Buffett weighs in on health care, wants real reform

opinions

March 1, 2010 - 12:00 AM

Billionaire Warren Buffett took a common sense stand on health care reform this morning on CNBC business news.
Other nations, he said, spend about 9 percent of their gross national product on health care. It is not practical, he said, for the U.S. to continue to devote 17 percent of its GNP to health care.
He urged Congress to develop reform plans which will reduce costs far more than any of the plans now in sight. Health care costs, he continued, are like a tapeworm eating at the nation’s business economy.
Buffett, who is anything but a socialist, did what most of us would do when attacking a problem: he looked for guidance from others who have handled a similar challenge with success. Why re-invent the wheel?
If other wealthy nations such as England, France, Germany, Switzerland, Japan and Canada — all of which cover 100 percent of their citizens with quality health care — can provide that care for less than 10 percent of their GNP, why must the United States spend almost twice as much while leaving 46 million of its population without coverage?
This is really where the conversation on health care should start.
When one of the world’s richest men says that Congress should come up with a reform plan that slashes health care costs by 40 percent or more, why on earth do critics say that our nation can’t afford to do that? What Buffett is saying is that we can’t afford NOT to.
What is unaffordable about cost-cutting?
What does the Oracle of Omaha mean when he calls health care costs a tapeworm eating at the innards of America’s economy? He knows that most Americans get their health insurance at their work place. So when health insurance premiums rise — which they have been doing at twice the rate of inflation for years now — the cost of doing business rises and the goods and services that America produces becomes less and less competitive in the world market place. Health care costs, in other words, make a significant contribution to our economic woes.
Money sent to insurance companies can’t be spent on higher wages or business expansion.

HOW CAN AMERICA bring its health care costs in line with those in the rest of the rich world? We can adopt a single-payer system which provides universal care.
A single-payer system significantly reduces the cost of administering health care. Universal care broadens the base of support. The cost per person drops when everyone is in the system.
Wouldn’t taking steps like this require a wrenching, painful restructuring?
Yes, it would. Over time, the health insurance industry would be replaced by a non-profit administration whose only purpose would be to deliver health care to all Americans rather than making money for stockholders. Thousands of jobs would be lost. The shares of health insurance companies would lose value. (But in contrast, thousands of new government jobs would be created.)
Bringing costs down would also require changes in administration that have already been adopted by our leading medical clinics such as the Cleveland Clinic in Ohio and the Mayo Clinic in Minnesota. Those clinics practice team medicine so that patients aren’t sent from specialist to specialist, being charged high fees at each stop. Physicians are paid salaries rather than compensation on a fee-for-service basis under which the more procedures they perform the more they earn.
But the bottom line is that reform would mean that some physicians would earn less, fewer MRIs and CAT scans would be done, fewer lab tests would be performed. Some specialized hospitals would be closed as would some scanning centers. If U.S. medical costs were reduced to rich-world levels, the inevitable result would be that the flow of money now being earned all along the line — from insurance companies, pharmacies, physicians’ clinics, hospitals, imaging centers, to medical specialists — would shrink.
And that, dear reader, is why meaningful health care reform — the degree of reform needed to kill that tapeworm that is eating away at America’s prosperity — is stalled at dead center.
The people standing in the middle of that two trillion dollar stream of cash like things just as they are, thank you very much. What Congress must do is change an industry which now is inner-oriented into one which benefits the nation as a whole. It’s a stiff challenge. There is no sign yet that our Senators and Representatives are up to it.

— Emerson Lynn, jr.

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