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Warren Buffett says start over on health insurance
By: David Freddoso
Online Opinion Editor
03/01/10 1:39 PM EST
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| Warren Buffett: Just cut the costs -- and a few thousand pages, too. (Bloomberg/Divis) |
Billionaire investor and big-business entrepreneur Warren Buffett spoke on CNBC today for three hours, addressing health insurance reform during one segment. Although he remains a proponent of reform, Buffett said that the bills before Congress do little to contain costs and contain thousands of pages of unnecessary provisions that are hurting the cause of reform.
BUFFETT: I mean, it--call what we're doing now plan A, and plan A has taken us from 5 percent of GDP to 17 or close to 17 percent of GDP. And that kind of a cost compared to the rest of the world is really a--it's like a tapeworm eating, you know, at our economic body....[I]t's a cost that the rest of the world isn't bearing. And the -- tops around the world, you find 10 percent of GDP....Unfortunately, we came up with a bill that really doesn't attack the cost situation that much. And we have to have a fundamental change. We have to have something that will end the constant increase in medical costs as a percentage of GDP.
QUICK: Then are you in favor of scrapping this and going back to start over?
BUFFETT: I would be -- if I were President Obama, I would just show this chart of what's been happening and say this is the tapeworm that's eating at American competitiveness. And I would say that one way or another, we're going to attack costs, costs, costs, just like they talk about jobs, jobs, jobs in the...(unintelligible). It's cost, cost, cost on this side. That's a tough job. I mean, we're spending maybe $2.3 trillion on health care in the United States, and every one of those dollars is going to somebody and they're going to yell if that dollar becomes 90 cents or 80 cents. So it take--but I would--I would try to get a unified effort, say this is a national emergency to do something about this. We need the Republicans, we need the Democrats. We're going to cut off all the kinds of things like the 800,000 special people in Florida or the Cornhusker kickback, as they called it, or the Louisiana Purchase, and we're going to -- we're going to get rid of the nonsense. We're just going to focus on costs and we're not going to dream up 2,000 pages of other things....[I] don't believe in insuring more people till you attack the cost aspect of this....
On whether this constitutes a reversal on his part:
QUICK: This is different than what you've said when we've talked to you in the past. I mean, even a couple months ago when I sat down and talked to you, you said that you would vote, I believe, for the bill if it were in front of you...When did you change your mind?
BUFFETT: No, if it was a choice today between plan A, which is what we've got, or plan B, what is in front of--the Senate bill, I would vote for the Senate bill. But I would much rather see a plan C that really attacks costs....
On the supposedly "villainous" (Nancy Pelosi's word) insurers' profits, which Buffett finds significantly less lucrative than his business in property and casualty insurance:
BUFFETT: [I]f you look at the largest health insurers, you look at their profit margins, if you look at their return on equity, they're--it is--that is not the problem. You can find individual problems, I'm sure, with any--in any arena. But that is not the reason we have 17--or 16 or the 17 percent of our GDP going to health care.
QUICK: What is the reason?
BUFFETT: Well, the reason--the reason is we're doing an awful lot of things that don't need to be done, probably. And we're--we've got a--we've got payment--we've got payment for procedures and not payment for results, but...
KERNEN: What's your margins in property/casualty vs.--I've read that margins in some managed care. What--do you know what's the average margin in managed care and what's the average margin for property/casualty?...
BUFFETT: Let--let's put it this way, Joe. I'm in the PC business and I'm not in the health care business. Draw your own conclusion.
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