The health-care law upheld by the U.S. Supreme Court last month is a step toward addressing the “tapeworm” of rising health costs consuming American businesses, billionaire investor Warren Buffett said.
Buffett said the court made the right decision in declaring the Affordable Care Act constitutional in its 5-4 ruling and said the law probably “cuts both ways” in terms of President Barack Obama’s re-election chances this November.
“The health-care problem is the No. 1 problem of America and of American business,” Buffett, chairman and chief executive officer of Omaha, Nebraska-based Berkshire Hathaway Inc., told Bloomberg Television’s Betty Liu in an interview today. “It’s the tapeworm, essentially, of the American economy, and we have not dealt with that yet. Obamacare is a step in the right direction in many ways.”
The law, Obama’s signature legislative achievement, was designed to cover more than 30 million uninsured Americans while imposing new taxes on health-care companies and fees on businesses that don’t provide coverage deemed affordable to workers. Republicans have vowed to repeal it if they win the White House and Congress in November.
Health costs now account for about 18 percent of the U.S. economy, compared with 10 percent in some countries, said Buffett, a supporter of Obama’s re-election campaign.
“There’s only 100 points in the dollar, and to have a seven or eight point disadvantage is huge,” Buffett said. “In terms of cost, it’s going to require a huge change.”
The law also includes a host of pilot programs and provisions designed to rein in costs, such as penalties for hospitals with high readmission rates and funding to study the effectiveness of drugs and medical procedures.
The Supreme Court on June 28 said the federal government can require Americans to obtain insurance under the health law or pay a penalty. Republicans in the U.S. House voted to repeal the act on July 11, saying the overhaul was hurting the economy. Their repeal bill isn’t expected to pass the Senate, where Democrats hold a majority.
The law bans insurers from denying people health coverage based on pre-existing medical conditions, gives subsidies to consumers to buy private insurance and cuts payments for hospitals and health plans to help pay the cost. It requires businesses with 50 or more full-time workers to offer a minimum level of coverage or pay a penalty.
While most polls have found the law unpopular, Buffett said in 2010 that he would have voted for it. The legislation may help rein in the “galloping” health-care costs afflicting U.S. businesses, he told the Lincoln Journal Star at the time.
Berkshire had about 271,000 employees as of Dec. 31, according to its annual report.