In one of many recent mergers of industry titans, Arkansas-based Walmart is reportedly in the early stages of purchasing Kentucky-based health insurer Humana. Following the high profile purchase of Aetna by CVS1, Walmart is quickly following suit. In a matter of months, these changes in dance partners have changed the landscape of the healthcare industry.
2016 Healthcare Facts
- Healthcare spending was 18% of the U.S. economy.
- U.S. health care spending increased 4.3 percent to reach $3.3 trillion.
- Healthcare spending is estimated at $10,348 per person in 2016.
With an aging population, rising costs of medication, and the arrivals and impediments of new middlemen, companies are now attempting to find ways to address the industry’s weaknesses. If there are weaknesses in a behemoth industry like healthcare, it will certainly affect the American economy as a whole. Financial sage Warren Buffet has described healthcare as a “tapeworm” in the economy2.
The merger of Walmart with Humana is an unconventional one as most of Walmart’s recent acquisitions have been with e-commerce and Internet retail companies. But the merger seems appropriate because Walmart is already successful with pharmacies and they had a less successful foray into operating primary care clinics. And on top of that, they already have a partnership in a prescription drug plan that serves those on Medicare.
Walmart and Humana, CVS and Aetna But Now Amazon?
There may be a common belief that the “big, bad evil” corporation is going to make healthcare even more difficult or they will become an even bigger middleman; A middleman backed by billions of dollars and government influence. But with Warren Buffet of Berkshire Hathaway, Jamie Dimon of JP Morgan Chase, and Jeff Bezos of Amazon throwing their hats into the healthcare ring, not only is the market getting proven competitors but possibly the most brilliant minds dealing with the economy.
There will be questions on whether these deals are anti-competitive, the Justice Department struck down a merger between Aetna and Humana3. And a merger between Walgreens and Rite Aid was scaled back by regulators4. It is an exciting time being witness to industry giants and economic geniuses and leaders wanting to make a drastic change in healthcare and in turn, the economy.
The other factor or alternative for the consumer is the sharing economy, the crowdfunding, donation…there are many terms to describe it. Eusoh can be a platform to supplement or even usurp the current healthcare system. Time will tell how far Walmart, CVS, Amazon, JP Morgan Chase, and Berkshire Hathaway will achieve but we have to amplify to you, the consumer, is that the alternatives are out there.