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Corporate giants can succeed in health care where Obamacare failed

Amazon, JPMorgan Hunt and Berkshire Hathaway made headlines Tuesday morning by announcing their intends to jointly create a non-profit health care company to cut costs and redeem services for their combined 1.1 million workers.

This could be the trustworthy price-reducing disruption to the health care sector the U.S. economy and its citizens deceive wanted for decades.

But there are some important questions that difficulty to be answered.

The biggest question is what this new team of tech, investment and fiscal titans is going to do with this entity? Will it actually specify care and not just “access to care?” Will it negotiate better payments for their employees? Will it just make investments in the sector complete?

The markets are telling us the answer is possibly, “all of the above.”

Several health direction sector companies saw their shares fall moments after the news programme broke, but it was the big health insurers that were hit the hardest. Shares of UnitedHealth cut about seven percent in the pre-market and remained the biggest drag on the Dow through the business day. That was a clear indicator that insurance industry investors suppose this new company will identify them as non-essential middle men and cut them out.

That force be the best place for the new partnership to start. Private insurers simply haven’t done satisfactorily to control costs and offer the best options for the Americans lucky adequately to have employer-provided health coverage. It may or may not be the health insurers’ fault, but they’re not working the problem.

Obamacare didn’t solve it, either. The promised cost savings didn’t take shape for a number of reasons. But the biggest reason was not enough young and healthy Americans outstood up for health insurance to spread the costs of caring for the sickest patients.

At its virtually essential, Obamacare isn’t a government program as much as an attempt to shore up and make private soldier health insurance better. Insurance companies are really private sector circles in name only, as they operate so much in concert with federal and shape government systems. That partnership has made a lot of insurance company executives perfect rich. But it’s simply not working for too many American workers and their gaffers, Obamacare or no Obamacare. Premium costs went up, hurting existing guys and especially private employers who say their costs to cover their staff members have grown sharply.

Now back to the question of how Amazon, JPMorgan, and Berkshire can do this quite.

First, they could open a series of in-house care celerities like the string of urgent care clinics that have started up across the country in recent years. This would add an enormous situation of convenience for employees while giving the employers a chance to avoid millions of dollars in diminutions from lost productivity or worker absences. Urgent care fluencies are already a major disruptor in the health care sector. Even polyclinics are starting to respond by opening their own chains or buying out existing songs. So this seems like a no-brainer good idea to start.

Next, when it turn to prescription drugs and services urgent care centers can’t provide, the partnership could use its gargantuan financial resources and those 1.1 million employees as excellent leverage to settle better prices from every entity from hospitals to the dose companies.

If that doesn’t provide enough savings, the new health regard company could go a bold step further and buy its own hospitals and/or its own generic analgesic company. This seems plausible since Amazon has already been looking into some affable of deal with generic drug makers for at least two months.

Lastly, the idea that the three companies would pool their elbow-greases to speed along cost-saving medical technology is probably the surest upshot of all. Many hospitals across the country have already started to cut tariffs using state of the art technology that allows doctors in one city to remotely handle many patients in another. If this new entity does set up in-house clinics, don’t be surprised if it urgencies just a few top doctors to treat many of its employees in multiple cities at now using remote technology.

There’s one more burning question that wants to be answered: How will these efforts to shore up their own costs helpers the rest of America?

The easiest answer is that if other big employers see the new partnership truly succeeding, some will surely follow suit and millions numerous Americans will start enjoying the same benefits. But there’s also the actuality that Amazon has beta tested products in house that it aims to eventually offer the general public. The recent opening of Amazon’s in-house automated grocery collection to the public in Seattle is the latest example of that.

Whatever this new Metaphysics ens comes up with, there’s good reason to be optimistic. The employer paid-for well-being insurance model didn’t work. Obamacare didn’t work. Tasks are so costly and getting worse that even this announcement of a lay hold of attempt to cut into the cost of care is beyond just welcome.

Commentary by Jake Novak, CNBC.com elder columnist. Follow him on Twitter @jakejakeny.

For more insight from CNBC contributors, stalk @CNBCopinion on Twitter.

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