Warren Buffett thinks that the US healthcare system is broken.
The legendary investor said costs for healthcare have exploded in the US and are holding back business growth.
Buffett pointed out corporate tax payments as a percentage of GDP have shrunk from 4% in 1960 to just 2% now. On the other hand, medical costs have ballooned from 5% of GDP to 17% of GDP currently.
“Medical costs are the tapeworm of American economic competitiveness,” Buffett said.
Buffett said that the lower rate of healthcare spending in other countries is one of the biggest disadvantages for US businesses.
The Berkshire Hathaway CEO also said that for his own business, “the tax system is not crippling our business around the world,” but the burden of healthcare costs make it more difficult to do business.
Additionally, in regards to the American Health Care Act — the bill passed by the House on Thursday to repeal and replace Obamacare — Buffett did not offer a forward prediction on how it would impact people’s healthcare but he did say it had one direct impact on him.
“The net effect of that act is that my federal income taxes would have gone down, down 17%, last year,” Buffett said.
“It’s a huge tax cut for guys like me.”
Buffett went on to say that the AHCA will lower taxes significantly for people making over $US250,000 that have large investment income.
“That means one of two things, either the deficit goes up, or someone else’s taxes do,” Buffett said.
Charlie Munger, Buffett’s partner, also decried incentives for healthcare providers to charge ever higher costs for procedures with questionable impact, saying there is “too much chemotherapy on people that are basically dead.”
“A lot of it is greatly immoral,” Munger said. “You have a lot of doctors and hospitals that are feasting on a dying person like jackals on a carcass.”
While Munger and Buffett did not offer particular policy solutions, they did say that the issue is being dealt with poorly by politicians on both sides of the aisle.
“Both parties hate each other so much that neither one of them can think rationally,” Munger said.
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