During the Berkshire Hathaway annual shareholder meeting on May 1, 2021, Warren Buffett and Charlie Munger admitted the failure of Haven, the health care initiative launched in 2018 by Jeff Bezos, Warren Buffet, and Jamie Dimon. After reading the original declaration of the three giants of business, I warned (see below) that they would need a lot of courage to succeed. Today, it is an explanation of why it did not work. To give them credit, it takes courage to concede failure. HAK. May 2, 2021
Three titans of American business – Jeff Bezos, Warren Buffett and Jamie Dimon – want to fix health care. One can only applaud the way Warren Buffet summarized the problem: “The ballooning costs of health care act as a hungry tapeworm on the American economy.” Jeff Bezos added that they “enter into this challenge open-eyed about the degree of difficulty,” believing that what is at stake “would be worth the effort.” Jamie Dimon clarified: “Our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans.” In brief, their aims are high.
They will try to do what for decades politicians have miserably failed to do. When attempting to fix health care, will they have the courage to apply the same meticulous business logic and the same cold money calculations that made them successful in their businesses? Or, will they act as warmhearted politicians putting wishful thinking ahead of what made them successful in business? It is a valid question since in the opening of their statement they declare their desire to reach their objective “through an independent company that is free from profit-making incentives and constraints.”
This is a clear contradiction to what Warren Buffet claims just a few lines later: “Our group does not come to this problem with answers.” Limiting a possible solution to not-for-profit options means crossing out about half of the possible answers, leaving one of the variations of a single-payer system as the only possible solution.
The crisis of health care as we had it before Obamacare was seen by about half of Americans as proof that the for-profit market approach did not work. This point of view was represented in the report by the President’s Council of Economic Advisers heralding Obamacare, recommending even more government regulations. Consequently, government’s role was expanded by the Affordable Care Act. The opposing view, supported by mostly the other half of Americans, was that the crisis in health care was caused by already too many regulations to the point that market forces had no room to work. Now, when Obamacare increased the costs of health care, the same disagreement remains; some blame the failures of Obamacare on not enough government control and want even more of it, while others want exactly the opposite. Will our three challengers have the courage to address this dilemma using the same iron logic they use when making their business decisions? Will they apply the same cruelty of the accountant that 2+2 always equals 4? Or, will they act as compassionate politicians who tend to believe that with goodwill and common effort we can make it into 5?
Politicians have failed so far because the nation is almost evenly divided; about half of Americans are deeply convinced that health care is and should be considered like any other service business, when another half believes that it is something special where no business logic should apply. In times when almost half of young Americans prefer socialism over capitalism, profit does not receive good press. Our three masters of making profit, when approaching health care, are trying to please the populist views of the masses that profit is bad. Do they have the courage to look in the mirror and see how awkward it is?
Worrying about being reelected, politicians skillfully avoid any essential public debate of this deeply divisive issue. Free from this kind of worries, will our three titans have courage to engage in open public debate with people of opposing views? And, after making a determination as to what the better option is, will they stand behind it? In particular, when asked about the best health care option, will Alexa answer with the meaningless wordiness of a politician, or will it give us the sharp, clear answer of a business person?
One can notice that the political divide among Americans on health care is just one of many. Similarly deep divisions exist on immigration, climate change, education, taxes and the role of government in general. In times of unprecedented abilities to communicate, Americans have lost the ability to discuss issues of the greatest public importance. Many Americans are deeply misinformed, and major media outlets can be blamed for this. Editorial pages, instead of dissecting in front of their audience the most valuable ideas, became a propaganda tool for this or that political orientation. Political commentary turned into reporting about the indolence of politicians. Guest writers are selected based on the names that readers can recognize, not on the value of ideas they can bring. Jeff Bezos owns the Washington Post, one of the major nationwide papers. Will he have the courage to order editorial page editors there to bring to light and scrutinize in public all major ideas as to how health care could be reformed? The Washington Post can help the public to understand the core problems of our health care, but will Jeff Bezos have the courage to change the editorial format of the Washington Post and will his partners in this venture support such a move?
By forming an independent company to provide health insurance to their employees, the three leaders of American business take as a given that health care should be provided by employers. This practice started during World War II when employers offered extra benefits to attract workers, circumventing government-imposed wage limitations. It is a relic of a wartime government intervention into the economy. If personal freedom and the right of each individual to pursue happiness are core American values, then health insurance chosen and paid for by corporations is downright un-American. It means undignified patronizing. It is limiting someone’s freedom of life through a dependence that shouldn’t be business-related and yet remains attached to the employment contract. Before proceeding further, will our three leaders be brave enough to ask for the ability to select workers from a pool of people healthy enough to do the job without having to take into account the cost of their insulin injections or the cost of healing the broken bones of their children? Should not the health of the public be a part of the infrastructure like water, sewer, education and national security? And obtained in a similar manner? Will our three leaders have the courage to ask rebellious questions of this kind?
In the recent interview, justifying their involvement in fixing health care, Jamie Dimon pointed that they want happier employees. He can make employees happier by creating satisfying work environments and by providing decent pay. Health care should be an employee’s personal matter. If Mr. Dimon will get engaged in employees’ wellness, what will be next? Will he need to hire a matchmaker to help his employees find happiness in their relationships? And, if this will not work out, should the employer pay for divorce attorneys later on? The line needs to be drawn between the business duty to compensate employees according to the value of their work, and employees’ personal matters.
As public persons, our three businessmen have the responsibility to do whatever is in their powers in order to reform our health care system. If the objective will be to put individuals in charge of their own health, in order to make it work, the current system of yearly health insurance contracts will make no sense, as for a person his or her health is a lifelong affair. Any meaningful health insurance plan needs to cover the whole lifespan of a person. Will our three ambitious leaders be brave enough to consider such a novel concept?
Warren Buffet can start with trying to find a definition of health insurance in the lengthy text of the Affordable Care Act. He will not find it because it is not there. What now is called health insurance is more a yearly prepaid health maintenance contract, heavily subsidized by taxpayers. Will our three leaders aspiring to fix health care have the courage to start with defining what health insurance is and should be?
On the receiving end, from both the employee’s and employer’s perspectives, the health care system, as we have it now, appears to be a super-complicated mechanism that needs many more additions here and there in order to work slightly better. At least this is what one can hear from politicians, who have failed many times trying to fix it. Will three titans of American business have the courage to take an Ockham’s razor and cut through all the nonsense that we have? If they do, they might conclude that they do not need to start a new company, because people already involved in the health care industry are well-equipped to do it fine and they can do it well as soon as they are free to follow “profit-making incentives and constraints.” Courage is the only thing we need. Will they have it?