4 ms·

“If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of G.D.P.,” Mr. Buffett said. “I mean, they bounced around some. And now, they’re a

“If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of G.D.P.,” Mr. Buffett said. “I mean, they bounced around some. And now, they’re about 2 percent of G.D.P.” By contrast, he said, while tax rates have fallen as a share of gross domestic product, health care costs have ballooned. About 50 years ago, he said, “health care was 5 percent of G.D.P., and now it’s about 17 percent.”

euroclydon 9y ago
It's interesting to consider what it really means for something to be a drag on the economy. I mean, every dollar spent on healthcare is literally part of the economy -- it's not siphoned off into some void. Companies make a lot of money in healthcare. Healthcare employee a lot of people. Folks like being healthy.
- mifreewil 9y ago
  You're right it's not being siphoned off into some void, it's being redistributed from some groups of people to other groups. If healthcare was delivered efficiently so that it was affordable and kept people healthy then that would be ok. There are so many inefficiencies with monopolistic practices such as inability to import drugs from outside US, healthcare networks, and on and on.
  - larrysalibra 9y ago
    Monopolistic practices == industry protected from competition by government violence. If the health industry wasn't, you'd have people making a killing importing 2 dollar generic antibiotics from overseas to compete with the 70 dollar generic antibiotics sold at CVS.
    - lostboys67 9y ago
      And then the scandals when it turns out these generics are fakes as happened in Africa with faked AIDS drugs or drugs with a nugatory amount of active ingredients
    - tw04 9y ago
      You'd also have people performance plastic surgery in their shed killing people. There's obviously middle ground somewhere, it's just we as a country lately have a REALLY hard time accepting the fact that compromise isn't a four letter word. At least some of us...
  - deleted 9y ago
    [deleted]
- misja111 9y ago
  That is true but the healthcare industry doesn't bring any money in from abroad. So for the average international competetiveness of American companies, it's bad.
- larrysalibra 9y ago
  Time and other resources are scarce. The more resources that are tied up in the healthcare the less available for other things. Other countries are getting better health results for way less money which all other things equal makes Americans comparatively less well off. When I pay $1500 and dozens of hours of time for something that costs $2 and 15 minutes in another country, I am less well off. I like being healthy, but I'd rather be more healthy for less money than less healthy for more money. You are right, the money isn't transferred off into a void, it is a wealth transfer from consumers to the healthcare industry.
- Retric 9y ago
  Broken window fallacy. Total Money spent on heath care has very poor correlation with outcomes. Largely because it includes things like medical billing and advertising which increases costs without providing any benefit. You also often do more dangerous and unnecessary procedures and give more drugs risking poorly understood interactions. Something like 80% of the benefit of modern heathcare comes from the first 10% of spending. EX: Sanitation and quarantine are cheap and amazing tools to stop the spread of disease where hospitals are extremely expencive and gather sick people together to spread disease. A vaccine is vastly cheaper and more effective than dealing with outbreaks.
  - larrysalibra 9y ago
    Bastiat for the win! https://en.m.wikisource.org/wiki/Essays_on_Political_Economy/That_Which_Is_Seen,_and_That_Which_Is_Not_Seen https://en.m.wikisource.org/wiki/Essays_on_Political_Economy...
  - dredmorbius 9y ago
    “In all, 86 per cent of the increased life expectancy was due to decreases in infectious diseases. And the bulk of the decline in infectious disease deaths occurred prior to the age of antibiotics. Less than 4 per cent of the total improvement in life expectancy since 1700s can be credited to twentieth-century advances in medical care.” ― Laurie Garrett, Betrayal of Trust: The Collapse of Global Public Health https://www.goodreads.com/author/show/12627.Laurie_Garrett https://www.goodreads.com/author/show/12627.Laurie_Garrett
- dredmorbius 9y ago
  The impacts are several-fold: * Inefficiencies in delivery mean that those for whom low-cost interventions are most beneficial, most especially pregnant women, and infants and children, don't receive preventive and supportive care which offsets future problems. * High healthcare costs translate directly to high labour costs, exacerbating the competitve disadvantages American labour faces relative to the rest of the world, and obviating much or all of the advantage of the greater efficiencies of such labour. * What health care services as are offered are, counter to my first point, late and heroic measures which do little to extend life or its quality, but keep sick patients alive longer. They are delivered largely based on capacity to pay, rather than social need. * Programmes to increase overall community well-being, ranging from vaccinations, education, and other public-health measures, to treatment of drugs and drink addiction as medical rather than criminal problems, aren't provided. Entire towns and states fall victim to epidemics of entirely preventible conditions: measles, mumps, cervical cancer, HIV/AIDS, alcoholism, drink driving, heroin and opoids additions, cocaine and meth addiction. * I won't even talk about mental health services. They are a national embarassment and shame to all Americans. Instead, a handful of insurers, hospitals, drugs manufacturers, equipment manufacturers, and service providers (look up medical transport for an eye-opener) are skimming off fat profits whilst delivering little of actual value, and actively eroding the competitive and health viability of the country as a whole.
- zaptheimpaler 9y ago
  The issue is relative efficiency. If I spend $500 more on treatment X in US vs. another country, that money is paying a healthcare employee, but the employee is also "paying" with their time. A more efficient system that needs less employees frees up other people to contribute to the economy in more ways. All of those extra people health insurance companies employ because they can get away with it would get other jobs and hence increase the total productivity. The same argument applies to bloated costs of equipment. If a surgical sponge is $500 vs. $10 elsewhere, i doubt the added benefit justifies the extra $490. That $490 is coming out of someones pocket and its a complete waste. This graph [1] also shows the same story. The return on investment measured by life expectancy in the US is pathetic. The extra money is just not helping... so its either being misused or stolen, probably both. https://ourworldindata.org/the-link-between-life-expectancy-and-health-spending-us-focus#life-expectancy-vs-health-expenditure-over-time-1970-2014ref https://ourworldindata.org/the-link-between-life-expectancy-...
  - ptaipale 9y ago
    One difference is that the U.S. system gives a lot to the people who pay a lot. Rich people have access to the most advanced cancer treatments in world, for instance. But child mortality is relatively high among poor people (which is a shame on US.). Of course, this is indeed bad for efficiency, if you consider health outcomes vs. spending. And inequality: wealthy people live longer. But then there are questions of fairness. Elsewhere, in a so-called welfare state where I live, all children get very good care and child mortality is low, but for instance, when I consider myself - a fairly well-to-do person although not wealthy by US standards - I pay a lot to the system but it gives me very little attention. No regular health checks that are normal in the US for people who have a health insurance through employment, no screenings for cancer (women get several types of specific screenings but men do not). (We use 9 % of GDP to public health, vs. 17 % in the US.) I know that the care is quite good if I run into a life-threatening situation, but with smaller trouble such as broken bones or a pneumonia, I'll be prioritized down after drug addicts who have a more serious condition that they have inflicted themselves. And they never contributed to the system which tells me to go to a private clinic. Fortunately the social problems resulting in non-contribution are still quite small, but an increasing number of people are not giving anything and are consuming more and more of the resources.
- TuringNYC 9y ago
  There are a lot of good responses to your question, sibling comments, but let me provide an orthogonal view: consider how many innovative companies are NOT being formed because worried workers cling to their generous big-company insurance plans -- plans which are so costly to buy independent that they are not real options. This is a major concern for me as an entrepreneur and parent.
DarkKomunalec 9y ago
“If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of G.D.P.,” Mr. Buffett said. “I mean, they bounced around some. And now, they’re about 2 percent of G.D.P.” While I guess I have no problem with this statement specifically, it's a bit too close to "the top 1 percent of Americans will pay 45.7 percent of the individual income taxes" : http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-federal-income-taxes.html http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-fede... The problem with the latter statement is of course that it makes it sound like the top 1% is unfairly burdened by taxes, while hiding the fact that the richer they get compared to the rest, the larger a share of taxes they'll pay. Taking it to the logical extreme, if all income went to the top 1%, they'd pay 100% of income taxes, while the lazy 99% contribute zero! Someone quickly give the rich a tax break!
- jstanley 9y ago
  Do you think the top 1% of Americans consume significantly more government services than an average 1% of Americans? If not, why should consuming those services cost significantly more money? It might feel right that rich people should pay more, but that's not how any other market works - why should government services be different? EDIT: To all of the people saying rich people consume more government services than poor people: you're forgetting about welfare payments. In the UK this is the largest government expenditure, and it is consumed almost entirely by people who are not paying for it.
  - mpweiher 9y ago
    Because society is not a market. Markets are artificial constructs that serve society. Not the other way around.
  - DarkKomunalec 9y ago
    I can think of three reasons, from least to most libertarian: 1) You're proposing a flat dollar amount be paid as tax by every citizen. This will be most painfully felt by the poorest. What sort of society do you think this leads to? 2) The rich do employ a lot of people, whose education and safety were provided for by taxes. Then there's all those road and water networks they use to deliver goods to the markets they own, and the large amount of property and contracts they have that are enforced by the state. So yes, I do believe they use more government services than the average person. 3) Plenty of markets work that way: https://en.wikipedia.org/wiki/Price_discrimination https://en.wikipedia.org/wiki/Price_discrimination Furthermore, in a market, the seller sets the price, and the buyer is free to take his business elsewhere. And there's plenty of countries to choose from - so why should government services be different?

“If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of G.D.P.,” Mr. Buffett said. “I mean, they bounced around some. And now, they’re about 2 percent of G.D.P.” By contrast, he said, while tax rates have fallen as a share of gross domestic product, health care costs have ballooned. About 50 years ago, he said, “health care was 5 percent of G.D.P., and now it’s about 17 percent.”

euroclydon 9y ago

It's interesting to consider what it really means for something to be a drag on the economy. I mean, every dollar spent on healthcare is literally part of the economy -- it's not siphoned off into some void. Companies make a lot of money in healthcare. Healthcare employee a lot of people. Folks like being healthy.

mifreewil 9y ago
You're right it's not being siphoned off into some void, it's being redistributed from some groups of people to other groups. If healthcare was delivered efficiently so that it was affordable and kept people healthy then that would be ok. There are so many inefficiencies with monopolistic practices such as inability to import drugs from outside US, healthcare networks, and on and on.
- larrysalibra 9y ago
  Monopolistic practices == industry protected from competition by government violence. If the health industry wasn't, you'd have people making a killing importing 2 dollar generic antibiotics from overseas to compete with the 70 dollar generic antibiotics sold at CVS.
  - lostboys67 9y ago
    And then the scandals when it turns out these generics are fakes as happened in Africa with faked AIDS drugs or drugs with a nugatory amount of active ingredients
  - tw04 9y ago
    You'd also have people performance plastic surgery in their shed killing people. There's obviously middle ground somewhere, it's just we as a country lately have a REALLY hard time accepting the fact that compromise isn't a four letter word. At least some of us...
- deleted 9y ago
  [deleted]
misja111 9y ago
That is true but the healthcare industry doesn't bring any money in from abroad. So for the average international competetiveness of American companies, it's bad.
larrysalibra 9y ago
Time and other resources are scarce. The more resources that are tied up in the healthcare the less available for other things. Other countries are getting better health results for way less money which all other things equal makes Americans comparatively less well off. When I pay $1500 and dozens of hours of time for something that costs $2 and 15 minutes in another country, I am less well off. I like being healthy, but I'd rather be more healthy for less money than less healthy for more money. You are right, the money isn't transferred off into a void, it is a wealth transfer from consumers to the healthcare industry.
Retric 9y ago
Broken window fallacy. Total Money spent on heath care has very poor correlation with outcomes. Largely because it includes things like medical billing and advertising which increases costs without providing any benefit. You also often do more dangerous and unnecessary procedures and give more drugs risking poorly understood interactions. Something like 80% of the benefit of modern heathcare comes from the first 10% of spending. EX: Sanitation and quarantine are cheap and amazing tools to stop the spread of disease where hospitals are extremely expencive and gather sick people together to spread disease. A vaccine is vastly cheaper and more effective than dealing with outbreaks.
- larrysalibra 9y ago
  Bastiat for the win! https://en.m.wikisource.org/wiki/Essays_on_Political_Economy/That_Which_Is_Seen,_and_That_Which_Is_Not_Seen https://en.m.wikisource.org/wiki/Essays_on_Political_Economy...
- dredmorbius 9y ago
  “In all, 86 per cent of the increased life expectancy was due to decreases in infectious diseases. And the bulk of the decline in infectious disease deaths occurred prior to the age of antibiotics. Less than 4 per cent of the total improvement in life expectancy since 1700s can be credited to twentieth-century advances in medical care.” ― Laurie Garrett, Betrayal of Trust: The Collapse of Global Public Health https://www.goodreads.com/author/show/12627.Laurie_Garrett https://www.goodreads.com/author/show/12627.Laurie_Garrett
dredmorbius 9y ago
The impacts are several-fold: * Inefficiencies in delivery mean that those for whom low-cost interventions are most beneficial, most especially pregnant women, and infants and children, don't receive preventive and supportive care which offsets future problems. * High healthcare costs translate directly to high labour costs, exacerbating the competitve disadvantages American labour faces relative to the rest of the world, and obviating much or all of the advantage of the greater efficiencies of such labour. * What health care services as are offered are, counter to my first point, late and heroic measures which do little to extend life or its quality, but keep sick patients alive longer. They are delivered largely based on capacity to pay, rather than social need. * Programmes to increase overall community well-being, ranging from vaccinations, education, and other public-health measures, to treatment of drugs and drink addiction as medical rather than criminal problems, aren't provided. Entire towns and states fall victim to epidemics of entirely preventible conditions: measles, mumps, cervical cancer, HIV/AIDS, alcoholism, drink driving, heroin and opoids additions, cocaine and meth addiction. * I won't even talk about mental health services. They are a national embarassment and shame to all Americans. Instead, a handful of insurers, hospitals, drugs manufacturers, equipment manufacturers, and service providers (look up medical transport for an eye-opener) are skimming off fat profits whilst delivering little of actual value, and actively eroding the competitive and health viability of the country as a whole.
zaptheimpaler 9y ago
The issue is relative efficiency. If I spend $500 more on treatment X in US vs. another country, that money is paying a healthcare employee, but the employee is also "paying" with their time. A more efficient system that needs less employees frees up other people to contribute to the economy in more ways. All of those extra people health insurance companies employ because they can get away with it would get other jobs and hence increase the total productivity. The same argument applies to bloated costs of equipment. If a surgical sponge is $500 vs. $10 elsewhere, i doubt the added benefit justifies the extra $490. That $490 is coming out of someones pocket and its a complete waste. This graph [1] also shows the same story. The return on investment measured by life expectancy in the US is pathetic. The extra money is just not helping... so its either being misused or stolen, probably both. https://ourworldindata.org/the-link-between-life-expectancy-and-health-spending-us-focus#life-expectancy-vs-health-expenditure-over-time-1970-2014ref https://ourworldindata.org/the-link-between-life-expectancy-...
- ptaipale 9y ago
  One difference is that the U.S. system gives a lot to the people who pay a lot. Rich people have access to the most advanced cancer treatments in world, for instance. But child mortality is relatively high among poor people (which is a shame on US.). Of course, this is indeed bad for efficiency, if you consider health outcomes vs. spending. And inequality: wealthy people live longer. But then there are questions of fairness. Elsewhere, in a so-called welfare state where I live, all children get very good care and child mortality is low, but for instance, when I consider myself - a fairly well-to-do person although not wealthy by US standards - I pay a lot to the system but it gives me very little attention. No regular health checks that are normal in the US for people who have a health insurance through employment, no screenings for cancer (women get several types of specific screenings but men do not). (We use 9 % of GDP to public health, vs. 17 % in the US.) I know that the care is quite good if I run into a life-threatening situation, but with smaller trouble such as broken bones or a pneumonia, I'll be prioritized down after drug addicts who have a more serious condition that they have inflicted themselves. And they never contributed to the system which tells me to go to a private clinic. Fortunately the social problems resulting in non-contribution are still quite small, but an increasing number of people are not giving anything and are consuming more and more of the resources.
TuringNYC 9y ago
There are a lot of good responses to your question, sibling comments, but let me provide an orthogonal view: consider how many innovative companies are NOT being formed because worried workers cling to their generous big-company insurance plans -- plans which are so costly to buy independent that they are not real options. This is a major concern for me as an entrepreneur and parent.

DarkKomunalec 9y ago

“If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of G.D.P.,” Mr. Buffett said. “I mean, they bounced around some. And now, they’re about 2 percent of G.D.P.” While I guess I have no problem with this statement specifically, it's a bit too close to "the top 1 percent of Americans will pay 45.7 percent of the individual income taxes" : http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-federal-income-taxes.html http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-fede... The problem with the latter statement is of course that it makes it sound like the top 1% is unfairly burdened by taxes, while hiding the fact that the richer they get compared to the rest, the larger a share of taxes they'll pay. Taking it to the logical extreme, if all income went to the top 1%, they'd pay 100% of income taxes, while the lazy 99% contribute zero! Someone quickly give the rich a tax break!

jstanley 9y ago
Do you think the top 1% of Americans consume significantly more government services than an average 1% of Americans? If not, why should consuming those services cost significantly more money? It might feel right that rich people should pay more, but that's not how any other market works - why should government services be different? EDIT: To all of the people saying rich people consume more government services than poor people: you're forgetting about welfare payments. In the UK this is the largest government expenditure, and it is consumed almost entirely by people who are not paying for it.
- mpweiher 9y ago
  Because society is not a market. Markets are artificial constructs that serve society. Not the other way around.
- DarkKomunalec 9y ago
  I can think of three reasons, from least to most libertarian: 1) You're proposing a flat dollar amount be paid as tax by every citizen. This will be most painfully felt by the poorest. What sort of society do you think this leads to? 2) The rich do employ a lot of people, whose education and safety were provided for by taxes. Then there's all those road and water networks they use to deliver goods to the markets they own, and the large amount of property and contracts they have that are enforced by the state. So yes, I do believe they use more government services than the average person. 3) Plenty of markets work that way: https://en.wikipedia.org/wiki/Price_discrimination https://en.wikipedia.org/wiki/Price_discrimination Furthermore, in a market, the seller sets the price, and the buyer is free to take his business elsewhere. And there's plenty of countries to choose from - so why should government services be different?