Buffett on failed health care venture Haven: ‘We were fighting a tapeworm in the American economy. And the tapeworm won’

At the Berkshire Hathaway (BRK-B, BRK-A) annual shareholder assembly on Saturday, CEO Warren Buffett and his long-time enterprise accomplice Charlie Munger mentioned the failure of Haven, the joint health care venture with JPMorgan (JPM) and Amazon (AMZN).

“We learned a lot about the difficulty of changing around an industry that’s 17% of GDP,” Buffett stated. “We were fighting a tapeworm in the American economy, and the tapeworm won,” he added.

The joint venture was fashioned in January 2018 with the objective of enhancing the health care expertise and reducing prices of care for his or her staff. Experts said the venture, which disbanded in February, failed to take off as a result of the health care system is simply too advanced with many giant, longtime gamers and a content material help group.

“The most prestigious people in the community are on hospital boards, a lot of people that are fairly happy with the system,” Buffett stated.

[Read more: Why Berkshire Hathaway’s health care project Haven failed]

The venture did result in financial savings for Berkshire, nonetheless. Employer-based health care remains one of the largest sources of protection in the U.S., and prices proceed to rise yearly. 

“We found inefficiencies, and … we probably saved more than the other two partners because they knew their situation better. We found dumb things we were doing. So we got our money’s worth,” Buffett stated.

FILE- This mixture of file images from left exhibits Warren Buffett, chairman and CEO of Berkshire Hathaway, on Sept. 19, 2017, in New York, Jeff Bezos, CEO of Amazon.com, on Sept. 24, 2013, in Seattle and JP Morgan Chase Chairman and CEO Jamie Dimon on July 12, 2013, in New York. A health care venture created in 2018 by the three company giants to assault hovering care prices will shutter solely a couple years after launching. An organization spokeswoman stated Monday, Jan. 4, 2021, that Haven will finish operations in February. (AP Photos, File)

One of the challenges in altering health care, Buffett stated, is that its company health care prices are sometimes hidden for the common particular person.

“When you aren’t writing the check yourself, you may know that the health benefit from your company is worth $10,000 a year to you or $15,000, and may cost them that much … but you don’t see it. So it’s something that most of the people are not seeing as a cost to them, and they like that pretty well,” Buffett stated.

Munger stated no matter the end result, the venture tried to unravel a main downside in the U.S. health care system.

“Even though you shot and missed, you were at least shooting at an elephant,” Munger stated.

Health consultants like Larry Levitt, government vp of health coverage at the Kaiser Family Foundation, say the Haven trio aren’t alone in their failure.

“Warren Buffett is hardly alone among corporate executives in throwing up his hands at controlling health care costs. Even the biggest and most powerful companies in the country don’t really have the leverage to go up against the health care system,” Levitt instructed Yahoo Finance Saturday.

A recent survey from KFF discovered employers imagine authorities intervention is required.

The query is what do giant employers do now? They are uniquely positioned, and have the assets, to take on the system and foyer for insurance policies to restrain health care prices, Levitt stated.

Amazon has made the most seen efforts to disrupt health care in the shadow of Haven’s failure.

The firm expanded its curiosity in the mail-order pharmacy enterprise with its acquisition of PillPack, which it has now transformed into Amazon Pharmacy — with many anticipating an excellent higher enlargement into pharmacy providers quickly. Its cloud service, AWS, is more and more taking part in a position behind the scenes for every type of health entities, together with hospitals. The e-commerce large has additionally launched clinics for its staff, which some predict will broaden to the normal inhabitants.

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