One way to size up Amazon.com's new effort to rethink U.S. health benefits is to look at the health benefits Amazon already offers.

The Seattle-based web retailer rattled Wall Street Tuesday by announcing it will team up with Warren Buffett's Berkshire Hathaway and JPMorgan Chase & Company to create a health care benefits company to be described later.

One of the few details available is that Beth Galetti, the Amazon senior vice president who signs Amazon's health plan Form 5500 tax returns, will be one of the project planners.

Another detail is that Amazon, Berkshire Hathaway and JPMorgan Chase say their new health benefits company will be "free from profit-making incentives and constraints."

Amazon Form 5500 filings show that Amazon already gets most of its health benefits from a company free from profit-making incentives and constraints: Kaiser Permanente, a giant, nonprofit managed care company based in Oakland, California.

Kaiser Permanente has been working to reform the U.S. health care delivery and finance systems since 1939. Many health policy watchers give Kaiser Permanente credit for making California hospitals cheaper and more efficient, on average, than comparable hospitals in the rest of the country.

Kaiser Permanente has obvious incentives to offer its own employees high-quality, efficient health benefits, and it has the expertise, size and access to capital to apply the latest tools and ideas to improving its own health benefits programs.

We've tried to get an idea of how Amazon might perform as a health benefits revolutionizer by comparing its health benefits with Kaiser Permanente's benefits.

Roadkill highway

One reason for trying to benchmark Amazon's proposed health benefits project is that the carcasses of older projects litter the side of the health reform highway.

In the past 15 years, for example:

Congress converted the medical savings account pilot project into the health savings account (HSA) program.
Google tried, and failed, to do something about U.S. consumers' personal health records chaos.
The U.S. Department of Health and Human Services (HHS) lured many would-be health reformers to their financial doom by encouraging them to participate in the Affordable Care Act Consumer Oriented and Operated Plan (CO-OP) nonprofit health plan program.
Walmart added $4 prescriptions, and it and other retailers made room for clinics.
Google invested in Oscar Health, which is like a CO-OP that's free from the regulatory chaos and restrictions at the Affordable Care Act program.
Many organizations have come up with incentives and communications strategies to persuade people to eat fewer cookies and spend more time at the gym.

Some of those efforts are still under way, and some may still have a shot at improving the quality and efficiency of the U.S. health care delivery system, the U.S. health care finance system, or both.

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Increases in health care costs have slowed in recent years, for example. Many health policy specialists say HSA programs and other programs that "give patients skin in the game," or increase patients' share of health care costs, have helped hold down spending.

Oscar Health and a few of the CO-OP carriers are still in business, and they grow up to revolutionize health benefits.

But producers can see that, as big and smart as Amazon managers might be, the company is taking a road that has shredded other large, well-financed organizations' tires before.

The Form 5500s

Both Amazon and Kaiser Permanente give the public a peek into their health benefits packages when they file their plan Form 5500 reports.

Sponsors of many U.S. benefit plans must send copies of Form 5500 reports to the Internal Revenue Service and the U.S. Department of Labor (DOL) every year, to help the IRS and DOL enforce benefits-related tax and labor laws.

The DOL publishes large Form 5500 filing data files on its website.

FreeERISA, an ALM company, provides a tool for looking at the filings on a company-by-company basis here.

e compared the 2016 filings we found for Amazon Corporate LLC's Group Health & Welfare Plan with similar filings we found for Kaiser Foundation Health Plan Inc.'s Kaiser Foundation Health Plan Inc. Health and Welfare Plan.

The Amazon filings include information for 13,583 covered lives and $61 million in premiums, with an average premium of about $4,500 per covered life.

The Kaiser Permanente filings provide information for 205,831 covered lives and $1.3 billion in premiums, for an average of about $6,300 in spending per covered life.

The raw numbers show that Amazon spends roughly 30 percent less per covered life than Kaiser.

Numbers in perspective

Employee comments on Glassdoor.com and other job hunter websites show that Amazon and Kaiser Permanente both offer great health benefits, but the richness level at Kaiser Permanente plans may be even higher: One recent commenter rejoiced that a union plan Kaiser Permanente offers still has a $5 co-pay and no deductible.

Another major difference between Amazon and Kaiser Permanente is that Amazon appears to have a much younger median employee age.

Business Insider has reported, based on data from Statista, that it believes Amazon has a median employee age of 31.

A comparable figure for Kaiser Permanente was not readily available, but Kaiser Permanente appears to be similar in many ways to the federal government. The U.S. Office of Personnel Management says the federal employee workforce has a median age of about 47.

Extrapolations based on anonymous employee survey data collected by GreatPlacestoWork.com has collected survey data from anonymous users who said they were Kaiser Permanente employees. Twenty-eight percent of the survey participants were ages 54 or older, and 45 percent were in the "Generation X" age group, meaning that they were born from 1965 through 1980. Extrapolations based on those figures suggest that the median age of the survey participants from Kaiser Permanente could be about 46.

Large employers now pay about 30 percent more to cover the health of an employee ages 45 to 54 than to cover an employee ages 26 to 34, according to ADP.

If Kaiser Permanente health plan enrollees are really 15 years older, on average, than the Amazon health plan enrollees, that could account for most of the difference between benefits costs for Kaiser Permanente and Amazon.

That implies that, at this point, with Kaiser Permanente's help, Amazon may be about as effective as Kaiser Permanente's own benefits managers at managing health benefits, but that it might not yet have any secret benefits management sauce that Kaiser Permanente lacks.

Instant Insights /

How would Amazon & Co. stack up against Kaiser Permanente?

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