YC: Requests for Startups

You mean they provide self-funded insurance, or are literally underwriting plans? It's quite common for companies to be self-funded/"self-insured," but rely on a large payer like Aetna to do all the work.

If they cut out the middleman, they could negotiate directly with providers and Pharma, lowering the "fully loaded" cost of their payroll. It would be a massive savings.

Once they did it for 1M people, the hard work would be over, and they could sell Amazon plans to the public.

They use Premea Blue cross for administration of the plan.

They created a joint venture with JP Morgan and Berkshire Hathaway several years ago called Havaen to try and fix insurance; however, it was shut down. https://hbr.org/2021/01/why-haven-healthcare-failed

There's no real underwriting per se. My understanding is that Amazon just pays claims as those come in. They rely on large payers to do all the network and formulary management including negotiating rates with providers. There's no reason to expect that Amazon could negotiate lower rates than Aetna, which already covers 22M lives.

In order to achieve any real savings, Amazon would have to build up a captive provider organization with practitioners as direct employees. Which all of the large payers are also increasingly doing. Basically the industry is consolidating and converging on the Kaiser Permanente business model. Eventually most US residents will obtain healthcare from a handful of huge nationwide "payvider" organizations.

Yes, and Amazon could have jumped in. They already had providers via Care and One Medical. It would have been a small leap to buy whole hospital systems.