Taking on healthcare
In response to a question about healthcare in the United States, Munger spoke to the burden that rising costs place on American businesses:
“If you go back to 1960, corporate taxes were about 4% of GDP (gross domestic product) and now they are about 2%. In 1960, healthcare was 5% of GDP and now it’s about 17% of GDP. So when American business talks about taxes strangling our competitiveness they are talking about something that as a percentage of GDP has gone down from 4 to 2 while medical costs which are borne to a great extent by business, have gone from 5 to 17%. So medical costs are the tapeworm of American economic competitiveness.”
Buffett goes on to state that other countries with national health systems have restrained their health expenditure growth during the same period (from 5% up to 10 or 11%).
“They have gained a five- or six-point advantage. If you talk about world competitiveness of American industry, it’s the biggest, single variable where we keep getting more and more out of whack with the rest of the world.”
Munger is a board member of a Los Angeles hospital and piped in with his perspective:
“What I don’t like is that there is too much medicine. There’s too much chemotherapy on people that are all but dead. There are so many vested interests that it is really hard to change. The system is crazy and the costs are going wild. If present trends continue it will get more and more [expensive].”
“It is deeply immoral,” Munger continued. “If you have a bunch of hospital people and doctors feasting like a bunch on jackals on the carcass of some dying person, it’s not a pretty sight.”
What I didn’t hear from The Oracle were any proposed solutions to lower healthcare costs while maintaining or enhancing quality. But I was impressed that a group of business leaders and investors, young and old, who tend to believe in free market approaches, clearly are so frustrated by our costly system.