As the beast of Obamacare is put out of its misery, health care innovations spring up, starting with Amazon, et al

The stock market was rattled by news of a bigfoot new entrant in healthcare, slowly coming up the horizon ... thud ... thud ... like Godzilla, stomping everything in its path.

Investor's Business Daily, in its editorial, noted the that that reaction to the news that Amazon was teaming up with Berkshire Hathaway and JPMorgan Chase was the sign of a disruptive force in the market, writing:

The immediate reaction of the stock market to the news that Amazon is teaming up with Berkshire Hathaway (BRKB) and JPMorgan Chase (JPM) to form a new health care company suggests that this is a transformative event. It is in one sense.

The editorial makes the point that the new venture, in a free market, may or may not succeed, and must avoid socialist pitfalls. As the editorial page writers there have a strong grasp of market dynamics and the way companies behave, the piece is well worth reading.

For me, (and full disclosure, I used to write for IBD), what's vivid is the flip side of this. We seem to be in for a healthcare spring.

Suddenly, a new player, with new ideas, and new innovations, is entering the markets.

Did anything like this ever happen under Obamacare? Actually, it would never have been possible with Obamacare. Obamacare stifled innovation, customer service, added value and everything in healthcare, that, out in retail land, made Amazon great. And now the end of the Obamacare mandate opens the door to improvement. In hindsight, the effect is obvious.

After all, the new venture was announced just after the GOP tax cut, which not cut the corporate rate to 21%, and most significantly, it freed consumers from the nightmare of Obamacare with its detested mandate, as President Trump noted in his State of the Union address last night. That mandate was in fact, a poverty tax on the middle class and working poor people who could not afford Obamacare plans. Paying that poverty tax prevented them from buying anything else in the health care market that might work better for them.

Now, the nightmare is over and new companies are springing up, far freer to provide the services customers want and cut costs that drive premiums up and customers away.

The mandate forced unwilling buyers into Obamacare programs run by just a few corporate giants, whether they liked it or not. They were a captive audience, everyone knew it, and thus, the trapped consumers could be jerked around because companies (and their government allies) set the terms. That was one reason why health care costs kept going up and up, and available services kept going down. As buyers quit anyway and went without health insurance, costs went even higher. It was as bad a system as was possible to be, and it encouraged health insurance providers to entrench themselves in their privileges with no incentives to change. They were like a nomenklatura, an elect, an elite, same as in the Soviet Union. Consumers had absolutely no input, given that the Obamacare mandate forced them to participate or be fined.

Now those customers have a potential choice. According to the New York Times report on the matter, which is full of good tidbits, JPMorgan Chase's Jamie Dimond believes the new non-profit being set up could move beyond being merely a company vehicle for health care insurance (which these companies already provide), and in time become available for everyone, presumably if they get it right. The Times notes that if the model is successful, competitors will follow and they may make it to the broader market before Amazon.

As for the new beast itself, all eyes are on what it will be like.

Amazon & Company seem to want it to be a non-profit, which may not be as bad as it sounds, given that health insurance and even health care itself is not an ordinary willing-buyer, willing-seller, market. Nobody actually wants to use the service they are buying, they only do if they have to, which is not an ordinary, straightforward market dynamic. And, health providers benefit when people get sick, which is not an ordinary market, which health insurers lose money if they have to pay for services, rather than gain. That someone's loss is someone else's gain is a tough dynamic in markets that normally operate on win-win. So non-profit, just as the Associated Press and educational establishments run on, is not out of the question, a company can still deliver a quality product on such terms and not be a complete charity.

American Thinker writer Joseph Smith has some knowledgable thoughts on how this might work out, too, in his blog piece here.

With the Republican tax cuts, and the end of the Obamacare mandate, suddenly everything is wide open. Amazon and its cohorts will offer a model. But so may others and people should be ready to see more. Meanwhile, existing health care companies will themselves be spurred to do better as competitors emerge, and some may succeed nicely. What we have here is a freer market and with freer markets, consumers benefit and more winning for everyone is in the works.

Had enough winning yet?



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