead to more efficiency.

If there’s multiple huge companies operating with similar, small profit margins over the course of 10+ years, it probably means they have optimized as much as possible within the constraints of the existing system. Hence, I would conclude that any further optimizations would have to come from changing the constraints.

There is a large administrative load for all healthcare which seems to serve no one except the hospitals (to avoid paying any local taxes their non-profit status does not get them out of), and the insurers (who justify their margins by negotiating through the bureaucracy).

The three companies all self fund their employees insurance, so the goal was to cut out some of this bloat by providing services directly to employees.

The Amazon Care implementation was amazing, it's unclear why it failed. I would speculate its because costs are dominated by services they didn't provide (emergency rooms etc).

Sure, but if it was as easy as cutting out the bloat, then wouldn’t Kaiser Permanente (KP) be the healthcare insurer/provider of choice where it exists?

Yet other plans are able to compete on the west coast.

KP has always been about the cheapest option for me. The Google/Stanford health plan was marginally cheaper when it launched while I worked at Stanford and then later at a Google subsidiary but living in SF they had very few local doctors (most of their network was down in Silicon Valley.)

People are certainly willing to pay more for PPO plans which give them more options but personally I’ve never run into problems with KP. And the California rule which means hospital charges for HMO patients are capped at the deductible for an out of network ER visit is hugely important. Otherwise you get nickel and dime’d by all sorts of charges for each professional who sees you in the ER and some hospitals even went after patients for $1000s when they charges more than the insurance company would pay. https://www.sfchronicle.com/bayarea/heatherknight/article/In...

> Otherwise you get nickel and dime’d by all sorts of charges for each professional who sees you in the ER and some hospitals even went after patients for $1000s when they charges more than the insurance company would pay.

The No Surprises Act took care of these issues nationwide as of Jan 1, 2022:

https://www.cms.gov/nosurprises

It took less than 6 months for hospitals to find a loophole. Participating Providers.

https://www.npr.org/sections/health-shots/2023/02/28/1159786...

Well, that is some nonsense that is ridiculous to have been left out of No Surprises Act. Although, at least in this case, it still seems the state government says the loophole is not valid.

> The office told KHN that the "participating provider" contract does not override the laws barring out-of-network charges in emergency situations. "Danielle had an emergency and Regence acknowledges it was an emergency, so she cannot be balance-billed," said Stephanie Marquis, public affairs director for the Washington state Office of the Insurance Commissioner.

> I feel like a lot of the costs in medicine have to do with liability, and without tort reform, there is not much any business can do about costs.

Medicine is life-or-death. It would make sense that carelessness and dangerous products would cause serious damages including to the point where certain providers and drugs are not commercially viable because they literally do more harm than good.

Sure, but that doesn't mean that the liability costs does a good job at gauging that tradeoff. Cost may not be proportional to harm, and may not include to cost of inaction.

Just speculating but maybe the Amazon advantage is in b2b rather than b2c. In terms of AWS or Marketplace they have huge experience in selling managed resources to other companies. Maybe that approach could be applied to real world resources. Wrap everything in an API and offer everything on the same single vendor platform.

Personally I picked KP purely because I had no interest in playing middleman between my doctor and insurance company.

The US healthcare market is a complete clusterfuck. Other countries get comparable outcomes from universal healthcare for about the same outlay as we already spend on public healthcare.

I've wondered about this. KP and Geisinger are the closest things I've seen in the US to European-style private healthcare, albeit more vertically integrated, yet why isn't it so popular in the US?

KP has a reputation for rationing care and more bureaucracy when seeking specialists compared to other insurance.

It is a good value, and works well for those who 1) aren't particularly involved in directing their own care or 2) are extremely aggressive in asserting themselves. People in the middle get frustrated.

> KP and Geisinger are the closest things I've seen in the US to European-style private healthcare, albeit more vertically integrated, yet why isn't it so popular in the US?

Kaiser has a reputation for being incredibly inflexible and rationing care to a degree that makes it a non-starter for anyone who has any healthcare needs beyond routine care (assuming they have an alternative to choose from). They have incredibly restrictive network rules, and they make it much harder to access non-routine care (additional hoops to jump through, etc). It's a very frustrating experience unless your care needs happen to align exactly with what their actuaries have determined is optimal.

This is not really surprising - it's exactly what you'd expect would happen when an insurer is directly responsible for clinical care (as much as integrated capitated healthcare systems pretend otherwise by using different terms to describe themselves, at the end of the day, that's exactly what they are: medical practices run by health insurance companies).

Because you don't get to choose your insurance provider in the US. Your employer does that.

I’d be wary of this decision since now you’ve elected to just work with the insurance salesperson, whose goal is to spend as little as possible on you. Providers at KP regularly tell you to “advocate for yourself” because now the doctors are beholden to the insurers. The regulatory agencies allow KP to self-police their quality metrics, so oversight is limited. As a KP member you waive your right to sue them for malpractice and have to engage in a KP designed arbitration process. If you’re in California there’s a limit on malpractice damages ($350k no death / $500k death) so chances are no lawyer will take a case against them unless it’s extremely clear cut and won’t require any domain experts ($$$).

KP may officially be a non-profit, but their CEO rakes in millions and their physician group is a separate for-profit entity.

There are some providers that make heroic efforts to provide quality care, but the overall culture seems to be very bureaucratic and big-co checkbox exercises.