Last month, Warren Buffett — who is worth north of 80 billion dollars and understands a thing or two about finance — compared the U.S. healthcare system to a “tapeworm” on the country’s economy. What’s behind his claim, and where is this problem headed?
If you had to take a guess, what percentage of the gross domestic product in this country is spent on health care costs? If you said 18% and rising, pat yourself on the back: that’s the astronomical number that represents the astonishing amount of money that flows through the healthcare system in America. As health care costs rise and quality of of care declines, most of the country’s experts are in agreement that something must be done. However, the number of influential people with the ability to actually make a dent in this problem is woefully small.
That is, until last month, when multi-billionaire tycoon Warren Buffett threw his hat in the health care ring, hoping to provide some relief — and possibly, solutions — to this escalating issue. In an interview, Buffett aptly compared the health care system to a “tapeworm” on the United States economy. Of course, he was suggesting that massive health spending is keeping the economy from growing as it should, preventing wealth accumulation at both a personal and corporate level. Buffett took the initiative, partnering with Amazon’s Jeff Bezos and J.P. Morgan’s Jamie Dimon (two fellow ultra-wealthy businessmen) for a joint venture that is first seeking to improve the quality and cost of care for their respective companies’ employees.
If they’re successful, the businessmen hope to provide a privatized model of how to improve the quality of life for workers, while also freeing up capital that can be pumped back into the economy at large (instead of just being vacuumed up by insurers like Aetna, who raked in over $63 billion in 2016).
If you belong to an upper-middle or upper-class income bracket, huge health care costs (including expensive insurance premiums) are definitely no fun, but they probably won’t completely ruin your financial picture for years. That’s not the case, however, for families struggling to get by or who live with only a modest or non-existent cushion of savings. For them, all it takes is one catastrophic health event to bring their house of cards crashing down. As a result, many of these families remain uninsured, which places a tremendous burden on the state and can put them into crippling (and often un-collectable) medical debt.
What Buffett and other forward-thinking philanthropists are suggesting, is that by making a small up-front investment in individual communities or workforces, money will ultimately be saved in the long run for both families and for the U.S. economy. When Buffett, Bezos, and Dimon subsidize some health care costs for their employees, they are taking an initial hit in terms of cash flow, yes. However, by keeping families afloat and improving their quality of life, there is a butterfly effect on the rest of the economy that will see increased consumer spending, longer lifespans (where more money can be spent!) and way less of a burden on state and federal safety net programs.
This is precisely why Urgent 9 has positioned ourselves uniquely in the Glendale and Los Angeles communities. Rather than continuing to fall in line with the obviously broken insurance pricing model, we’ve transitioned to a low-cost direct payment method that puts the ability to control health costs back in the hands of families themselves.