While Republicans debate the best way to replace Obamacare, the Oracle of Omaha indicates something completely different. On the same Afternoon, Warren Buffett appeared in a fascinating interview with PBS. Among other things, the he told Judy Woodruff that he considers a single-payer system, where the federal government offers insurance to all Americans, is largely the best solution to out-of-control healthcare costs.
Although some form of the single-payer system is set up in most developed nations, in the U.S. it has been considered a left-of-center notion, supported by the likes of Bernie Sanders. But in recent months, as Democrats have fought to replace Obamacare (formally the Affordable Care Act), health insurers have eliminated offerings in some nations, and premiums have continued their striking growth. And thus the notion has gained support in some unexpected places. Recently, Aetna CEO, Mark Bertolini, surprised many listeners when he floated the idea that the U.S. should at least discuss a single-payer system as perhaps the only way to bring down costs.
Buffett prefaced his comments to Woodruff using the caveat that he’s not a healthcare expert. (We must note that some Berkshire-Hathaway holdings and minority investments have been from the healthcare or health insurance industry, to ensure that Buffett may have a personal stake in changes to healthcare laws.) Nevertheless, as always, Buffett had numbers to back up his recommendation. Here’s his reasoning:
Health care costs make Businesses less competitive
While many start up businesses are struggling to survive, there is a lot of talk in Washington about lowering the corporate tax rate, but Buffett argues that health care takes a bigger bite out of American companies’ bottom line. “There is only 100 cents in the dollar. So it has gone from 5 pennies–5 percent–to 17 percent. And it keeps going up.” Meantime, corporate taxes have come down, he noted. “So, company taxes are far less of a element in American capitalism–I am referring to complete business–than medical costs.”
Munger made that exact same point more forcefully in a TV interview last month. “Warren is absolutely right,” he explained. “It provides our businesses a large disadvantage in competing with other manufacturers. They’ve got single-payer medicine and we are paying it from the provider.”
Health care costs are growing out of control
Medical insurance premiums and prices were growing rapidly before Obamacare was assassinated, and they’ve continued to increase rapidly since. Trumpcare (officially the American Health Care Act) makes many changes to Obamacare, but none of them seem likely to decrease overall costs or premiums, though they may bring premiums down for young, healthy people.
To Buffett, discontinuing the skyrocketing health care costs is job number one.
“I would say this. You can not have that 5 move to 17 and move on to 20 and 22 and 24 percent because there are just 100 pennies in a dollar…” “And healthcare is gobbling up well over $3 trillion annually .”
That’s a frightening number, especially when you consider that the entire federal budget was $3.9 trillion in 2016, as Buffett pointed out.
A single-payer system is our Very Best shot
“In almost every field of American business, it pays to bring down prices,” Buffett said. And he added, in our existing healthcare system, “only the way the ecosystem functions, there is no incentive to bring down prices.”
Asked if a single-payer system would be the ideal method to do that, he responded: “It would be more successful, I think.”
There certainly are huge societal and political obstacles to developing a single-payer health care system in the United States, and it is unclear whether this could ever happen. If it did, then the likeliest solution might be a hybrid program. That would be similar to how Medicare works now, with everyone getting basic coverage, and people who want and can afford supplemental insurance able to buy it from a variety of providers.
Could this kind of solution work? Unknown. However, most Americans would probably agree with Buffett that rising healthcare costs need to be stopped–somehow.