Amazon is launching its medical care business for its employees and other companies across the US

• Amazon Care is launching nationally for its employees and other companies.
• Insider reported that the announcement was incoming last Friday.
• It's the first time Amazon is being clear about wanting to deliver medical care beyond its own staff.

Amazon on Wednesday said it's rolling out its telehealth service in all 50 states for its employees starting starting this summer. It will also expand to other employers later this year.

On Friday, Insider reported that the launch was imminent. And in December, Insider broke that Amazon was incubating "Amazon Care" as a business for other companies and undertaking a national expansion.

In-person services of Amazon Care, like home visits by nurses, will be available in Washington state. It's planning to add in-person services to cities including Washington, D.C., its second headquarters, and Baltimore as well as other cities this year, the company said.

"Amazon Benefits has been the enterprise customer that we've been serving to date. Now, looking at other enterprises, understanding their needs, we think a lot of the needs are similar," Kristen Helton, director of Amazon Care, told CNBC's Bertha Coombs.

This is the first time that the company has made clear the purpose behind Amazon Care, which is to not just serve Amazon's own employees but also stand up a lucrative healthcare business in the $3.8 trillion healthcare industry, while solving for other employers their shared cost headaches.

It's also the first time that the $1.6 trillion tech and shipping giant has put a stake in the ground in healthcare delivery, not just pills and devices.

The healthcare industry is taking notice to Amazon's ambitions in medical care. On Wednesday morning after the national expansion became official, telehealth company Teladoc sank more than 7%, while rival Amwell was down more than 5%.

Amazon Care grew out of Bezos' frustration with healthcare costs

The headaches associated with the high cost of medical care led to the creation of Amazon Care. Employers insure about half of Americans and spend more than $880 billion on healthcare each year. Amazon hasn't talked about its healthcare costs, but for its rival Walmart, they were its second-highest expenditure behind wages in 2018.

So Amazon's human resources department and Grand Challenge, its secretive lab for long-term ideas, came up with Amazon Care, as Insider previously reported. That was right before Amazon CEO Jeff Bezos, frustrated with Amazon's healthcare costs, launched a joint health venture with Jaime Dimon and Warren Buffett.

Later named "Haven," the company disbanded early in 2021 as several of its efforts, including in primary care, failed to take off.

Amazon has told Insider that it worked in lockstep with Haven on a number of pilots, including one in copay-plan design that it launched in four states in 2020. But Amazon Care has become the company's priority in healthcare, alongside Amazon Pharmacy, its Prime-friendly service for delivering people's medications.

Amazon is entering a competitive space

Amazon Care pilots launched in Seattle in 2019 and rolled out to the rest of Washington in September 2020.

The service connects people through a mobile app with doctors and nurses. They can message, talk, or video. In some locations, the healthcare workers can visit employees at work or in their homes for exams and labs. Amazon Care also arranges prescription deliveries where necessary.

The doctors visits are run by Care Medical, a medical group that exclusively works with Amazon. In a sign of the national launch, Care Medical filed paperwork to operate in nearly 30 states as of last week, Insider found. Stat News's Erin Brodwin previously reported the medical group's expansion.

While Amazon is not heading into uncharted territory - digital health for employers is a well-funded and competitive space - it has aspects that make it different, like if the company decided to bundle care services with its pharmacy offering, Jeff Becker, a principal healthcare analyst at CB Insights, told Insider. Helton declined to speculate on how the services will work together in the CNBC interview.

Amazon is also expanding work with health wearables, connected devices, and, in light of the coronavirus pandemic, diagnostic labs. A growing number of companies are combining services like these to treat people at home to avoid the two highest cost settings, which are the hospital and the nursing home, Becker said.

"If you can get emergency-department visits to the urgent-care setting, and then urgent-care visits to the home, you're saving tons of money by doing that - enough that it's worth driving a doctor to your house," he said.