STEVE INSKEEP, HOST:
Three prominent companies led by three very prominent executives say they want to shake up health care. Amazon, led by Jeff Bezos, JPMorgan, led by Jamie Dimon and Berkshire Hathaway, led by Warren Buffett, all vow to improve health care for their own employees, who number more than a million in total. The three companies are creating a new firm together to try to lower costs and more which we will discuss with Dr. Kevin Schulman, professor at Duke's medical school. He focuses on health care economics. Good morning, sir.
KEVIN SCHULMAN: Good morning, Steve.
INSKEEP: Do you think these non-health care companies can really do much?
SCHULMAN: You know, I think that it's a really exciting opportunity. We haven't seen a lot of dramatic change in health care in the United States in in a long time. Health care costs continue to rise. We're now at almost 18 percent of gross domestic product. And health care costs have increased by about 60 percent over the last decade. And almost all of that increase is price. So people from outside see this as an expense and see this as an opportunity to really shake up the system.
INSKEEP: I just want to clarify a couple things you just said. Almost 18 percent of the economy, so we're getting close to the point where 1 of every 5 dollars we make - all of us make - goes to health care. And you're saying almost all the increase is price. I think you're telling me people aren't getting any more quality for the extra money. Is that right?
SCHULMAN: There's very little evidence that the quality has been improving over the last decade. And until the last couple years, there hasn't been really dramatic new technologies coming onto the market to explain these increases in cost.
INSKEEP: Well, now that's interesting you mentioned technology because to the extent they laid out a plan at all, the three companies said they thought there might be a solution in technology. Is there some technological wonder that would really cut costs that much?
SCHULMAN: You know, to use some jargon, we think the business architecture is flawed. So imagine that you had all your data on Amazon - on an Amazon device. When you woke up in the morning, you didn't feel well, you talk to Alexa. And she said, you know what, Steve? Maybe you should come and see us or maybe you should get your blood drawn, and I'll set up an appointment for you.
INSKEEP: Oh, so the smart speaker is going to become your admitting nurse or whatever you want to call it?
SCHULMAN: It absolutely could. And the backbone of this could - would have to be access to really high-quality data that you generally don't have. Your doctor has it or their health system. One of the things that they're going to have to do is work on liberating the data so these services can actually be really impactful for you.
INSKEEP: So is this something that, in the end, would actually save money, would be so efficient that it'd be worth the investment?
SCHULMAN: Well, I think there are other parts of the system that aren't as glamorous as that. The back end of the system, you know, administrative costs in the United States are almost 30 percent of all health care spending. When you pull out your credit card, you're paying about 2 percent transaction costs. When you pull out your insurance card, you're paying about 30 percent.
INSKEEP: Wow.
SCHULMAN: And so, you know, when you think about these firms - Berkshire Hathaway has insurance companies, and JPMorgan has banks - you know, could they do the back-end of health care, the part you don't see, and make that part more efficient?
INSKEEP: And in just a few seconds, what do you think of the opportunity of these companies essentially experimenting on their own employees and maybe finding something that can be applied to everyone?
SCHULMAN: Well, I think that's a great opportunity for them. They could really, you know, take some chances and take some risks, develop these services and then offer them to the rest of us.
INSKEEP: Dr. Shulman, thank you very much.
SCHULMAN: Thank you, Steve.
INSKEEP: Kevin Shulman is a professor at Duke's medical school. He focuses on health care economics. Transcript provided by NPR, Copyright NPR.