Buffett's Cogent, but Shortsighted, Point on Health Care
Yes, health care costs are a huge problem, but the billionaire's call for a single-payer system isn't the solution.
The New York Times this week published an article on billionaire Warren Buffett’s sentiments regarding corporate roadblocks. According to Buffett, Republican lawmakers and company officials are too fixated on corporate tax rates, the lowering of which he contends would do little to propel economic growth. (We strongly disagree, but that’s another topic.) Buffett’s justification is this: “If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of GDP. … And now, they’re about 2 percent of GDP.” Meanwhile, a half-century ago, “[H]ealth care was 5 percent of GDP, and now it’s about 17 percent.” His statement is comprehensive, meaning he’s referring to the health care system in its entirety. Consequently, he surmises, “Medical costs are the tapeworm of American economic competitiveness.”
Someone should ask him why he helped finance Burger King’s corporate inversion to lower its tax bill if corporate taxes don’t matter so much.
Buffett is right to pinpoint how ridiculous health care costs are today. In fact, it would be laughable if it weren’t so absurd. Providing these benefits is a huge financial burden for most businesses, particularly small ones. And yet an excerpt from the Times underscores the shortcomings of Buffett’s solution: “Mr. Buffett is a Democrat, but his business partner, Charles T. Munger, is a Republican — and a rare one who has advocated a single-payer health care system. Under his plan, which Mr. Buffett agrees with, the United States would enact a sort of universal type of coverage for all citizens — perhaps along the lines of the Medicaid system — with an opt-out provision that would allow the wealthy to still get concierge medicine.”
Simply stated, Buffett would rather the government take on most of the cost of health care. Well guess what may be needed to help pay for it? Even higher taxes on corporations. And even then, a single-payer system would set us up for even worse national debt problems in the future (as if the outlook isn’t bad enough). Health care costs need to be reduced significantly. As Star Parker put it, “Health care markets are distorted from top to bottom by government, regulations and bureaucrats. Nothing is more personal than health care; sadly, in no marketplace are individuals less in control of their own selves.” The whole system needs to be revamped. If done properly, businesses can be saved from drowning in health care costs. As for tax reform? Well, that would just be icing on the cake. Regardless of Buffett’s point on GDP, you can’t reasonably argue that reducing the current 35% rate won’t result in far-reaching, very positive changes.