Employee Demographics - Why Amazon Care Will Fail

This video provides an in-depth exploration of why employer-sponsored healthcare initiatives, specifically Amazon Care, may struggle to achieve widespread impact due to fundamental differences in employee demographics and associated healthcare costs. Dr. Eric Bricker, the speaker, begins by establishing that the three top diagnostic categories driving employee health plan spend are musculoskeletal conditions (primarily osteoarthritis), cardiovascular diseases (heart attacks, strokes, diabetes), and cancer. He then posits that age is the single greatest risk factor and driver of costs for all these conditions, as bodies naturally deteriorate with age, leading to increased health issues.

The speaker supports this claim with specific data from Health Affairs, illustrating a dramatic increase in per-person per-year healthcare costs with age: from $3,628 for under 18s to $18,424 for those 65 and older. He highlights that working populations over 44 years old cost almost double those under 44. This foundational understanding of age as the primary cost driver sets the stage for his critique of Amazon Care. He contrasts the median age of employees in various industries, noting that "older" industries like government (45.6 years), manufacturing (44.4 years), education (43.9 years), and transportation (43.9 years) have median ages significantly above the national average of 42.5 years.

Conversely, Dr. Bricker points out that major tech companies like Facebook (28 years), Google (30 years), Apple (31 years), Amazon (31 years), and Microsoft (33 years) have significantly younger workforces. He argues that for these tech giants, employee healthcare is often a "hobby" rather than an "existential threat" because their young, relatively healthy employees incur much lower healthcare costs. Consequently, solutions developed within this context, such as Amazon Care, are designed for a demographic that doesn't face the severe healthcare cost challenges plaguing older industries. The video concludes by suggesting that true innovation and change in employer-sponsored healthcare will emerge from organizations with an "existential threat" – those with older employee populations and consequently higher healthcare burdens, such as state governments, municipalities, school systems, and manufacturing firms.

Key Takeaways:

• Age is the Primary Driver of Healthcare Costs: The video emphatically states that age is the greatest risk factor for the top three diagnostic categories driving employee health plan spend: musculoskeletal, cardiovascular, and cancer. As employees age, their bodies are more prone to these conditions, leading to significantly higher healthcare expenditures.
• Significant Cost Discrepancy by Age Group: Healthcare costs per person per year escalate dramatically with age. For instance, individuals aged 45-64 cost nearly double those aged 19-44, demonstrating that older workforces inherently incur much higher healthcare expenses.
• Industry Demographics Impact Healthcare Spend: There's a stark contrast in median employee ages across industries. "Older" industries like government, manufacturing, education, and transportation have median ages significantly above the national average, leading to higher underlying healthcare problems and costs.
• Tech Companies Have a Unique Healthcare Advantage: Major tech companies (e.g., Facebook, Google, Amazon) boast significantly younger workforces (median ages in the late 20s to early 30s). This demographic advantage means their employees are generally healthier and incur substantially lower healthcare costs.
• Healthcare as a "Hobby" vs. "Existential Threat": For tech companies with young employees, healthcare costs are often manageable, making it a "hobby" or a perk rather than a critical financial burden. In contrast, for industries with older workforces, healthcare costs can become an "existential threat" to their financial viability.
• Amazon Care's Demographic Mismatch: Amazon Care, developed for Amazon's young employee base (median age 31), is fundamentally misaligned with the demographics of most other industries facing severe healthcare cost problems. Solutions designed for a young, healthy population are unlikely to be effective or scalable for older, sicker populations.
• Where True Healthcare Innovation Emerges: Genuine innovation in employer-sponsored healthcare is more likely to originate from organizations facing an "existential threat" from high healthcare costs. These are typically industries with older workforces, such as state and local governments, school systems, and manufacturing companies.
• Examples of Progressive Organizations: The video cites examples like the State of Montana and the manufacturing company Serigraph as organizations that have successfully implemented changes to address their employee healthcare problems due to their significant "itch" (high costs).
• The "Itch and Scratch" Analogy: The speaker uses the analogy of an "itch" (poor employee health and high costs) and a "scratch" (healthcare solutions). He argues that tech companies lack a major "itch," thus their "scratches" (solutions) may not be robust enough for those with a severe "itch."
• Technology Adoption Life Cycle in Healthcare: The video implicitly touches upon the technology adoption life cycle, suggesting that early adopters and pragmatists in industries with high healthcare costs are the ones driving significant change, rather than those without a compelling need.
• Healthcare is Not a Monolith: Employer-sponsored health plans are highly diverse, primarily due to the varying age and health profiles of employee populations. Solutions must be tailored to these demographic realities, rather than assuming a one-size-fits-all approach.
• Focusing the Mind with Existential Threats: The speaker emphasizes that "nothing focuses the mind better than an existential threat." This implies that organizations facing severe financial pressure from healthcare costs are more motivated to find and implement truly transformative solutions.

Tools/Resources Mentioned:

• Health Affairs: Cited as a source for healthcare costs by age.
• Bureau of Labor Statistics (BLS): Cited as a source for employee age by industry.
• Business Insider: Cited as a source for tech company employee age.
• "16 Lessons in the Business of Healing": A book by Dr. Bricker, mentioned as a resource for viewers.

Key Concepts:

• Employee Demographics: The statistical characteristics of a workforce, particularly age, which the video highlights as a critical determinant of healthcare costs.
• Healthcare Spend Drivers: The underlying factors that contribute to the overall cost of healthcare, with age identified as the most significant.
• "Itch and Scratch" Analogy: A framework used to explain the relationship between a problem (the "itch" of poor health and high costs) and its corresponding solution (the "scratch" of healthcare interventions).
• Technology Adoption Life Cycle: A sociological model describing the adoption or acceptance of a new product or innovation, applied here to the adoption of healthcare solutions by different types of organizations.

Examples/Case Studies:

• Amazon Care: Used as the central example of a healthcare initiative developed within a demographic context (young tech employees) that the speaker argues makes it unsuitable for broader application.
• State of Montana: Highlighted as a progressive organization that successfully addressed its state employee health problem, likely due to having an older workforce and thus a significant "itch."
• Serigraph: A manufacturing company whose CEO wrote a book about solving healthcare, presented as another example of an organization driven by necessity to innovate.
• Cities, Municipalities, and School Systems: Mentioned as organizations in states like Colorado and Wisconsin that have implemented on-site or near-site clinics due to high healthcare costs, demonstrating localized innovation.