Warren Buffett says health care costs are a bigger problem than corporate taxes

I’m not American, but I’ve been hearing about your health system for a several years. Ironically, I know more about it than my own country’s (Ireland).<p>Several years ago, there seemed to be a lot of talk about how much The US spends (private &amp; public) per capita on health. It’s a lot more than everywhere else. This was usually presented in the context of the health care “regime” A UK-esque system, a Swiss-like system, etc.<p>Lately, that comparison seems to come up less. Obama-care, Trump-care or Bernie-care would mostly deal with who pays &amp; how, not how much.<p>The “who pays” question is a favourite ideological one so politicians and commentators are comfortable with it. But, I think the “how much” question is probably the more important one, and the harder one to solve. If the US could get costs down to average European rates, then I’m sure a workable system could be found within the confines of most ideological frameworks.<p>The problem is that getting costs down is almost impossible. Costs are salaries of doctors &amp; nurses, a giant pharmaceutical industry, thousands of radiologists, ultrasound technicians, the machines they use (far more frequently than europeans)…<p>Getting costs down to EU levels would be mean the medical industry shrinks like manufacturing shrunk two generations ago.<p>I don’t have a solution to suggest, but I do suggest toning down the ideological discussion. The problem is more of a technical one.

There are many, many problems with healthcare in the US. Off the top of my head, the big ones are:<p>* Endless number of middlemen and administrators. * Every player in the healthcare chain benefits from higher prices. * No price transparency. * Tacit collusion is rampant. * &quot;Cost no object&quot; mentality to treating the dying.<p>The last one, while insensitive, is true nonetheless, and it&#x27;s alarming that over 50% of all healthcare spending takes place in the last two years of a person&#x27;s life. We have basically decided that it&#x27;s okay to spend literally any sum of money on a dying person in order to prolong life by an average of a few months. And the problematic word there is average, because some people do live a lot longer, and that&#x27;s what we all look to. I realize this is grim and seemingly lacks humanity, but unfortunately that doesn&#x27;t make it not true. Charlie Munger, who is on the board of Kaiser Permanente, said this same thing yesterday...&quot;over-treatment of the dying&quot; was the biggest problem they faced.<p>It&#x27;s reminiscent of our approach to college education - justified at any cost. So we push millions of kids into a schooling system that&#x27;s not right for them, and the result is a lot of crappy education, worthless degrees, student loans, etc. Once we flip the switch to &quot;there is no price you can put on _____&quot; things get sideways FAST.

The middleman role of insurance companies in American healthcare seems completely useless. They&#x27;re not serving patients, doctors nor the national economy by siphoning off enormous profits from the 17% of GDP that gets spent on healthcare.<p>Getting rid of them would be extremely hard, of course, given how well entrenched they are thanks to lobbying and regulatory capture.<p>Insurance companies are a massive-scale version of the car dealerships that have managed to keep Tesla out of many US states by taking advantage of local legislation -- nobody would want to deal with a car salesman or an insurance company given the choice.

In the US the health care cost since 95 went from 13.1 to 17.1 while in Germany they went from 9.4. to 11.3. It is actually way worse than the article tells if one considers the age structure of the two countries where Germany has 21.7% over 65 vs. the US with 15.25%.<p>The non tangible cost are also non negligible. There is friction in the job market as changing job risks incurring a potentially catastrophic coverage gap. There are bizarre industries focused on renegotiating issued medical bills, collecting those or managing the health related bankruptcies.<p>Pricing of pharmaceutical usually generally defies the laws of gravity as the incentives of regulators, suppliers, distributors, doctors and insurers have been distorted beyond anything resembling a fair playing field. In such an environment playing games is superior than providing value and adhering to generally accepted rules. When it comes to pricing the costs of providing the service is often the least important input.<p>Steve Balmer recently: “If you look at these tax deductions for employer-provided health [...], they’re really subsidies to the affluent, which I guess I hadn’t thought about them.”<p>The biggest problem society faces at the moment is the vanishing middle class and lower qualified jobs that are still providing enough to subside. For the latter the cost of food, shelter, fuel and health are key. Lower the cost of living and there will be more jobs that are worth taking.

“If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of G.D.P.,” Mr. Buffett said. “I mean, they bounced around some. And now, they’re about 2 percent of G.D.P.”<p>By contrast, he said, while tax rates have fallen as a share of gross domestic product, health care costs have ballooned. About 50 years ago, he said, “health care was 5 percent of G.D.P., and now it’s about 17 percent.”

Good news is that the amount of health care spending is a choice. E.g. other western countries are running a health care cost to GDP ratio from 10%-13%, sometimes offering vastly superior and equitable outcomes than in the US.<p>The bad news is that this is a choice Congress and Senate are taking on behalf of the American people. And with the partisan divide and lack of agreement on fundamental values, things won&#x27;t really change.<p>Add in a rapidly aging population, and being cognizant of the per capita health care spending steeply increasing at later stages of life, kicking the can down the road won&#x27;t make the later adjustment any easier...

The real problem with health care is that it&#x27;s a gravy train for all involved. Doctors, who don&#x27;t invent anything new and who just practice garden-variety medicine are wildly overpaid. They don&#x27;t like it be known, but the average doctor earns a quarter-million a year. Totally unjustified.<p>Then there are the medical device manufacturers, big Pharma and the hospitals. They all are getting rich off the current system. That&#x27;s what needs to change.

Americans unable to afford healthcare are just waiting in line to become bankrupt.<p>A study done at Harvard University indicates that this [medical costs] is the biggest cause of bankruptcy, representing 62% of all personal bankruptcies.<p><a href="http:&#x2F;&#x2F;www.investopedia.com&#x2F;slide-show&#x2F;top-5-reasons-why-people-go-bankrupt&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.investopedia.com&#x2F;slide-show&#x2F;top-5-reasons-why-peo...</a>

Healthcare costs create huge problems across the economy, increasing the cost of everything from manufacturing to higher education.<p>Between myself and my employer, it costs about $20,000 to insure my family a year. My employer shares much of the cost breakdown and it&#x27;s interesting how goes to prescriptions and how much of that goes to specialty drugs to keep a handful of people alive.<p>$500 million dollar spend on healthcare.<p>$120 million goes to prescriptions.<p>$40 million of that went to specialty drugs, representing 1.7% of the prescriptions.<p>&quot;The average ingredient cost of a single-source brand prescription increased by 14.9% in 2016 to an average $745 per prescription, mainly driven by high-cost specialty drugs. The average ingredient cost of multiple-source brand prescription increased by 49.5% to an average $585 per prescription. The average ingredient cost for a generic prescription decreased by 10.9% to an average cost of $34.04 per prescription. &quot;

The most insightful and thought provoking analysis of health care I&#x27;ve seen in the last several years is this one:<p><a href="https:&#x2F;&#x2F;randomcriticalanalysis.wordpress.com&#x2F;2016&#x2F;09&#x2F;25&#x2F;high-us-health-care-spending-is-quite-well-explained-by-its-high-material-standard-of-living&#x2F;" rel="nofollow">https:&#x2F;&#x2F;randomcriticalanalysis.wordpress.com&#x2F;2016&#x2F;09&#x2F;25&#x2F;high...</a><p>It argues that the high cost of health care in the United States is explained by its extreme wealth and that health care is a superior good (<a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Superior_good" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Superior_good</a>).<p>This is a much different explanation than what is given by either political party.<p>Anyone have any points in support of or against this argument?

Obligatory Slate Star Codex Link:<p><a href="http:&#x2F;&#x2F;slatestarcodex.com&#x2F;2017&#x2F;02&#x2F;09&#x2F;considerations-on-cost-disease&#x2F;" rel="nofollow">http:&#x2F;&#x2F;slatestarcodex.com&#x2F;2017&#x2F;02&#x2F;09&#x2F;considerations-on-cost-...</a><p>Scott Alexander examines &quot;cost disease&quot; in the sectors of health care and education.

By this argument, we should also be examining why we spend so much on education. In 2010, the United States spent 7.3 percent of its gross domestic product on education, compared with the 6.3 percent average of other OECD countries.<p>Surely spending dramatically higher amounts than other countries, with no better effects, is enough to drive us to consider how we can reduce the costs of education - and should make us think long and hard before considering proposals that we should throw even more money at this.<p>It&#x27;s surely true that having a well-educated workforce improves productivity, but it&#x27;s also true that having a healthy workforce does the same. I&#x27;m having trouble finding much difference between the two examples.

I really think health care costs in the US are a byproduct of Americans obsession with convenience. Most lifestyles can be lived without any physical activity - the whole country is designed around the car.<p>Traveling around a bit I&#x27;ve seen other cultures still require people to walk somewhat to get places and people will also just go on &quot;walks&quot; whereas Americans will go for a &quot;drive&quot;<p>Food culture is also responsible, just jamming food into your face as quickly as possible rather than enjoying a meal is for sure and American thing.<p>Add all this up and you get 60% obesity rates in adults and getting worse.

There are no sane constraints on the prices. Instead of &quot;price is what the market will bear,&quot; it&#x27;s &quot;the market will bear whatever price.&quot; This creates an irrational drain on the rest of the system. Whoever is sucking on that drain is doing well, though.<p>My grandfather used to get a shot that was $12,000 a pop, and didn&#x27;t do anything.

Looking from the outside, it seems to me that the root of the problem is not about the health care in US, but about the prices of health related services and products? Prices are so inflated, hospital and medication bills are huge compared to what the same things costs in Europe or elsewhere.

I had kind of hoped that Trump would stumble into single payer health care as a solution for healthcare needs of his base and would somehow get it passed through congress with support from democrats. Alas, nothing of that sort seems likely.

Health care costs would be lower, if more people were able to provide health care service. If the world focused less on rate my sandwich apps, and more on fixing humans, the prices would be much more affordable.

Yes, this is an academic article, but I can think of no better resource for a pretty sane discussion on all the insanities in our healthcare system: <a href="http:&#x2F;&#x2F;faculty.chicagobooth.edu&#x2F;john.cochrane&#x2F;research&#x2F;papers&#x2F;after_aca_published.pdf" rel="nofollow">http:&#x2F;&#x2F;faculty.chicagobooth.edu&#x2F;john.cochrane&#x2F;research&#x2F;paper...</a><p>The thing that is pretty remarkable is that you unfortunately realize just how far either political party is in addressing any of the issues brought in the piece.

Amazon could disrupt providing Health Care services in the US. Current price overhead versus over developed countries is huge, so an efficient provider could shock the whole HC market.

And entirely ignored seems to be the demand side of the question, why is that? Could expenses be higher than we want if we are less healthy that we should be? I see a lot of unhealthy habits associated with the subsequent associated costly interventions required. Just because we see no path forward to affect demand, leaving it out of the discussion will ensure the debate is framed only as which system can provide that volume of healthcare for a little more or a little less.

Question for y&#x27;all... Have your health care providers started being more conscious or out-spoken about cost? Mine definitely have, both for prescriptions and procedures.

Would it be a worthwhile idea to open up health care internationally? Maybe insurance companies could create global standards for medical procedures, so that clients could choose in which countries they want to perform a procedure and then receive or pay the difference with regards to the cost of a national procedure. This could introduce some level of competition without jeopardizing quality - or am I missing something?

The pharma industry should open up; it is dominated by corporatism and their monopoly patents driving up prices, which make individual spending on drugs rise till an unaffordable level for the lower income.

Frankly, I just stubbed my big toe and that&#x27;s a bigger problem than US corporation tax.

Why the U.S. pays more for health care than the rest of the world<p><a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=gXBPKE28UF0" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=gXBPKE28UF0</a>