Warren Buffett, chief executive of Berkshire Hathaway, speaks during a television interview earlier this week. (AP)
| Associated Press | Billionaire Warren Buffett says health care costs are a major drain on U.S. businesses and act like an “economic tape worm.”
The head of the holding company Berkshire Hathaway Inc. said Monday on Buffett says much of the rest of the world is paying about 9 percent of |
See also • Buffett boasts about profit, outlook • Read Buffett’s annual shareholder letter • Berkshire Hathaway profit jumps 25-fold |
He says he hopes Congress will develop a new health care reform proposal that will restrict costs more than any of the current plans would.
Buffett said Monday the economy is improving but at
a very slow rate and consumers are still not spending much, so job
growth will remain slow.
Buffett appeared on the CNBC cable network for three hours Monday
morning — two days after releasing his annual letter to Berkshire
Hathaway Inc. shareholders — and he addressed a range of topics,
including health care reform and succession at his company.
Buffett said the reports he receives from Berkshire’s 80 subsidiaries don’t show much improvement. And most of Berkshire’s businesses, especially retail and manufacturing businesses, are still performing worse than they were two years ago before the height of the crisis.
“It’s getting better, but at a very, very slow rate,” Buffett said.
Berkshire owns clothing, furniture, jewelry and corporate jet firms, but its insurance and utility businesses accounted for one-third of the company’s profit last year. Its net income jumped 61 percent in 2009 to $8.1 billion largely because the value of its investments and derivatives rose sharply.
Buffett said he expects job growth will remain slow until demand recovers. For instance, Buffett said Berkshire’s Shaw Carpet and Acme Brick subsidiaries both laid off thousands of employees over the past couple years as housing construction slowed. Buffett said Acme and Shaw will definitely employ more people three years from now, but won’t necessarily hire new employees in the next six months.
“The jobs will come back, but it won’t be fast,” he said.
Buffett said health care costs are a major drain on U.S. businesses that put them at a competitive disadvantage. He said America’s health care system needs fundamental reform to attack costs because it’s not practical to continue devoting roughly 17 percent of the nation’s gross domestic product to health care.
Buffett said much of the rest of the world is paying about 9 percent of their GDP on health care and have more doctors and nurses per person.
“That kind of a cost, compared with the rest of the world, is like a tapeworm eating at our economic body,” Buffett said.
He said he hopes Congress will develop a new health care reform proposal that will restrict costs more than any of the current plans would.
“Unfortunately, we came up with a bill that does not deal with the cost system much,” Buffett said.
At Berkshire Hathaway, many investors regularly worry about the 79-year-old Buffett’s health because he will be a tough act to follow. Buffett mostly evaded questions about his successors Monday, but he did offer a few new clues.
Buffett has said the plan to replace him includes splitting his job into three parts — chief executive officer, chief investment officer and chairman.
Buffett said Monday that Berkshire’s investment duties would likely be split among three or more different managers who would report to the next CEO. Those investment managers will be in charge of Berkshire’s roughly $60 billion stock portfolio and its other investments.
Buffett, however, has said he has no plans to retire, still loves his work and remains in good health.
Buffett also said Monday that Berkshire’s culture and the principles the company follows are deeply ingrained, so Berkshire’s managers and board members would reject anyone who tried to change them.
“They think of Berkshire as something special and they’ll keep it special,” he said. “The organization would thrust out anybody that tried to go in a different direction.”
Buffett devoted much of his annual letter to Berkshire shareholders to reviewing the company’s approach to business, which includes a hands-off approach to managing subsidiaries and little effort to woo Wall Street.
Buffett emphasized those principles this year because Berkshire recently gained at least 65,000 new shareholders as part of its acquisition of the Burlington Northern Santa Fe railroad and because Berkshire recently joined the S&P 500 index. But even though Berkshire now has about 257,000 employees, its world headquarters in Omaha includes only 21 people.
Its Class B shares fell 80 cents to $79.33 in morning trading Monday while its Class A shares fell $880 to $118,920.
Ok, right wingers. NOW what do you say? One of the richest men in the world, one of the most successful, brightest business minds of our time sees that there is a fundamental problem with our current health care system. State YOUR credentials…then state YOUR case. This sucker needs change. Now. My premiums just went up 10% from the prior year. How’re yours doing?
Hard to argue with Buffett on business matters. He is the same guy who did some serious stumping for Obamasiah, so I think his opinion here is a bit suspect. He is a Democrat in favor of keeping the estate tax from now on. He has the money to spend on tax advisers and attorneys to set up foundations and avoid taxes very few others could. So what Warren Buffett thinks about health care reform doesn’t much matter to me. His opinion is clouded.
Need a good pandemic to knock off large numbers of poor and old people. Long term health care cost issues – solved!
You mean the guy who owns a bunch of insurance companies wants health care bill passed? Cant imagine why.
I take care of my health. You want me to pay for crack addicts, people who smoke every minute, people with diabeties who refuse to change their diets, fat slobs how is change now?
For all his financial wizardry he sure is a dummy when it comes to this topic. I’d like to know where he’s getting his statistics about the countries with social medicine having more doctors and nurses per capita then in the US. He’s nuts. Why did the PM of Canada recently come to the US for a heart operation? I tell Mr.Ding-Dong Buffet why, because he’d be waiting until January 2011 to have the procedure done in Canada. Socialized medicine sucks because government intervention in ANY business sucks because there’s no accountability. I might not have the answers as to how to curb the spiraling cost of health care but I can damn well tell you that socialized medicine isn’t the answer.
Um, Tim: crack addicts rarely go to the doctor. And guess what? You are already paying for everyone you mentioned because they just walk into an emergency room at $1000 a pop. Plus they may change their habits if they had access to doctors.
Tim, even though you take care of yourself, hopefully you will never get cancer or another disease and then loose your job and insurance. Their goes the money you saved up for your BMW. Grow up!
If you read his other comments, he also indicated that the current proposal doesn’t sufficiently contain costs. It’s not a “right-wing” problem. It’s a problem that every person in the political spectrum needs to realistically deal with.
marko, you’re completely backwards. If he owns insurance companies then it would NOT be in his best interest for there to be healthcare reform. Think about all the health insurance companies lobbying against health care reform.
So he believes so strongly about this that he is speaking out against his own interests.
It cracks me up when I hear “healthy people” not wanting to pay for the uninsured – who do you think is paying for them now? When an uninsured person walks into a government-funded hospital, where do you think the money comes from to treat them? That’s your federal tax dollars at work. Universal health coverage IS NOT socialized medicine. Maybe its time to cut the partisan garbage, get educated about the real facts and actually work towards a solution.
I always get a kick out of people that cherry-pick what they like about someone. Buffett is one of the greatest financial minds of our time (maybe ever). He is practically the symbol of Capitalism. Funny that just because he supported Obama, people say “he’s a financial wiz, but he’s a retard on this topic.” As if by supporting Obama, he has no legitimacy on this topic.
If you read the article, which it appears several people didn’t (or have poor reading comprehension skills), you’ll see he actually notes that the current health reform bill doesn’t address the core problem…health care costs! He is 100% right on this one. There’s a reason this guy is as successful as he is. He knows what he is talking about.
The article is edited improperly. Buffet’s complete remarks included the statement that he preferred “Plan C” to either the house or the Senate plan and the “Plan C” should address costs of healthcare. For “Plan C”, see the republican plan to limit malpractice damages, allow across state line purchases, and allow cooperatives to buy at group rates.
Dave U – You are an idiot. Try reading the entire article. I know it’s hard and you get distracted but please try. He said what needs to change the most is not even in the bill. No one argues that there needs to be reform. It just doesn’t need to be a welfare program. We have too many of them already.
Perhaps, Mr. Buffett, you and your corporate officers can find a way to do for USA healthcare insurance premiums and related costs, what (if my aging memory has not fooled me) one of your Berkshire Hathaway companies started awhile back for automobile insurance — introduce meaningful, effective market price competition via GEICO– with the resulting, and extremely welcome, real cost savings for many of us consumers not only from your company, but also much of the competition. In my humble opinion, a factor in the ridiculous increases in the USA’s “healthcare costs” in recent years has not been caused by, say, our doctors but rather by our absurd “Rube Goldberg” structure to pay their and other medical bills– a big part of which as you noted currently must be absorbed by our country’s employers–resulting in higher, less affordable prices for domestic goods and services. The vicious downward spiral continues…. unless…..
Sincerely, Lawrence S. Wick
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