This could be Amazon’s biggest challenge yet.

Amazon is no stranger to disrupting industries. But with its tentative entrance into health care, along with Berkshire Hathaway and JPMorgan Chase, it might have challenged its biggest industry yet.

When Amazon announced today that it might be starting its own health care company, health care stocks, predictably, fell. Health services and health technology sectors declined more than any others in the Dow Jones Industrial Average today.

Health insurance companies like UnitedHealth suffered the worst, followed by pharmaceutical companies like Pfizer.

These declines aren’t disastrous by any means. The thing is, the health care industry is huge and any disruption in the industry could have far-reaching effects on Americans. Spending on health care accounts for nearly 20 percent of the U.S. GDP. Health care is also now the biggest employer in the U.S.

Health care companies — especially pharmaceutical and biotech companies — have huge profit margins, especially compared to Amazon. The Amazon, Berkshire Hathaway and JPMorgan Chase consortium could make a dent in those as it tries to reduce costs “through an independent company that is free from profit-making incentives and constraints.”

And Amazon, Berkshire and JPMorgan are huge and have plenty of technology know-how they could bring to bear on the health care industry. Check out their market cap compared to the biggest U.S. health care companies.

For now, Amazon et al. are only hoping to roll out this health care company to their employees. The real threat to other health care companies would be if Amazon decided to eventually roll out this program more broadly.

As Barclay’s analysts noted today, “we are never dismissive of anything disruptive that Amazon is involved in.”

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Rani Molla

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