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The Oracle of Omaha has spoken. I wonder if any politicians will listen?
In an interview on CNBC today, Warren Buffett called the high cost of health care a "tapeworm eating at our economic body." With 80 subsidiaries under Berkshire Hathaway (NYSE: BRK-A ) (NYSE: BRK-B ) , he certainly knows a thing or two about how American companies are struggling with rising health-care costs.
The problem basically boils down to competition with other countries. We spend close to 17% of our gross domestic product on health care, which is integrated into the cost of goods and services we produce. Everything that we export has to compete against products made in other countries where health-care costs are less than 10% of their GDP. The same is true for products made and consumed locally that have to compete against imports from other countries.
The upward trend -- we used to be at just 5% of GDP -- is unsustainable. The worst possibility, as Buffett sees it, is keeping with the status quo. Buffett would take the Senate version of the health-care bill if he had to, but would much rather see real reform that would make a major dent in the cost of care.
You could also look for American companies that have shifted some of their workforce abroad. Apple's (Nasdaq: AAPL ) iPhones are made in China, and Palm's Pre is made in Taiwan. But who'll be able to afford them if Americans' discretionary funds are increasingly eaten up by health-care costs?
The best move then, might be to invest in companies that have a strong presence in their home country, essentially betting that their economies will grow faster than ours -- think Baidu (Nasdaq: BIDU ) instead of Google (Nasdaq: GOOG ) or China Mobile vs. Verizon (NYSE: VZ ) .
While it's great that Buffett is highlighting the problem, he didn't have any specific solutions, except for politicians to call on the experts to help propose solutions. Considering that the president has already called for suggestions and the two sides are very far apart on a solution, I wouldn't count on Buffett's involvement solving much.