JPMorgan CEO divulges Haven’s disruptive insurance plans (JPM)

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Haven — the enigmatic healthcare joint venture (JV) formed by Amazon, JPMorgan Chase, and Berkshire Hathaway — is gunning for the broader health insurance market: JPMorgan CEO Jamie Dimon stated during a speaking appearance that the JV plans to one day scale to the public at large — a more pervasive goal than when the trio came together in January 2018, touting a focus on shaving down healthcare costs for their 1.2 million employees. Haven’s plan to look at consumers beyond the troika’s workforces should push healthcare stakeholders to batten down the hatches.

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Here’s what it means: Dimon’s statement is the most clear-cut signal to date that Haven plans to break into the wider health insurance market.

Since Haven’s big reveal, there have been rumblings about a broader expansion, which has incited a wave of industry anxiety. For example, Optum — UnitedHealth’s IT branch — sued a former executive in January after he joined the JV, insinuating the insurer feels threatened by Haven’s emergence. At the time, the employee’s attorneys contended that the JV poses no direct competition to Optum, per CNBC. But the vague assurance likely didn’t do much to alleviate concerns or keep incumbents from strategizing to protect against Haven’s march into the space.

The bigger picture: Dimon’s comments cement industry fears and should spur activity from threatened players.

Incumbent insurers have some time before they start feeling the heat, but should reassess digital strategies to prepare for Haven’s coming. In his nod to future expansion, Dimon said pivoting Haven’s services to the larger public "will take years." And the JV collectively employs about 1 million people, representing a muted threat in terms of scale to players like UnitedHealthcare, which covers 50 million customers. Nonetheless, the deep-pocketed players behind Haven alongside Amazon’s mastery of supply chains and consumer experience mean larger incumbents would be smart to shore up their offerings. This could mean adopting a larger arsenal of convenient digital offerings, especially since JPMorgan scooped up healthcare payments tech firm InstaMed last month, meaning Haven could be in good shape to set up a convenient, streamlined service for its tech-savvy consumers.
Smaller insurance entrants stare down a more immediate risk from Haven, and we could see some consolidation as a result. Health insurtech startups have been gaining traction among consumers and investors, but they haven’t accrued nearly as many members as incumbent insurers. For example, health insurance startup Oscar Health grew rapidly in its early years, but only covers about 260,000 people. That means startups like Oscar have a smaller cushion to fall back on as a force like Haven roars into market and looks for new business. As Haven plans to roll out, insurtechs will need to look for new ways to stay afloat; we might see a spike in M&A activity, for example, among smaller players looking to consolidate pools of consumers and incumbents seeking to become more tech-focused.

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