Warren Buffett was quoted in a recent article as comparing the cost of healthcare in the U.S. to a corporate tax (see: Forget Taxes, Warren Buffett Says. The Real Problem Is Health Care). This line of reasoning is important because many executives are lobbying the administration for a lower corporate tax rate. Buffett thinks that they should more appropriately be seeking a lower cost of healthcare in order to be able to operate more competitive globally. I think that he's right and we need a broader discussion of this topic. Below is an excerpt from the article:
“The tax system is not crippling our business around the world.".....Mr. [Warren] Buffett, in a remarkably blunt and pointed remark, implicitly rebuked his fellow chief executives, who have been lobbying the Trump administration and Washington lawmakers to lower corporate taxes. In truth, Mr. Buffett said, a specter much more sinister than corporate taxes is looming over American businesses: health care costs. And chief executives who have been maniacally focused on seeking relief from their tax bills would be smart to shift their attention to these costs, which are swelling and swallowing their profits.....In 1960, corporate taxes in the United States were about 4 percent of G.D.P., which is probably the best way to measure the burden on businesses....Today, it is 1.9 percent. In the meantime, health care costs as a percent of G.D.P. have skyrocketed, significantly diverging with those of other industrial countries. Our health care costs stand at 17.1 percent of G.D.P., up from 13.1 percent in 1995.....
That puts the United States at a material disadvantage far beyond the tax differential. And it harms American companies in particular, since they bear such a big share of those costs. Corporations spend $12,591 on average for coverage of a family of four, up 54 percent since 2005....[T]he United States...[should] enact a sort of universal type of coverage for all citizens — perhaps along the lines of the Medicaid system — with an opt-out provision that would allow the wealthy to still get concierge medicine. Our bloated health care system, Mr. Buffett asserted, is the true barrier to America’s world competitiveness as well as “the single biggest variable where we keep getting more and more out of whack with the rest of the world.”
If and when corporate executives come to realize that the cost of healthcare is a form of corporate tax, what should they then do to help bend the cost curve? One recent article suggested that one solution would be to pursue a series of small steps that, in the aggregate, could make a difference (see: How Small Ideas Are Helping to Bend the Health Care Cost Curve). Here are examples of the small ideas cited in the article:
- Lowering treatment costs by reducing the use of anesthesia providers in routine gastroenterology procedures for low-risk patients.
- Changing the payment policy for emergency transportation or ambulance service. Medicare currently pays vast sums for transporting elderly patients to and from the hospital.
- Shifting care from hospital emergency rooms to retail clinics when appropriate.
- Increasing the use of $4 generic drugs to help rein in runaway prescription drug costs.
There is one way that consumers with high-deductible plans or no health insurance can reduce their healthcare costs -- direct access testing (DAT). Using DAT, consumers order lab tests for themselves on the web, perhaps on the basis of advice from their physicians. Most of these DAT companies use the same national reference labs that provide services to physician offices such as LabCorp (see: FAQs: Walk-in Lab's Questions and Answers). For drawing the necessary blood samples, DAT customers will be directed to the LabCorp's patient service centers. The web-based DAT firms usually use LabCorp to as their performing reference lab.