Why Warren Buffett Says The GOP Healthcare Bill Stinks – Forbes
When one of the richest human beings on the planet says he’s not getting taxed enough, I think Washington should listen and act.
Warren Buffet has been saying for years that it’s unfair he gets more tax breaks than his secretary. Now he’s applying the same rule to health care in the U.S.
According to NPR, which was covering Buffett’s remarks at his Berkshire Hathaway annual meeting last weekend, “when asked about the bill Republicans in Congress just voted to pass to repeal and replace Obamacare, Buffett signaled his distaste for a tax cut provision. Obamacare pays for health care for Americans in part by taxing wealthier people. The Republican bill scraps that tax on the wealthy.”
Actually the GOP’s American Health Care Act bill does more than peel away taxes on the wealthy. It will effectively take away coverage for tens of millions of people with pre-existing conditions or on Medicaid. It’s one of the cruelest healthcare bills ever conceived and blatantly ignores President Trump’s call to “cover everyone.”
Buffett flat out condemned the GOP plan, mostly because it penalizes the old, poor and chronically ill in favor of lifting taxes on the affluent:
If the GOP bill had been law last year, Buffett observed, “my federal taxes would have gone down 17 percent last year, so it’s a huge tax cut for guys like me. That is in the law that was passed a couple days ago. Anybody with $250,000 a year of adjusted gross income and a lot of investment income is going to have a huge tax cut.”
Buffett takes his attack on this GOP healthcare bill one step further, though. He essentially calls it a red herring. The real issue — besides access — is the escalating cost of medical and drugs expenses. It’s a real drain on the American economy.
Here’s how Buffett does the math:
He figures that “if you go back to about 1960, corporate taxes were about 4 percent of GDP and now they’re about 2 percent of GDP. At that time, healthcare was 5 percent of GDP and now it’s 17 percent of GDP. So when American business talks about taxes strangling our competitiveness, they’re talking about something that as a percentage of GDP has gone down from 4 to 2. Meanwhile, medical costs have exploded. So medical costs are the tapeworm of American economic competitiveness,” he said.
When dealing with numbers, everything’s relative, so you have to put them into perspective. If healthcare is consuming 17% of an $18-trillion-plus economy, that’s more than $3 trillion a year going to doctors, drugmakers, hospitals and medical services.
That means healthcare spending in the U.S. — the most of any nation — is almost as much as the entire spending by the federal government (in 2016 dollars). Note: Keep in mind that healthcare spending is spread out between private sources, state and federal governments and the government spends more than it takes in. Social Security, Medicare and Medicaid also cover more than 60 million Americans, but not completely.
So, yes, Mr. Buffett, that’s a lot of money and a difficult burden for private employers, taxpayers and the uninsured to bear. And trying to insert the failed logic of trickle-down economics into the GOP formula will only make matters worse and distracts us from the runaway costs of fragmented healthcare. Giving the wealthy tax cuts won’t solve the math problem or reduce medical bills.
Still, even as the leadership in the Senate struggles to reconcile its emerging plan with the House GOP train wreck, the question remains: How to cover the greatest number at the lowest cost while offering the highest-possible quality of care?
President Trump alluded to a better model when he said shortly after the GOP bill was passed that he admired the Australian single-payer system. The Australians have “better health care than we do,” Trump said.
Why does the Land Down Under have a workable universal plan? They tax all of their citizens from 2 percent to 3 percent of their annual income to pay for basic coverage. What’s not covered by the national program is covered by optional private insurance, which six of 10 Aussies have.
Note that middlemen are mostly cut out of the basic Aussie health plan, so costs are lower. And there’s no debate on who pays, who gets tax breaks and who doesn’t get covered. Everyone pays and everyone has protection.
In a roundabout way, Buffett definitely has the math right and it leans in the direction of the Aussie model. Hopefully his logic will boomerang and hit some Senators in the head (in a good way).