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How Amazon Could Upend the Healthcare Sector

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Amazon to team up with Berkshire Hathaway and J.P. Morgan

E-commerce giant Amazon.com (AMZN) has joined forces with Berkshire Hathaway (BRK.A) and JPMorgan Chase (JPM) to create a not-for-profit healthcare company for all US employees in an effort to reduce their workers’ health costs. This marks yet another attempt by the tech behemoth to disrupt a sector.

This is massive news for the healthcare industry, and it could potentially have consequences for health insurers as well as for tech firms that are ready to be acquired by the company or are already partnering with it.

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How the plan can affect the healthcare industry

This plan was made with the intention of tackling the surging healthcare prices across the US. Spending on healthcare in the US accounts for nearly 20% of US GDP (gross domestic product), according to CMS (Centers for Medicare and Medicaid services). The US healthcare sector, of course, is at a crossroads as the future of the Affordable Care Act remains in question.

Amazon’s plan is still in its early stages of development, as only the formation of the company and moving ahead has been decided, according to the Wall Street Journal.

This led to a slide in the healthcare stocks (XLV) on Tuesday, as the graph above shows. The most-affected stock was Cigna (CI), which fell by 6.6% that day.

Continue to the next and final part of this series for a look at the latest news from Samsung.

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