Healthcare stocks are getting smoked after JPMorgan, Amazon, and Berkshire Hathaway say they're teaming up to reduce costs for employees

  • Amazon,Berkshire Hathaway, and JPMorgan are teaming up to try to make healthcare more affordable for their US-based employees.
  • Insurance stocks like UnitedHealthcare, Cigna, Anthem and others are deeply in the red early Tuesday after the news hit. Pharmacy stocks and benefits managers were down too.

Shares of insurance providers, benefits managers, pharmacies and other healthcare companies are getting smoked in pre-market trading Tuesday after three of the country’s largest companies – Amazon, JPMorgan and Berkshire Hathaway – announced they were teaming up to create a new, independent healthcare company for their employees that will be “free from profit-making incentives and constraints.”

Here’s the standings:

The negative effect the announced collaboration is having on healthcare stocks is just the latest example of the outsized influence both Amazon and Berkshire can have on industries they explore. Armed with mountains of cash and an abundance of resources, their forays into new sectors can erase billions of dollars of market value in a short time.

Americans on average spent $US714, or 1.6% of their take-home pay on out-of-pocket healthcare costs in 2016, according to a report from JPMorgan Chase. That was up 3.6% from the year before and up 13.5% from 2013. The bank also found that the US spent 18% of gross domestic product on healthcare, up from 13% in 2000.

“The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” Berkshire Hathaway’s chairman and CEO, Warren Buffett, said in the statement.

“Our group does not come to this problem with answers. But we also do not accept it as inevitable. Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes.”

Aetna’s move also correlates with its earnings report Tuesday morning that beat analyst expectations.

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