Amazon and the Medicaid Entitlement

By ROGER STARK  | 
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Mar 8, 2018

Several months ago, Amazon.com joined with Berkshire Hathaway and J.P. Morgan to announce a partnership that would explore health care reform options. (here) These are three extremely large and successful companies in their respective areas. Health care, however, is very complex and represents 18 percent of the U.S. economy, or $3.2 trillion dollars per year.

Except for providing an innovative health insurance model for their employees, it is difficult to see how even these three companies combined can impact our health care delivery system.

Amazon is giving it a try… sort of.

The company recently announced that it would give Medicaid enrollees more than a 50 percent discount on its “Prime Membership.” (here) Instead of paying the usual rate of $12.99 a month, people in Medicaid can receive all the perks of Prime for $5.99 a month.

This may sound great, but think about it for a minute. Medicaid is an entitlement with free health care, paid for by taxpayers. Supporters of Medicaid are adamantly opposed to a monthly premium or co-pay, as well as such things as a work requirement. An insurance premium in Medicaid could be set as low as $5.99 per month.

So essentially at taxpayer expense, instead of paying something toward their health care, Medicaid recipients can now access all of the benefits of Amazon Prime.

Amazon’s CEO is one of the world’s richest men and one of history’s most successful entrepreneurs, earning his success through the free market. He is also a long-standing Democrat supporter - the party of more government involvement in our lives and more entitlements.

On the surface, it appears that Amazon is doing a great service for low-income people. The reality is that Amazon is collecting money from Medicaid enrollees that could, and should, go toward their health care. It will be interesting to see how much Amazon actually earns from this taxpayer-supported scheme.