Talk of single-payer health care in the United States popped up in an unexpected place recently: the most recent Berkshire Hathaway annual meeting. “The whole system is cockamamie,” the company’s vice chair, Charlie Munger, declared. “I think we should have single-payer medicine eventually.” As for partner Warren Buffett, the man known by his fans as the Sage of Omaha, he called health-care costs “the tapeworm of American economic competitiveness” and claimed he “personally” supported a single-payer system.
Those of us who cover individual investing know that the utterings of Buffett and Munger are generally repeated, and repeated again. They turn into aphorisms—how many times have you heard it said of the stock market, “It’s only when the tide goes out that you learn who’s been swimming naked?” But when it comes to health care, it’s something else. There is a day or so of attention, and then it’s nothing but crickets.
What’s going on? You can thank a toxic stew of ideological blindness, fear of controversy, and rampant cost shifting for the silence. The size and power of the industry is a factor too. Healthcare “is the military industrial complex of the 21st century,” says Richard Master, the chief executive officer of MCS Industries, a supplier of picture frames based in Pennsylvania, and the rare C-suiter to publicly support single-payer.
The United States spends more than $3.3 trillion on health care annually. Employer-based insurance covers about half the non-elderly population. The cost is not unsubstantial. Medicare spends less than 2 percent of its budget on administration vs. 18 percent for private insurers. According to the Kaiser Family Foundation, the average premium for a family was $18,142 in 2016. The typical employer picked up about two-thirds of that total. The numbers are adding up, and the politically vaunted small-business sector is yowling. The National Federation of Independent Business’s 2016 Problems and Priorities survey found more than half of those they polled claimed the cost of health insurance was “a critical issue,” they faced.
Healthcare costs also eat away at American business competitiveness. Prior to the Great Recession, General Motors claimed that providing health-care coverage adds another $1,500 onto the sticker price of every new model sold. Starbucks reported around the same time it spent more on health care than on coffee beans. The Affordable Care Act has slowed the overall pace of health-care spending, which nonetheless still exceeds the rate of inflation.
Buffett’s economic point—one he’s made for a number of years—is that corporate honchos obsess about the weight of taxes on their bottom line when they should be pondering the impact of skyrocketing health-care costs instead. For years, he’s pointed out that health-care expenditures were approximately 5 percent of the gross domestic product in the 1960s. Now they are at about 17 percent. Other countries spend significantly less. Healthcare costs make up 11 percent of Canada’s gross domestic product. In Australia—about which Donald Trump recently said, “you have better health care than we do”—it’s approximately 9 percent.