Why Amazon is discounting Prime memberships for Medicaid beneficiaries

Amazon on Wednesday announced it is extending a discount on its Prime membership to adult Medicaid beneficiaries.

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The move comes as Amazon has increased its presence in the health care sector. Amazon in August 2017 began selling its own line of over-the counter health products, ranging from ibuprofen to hair regrowth treatment, and it has sought to expand its business as a medical supplier to hospitals.

Discount details

Last year, Amazon introduced a discounted monthly rate of $5.99 for its Prime membership for U.S. residents who receive government assistance through the Supplemental Nutrition Assistance Program. According to the Journal, Amazon typically charges a monthly rate of $12.99, or $99 per year, for Prime.

Amazon on Wednesday said it is now extending that discount to U.S. adults with a valid Medicaid card. Over half of the more than 68 million U.S. residents enrolled in Medicaid at the end of 2017 were adults, according to the New York Times. Medicaid beneficiaries are eligible for the discounted rate for a maximum of four years.

Prime members can access Amazon's:

  • Food-shipping service, called Prime Pantry;
  • Music and video streaming;
  • One- and two-hour shipping option, called Prime Now; and
  • Unlimited no-cost two-day shipping.

In a promotional video, Amazon highlighted the story of a single mother of three who works part-time and is about to undergo surgery that will require a long recovery time. According to GeekWire, Amazon in a release also highlighted the stories of several customers who have trouble getting to the store for various reasons, including medical conditions and caring for others.

Reaction

Some experts say the discount will give Medicaid beneficiaries access to a benefit many higher-income U.S. residents already use, but others say even the discounted price might be too high for some beneficiaries.

Avi Greengart, an industry analyst at GlobalData, said, "People in higher-earning demographics have long seen" the ability to purchase goods online and have the items shipped quickly and directly to them "as a convenience that changes the way they shop." He added, "People [whom] this [discount] are targeting are going to get that chance for the first time—and they may actually need it more."

However, Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, said Medicaid beneficiaries might not flock to Prime because of the discount. "Obviously we're talking about a few bucks a month," he said, adding, "I'm not suggesting that's a lot of money for low-income families, but these families do have to scrutinize their expenditures" (Wingfield, New York Times, 3/7; Stevens, Wall Street Journal, 3/7; Breland, The Hill, 3/7; Weise, USA Today, 3/7; Perez, GeekWire, 3/7).

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