The prospective CEOs for a health care company that Warren Buffett is launching with fellow billionaires Jeff Bezos and Jamie Dimon all agreed on one thing, Buffett said recently: The system is broken. But that didn’t mean they were eager to identify the problem.
“When we were interviewing people to be in charge, everybody agrees that there’s a better system out there,” Buffett told CNN’s Poppy Harlow at a charity lunch. “But they just don’t think it involves them.”
“They’re not the problem. I mean that’s human nature,” he said. “I’d be the same way.”
Buffett, Bezos and Dimon earlier this year selected Dr. Atul Gawande, a renowned surgeon and writer, to head their new health care venture. Its stated goal is to give Berkshire Hathaway (BRKA), Amazon (AMZN) and JP Morgan (JPM) employees better health insurance that will be “free from profit-making incentives and constraints.”
Buffett spoke with Harlow at a lunch hosted at Smith & Wollensky steakhouse in New York City. An anonymous bidder paid more than $3 million to meet the investing guru as part of an annual auction Buffett holds to raise money for The Glide Foundation, a charity that benefits San Francisco’s homeless.
He said the cause has long been important to him because the group helps people who had “given up on themselves.”
“Their friends had given up on them,” he said. “Now they’ve changed the lives of thousands and thousands of people, one at a time.”
Health care: ‘Tapeworm of costs’
Buffett didn’t go into much detail about his health care venture’s plans, but he told Harlow that the goal will be to check the “tapeworm of costs” in the industry.
“At the very least we’ve got to figure out a way to check that. Preferably reduce it a little bit, getting closer to other countries, and have a better outcome for people,” he said. “That’s a very, very tough one.”
Harlow also asked Buffett if he still thinks a single-payer system is the way to go for the country as a whole.
“It may be the answer,” he said. “I would like to see obviously the private sector arrive at something that gets the cost-benefits of that, and eliminates some of the downsides of it.”
Ultimately, he added, it’s an issue for voters to decide.
Taxes: ‘Reform and expand the earned income tax credit’
Buffett said the most important thing the Trump administration can do for working class Americans is to change tax policies in ways aimed at helping them.
“People don’t need a minimum wage, they need a maximum amount of cash in their pocket,” Buffett said.
That’s how the government can best help the most marginalized in society, he said. “Reform and expand the earned income tax credit.”
He’s made this argument before. In a 2015 op-ed published in the Wall Street Journal, Buffett said the modern US economy works for people with specialized skills but is difficult for people with more “commonplace skills.”
A higher minimum wage would “almost certainly reduce employment in a major way,” he wrote.
Buffett said the Republican tax overhaul that passed in December was a major boon for Berkshire and its shareholders.
But beyond its effects on his company, Harlow asked him, does he think the new law will be good for the economy in the long run — or has it just created a short-term “sugar rush”?
“Well, it isn’t a sugar rush,” Buffett said. “But there’s no question that corporations, owners of those corporations, benefited significantly.”
Economy: ‘I’m not worried’ about America
Buffett said despite a few hangups — like the pace of housing construction — he is pleased with the current economy.
“It’s come back from being in the emergency ward in 2009, and it continues to,” he said.
But Buffett declined to speculate on whether the US is due for a recession after a nine-year bull market. Recessions can happen at “any time,” he said, but they’re just temporary interruptions.
“I’m not worried about the long term future of America, no, and I don’t worry about the short term,” Buffett said. “That makes me a happy guy.”
As far as exactly what quarter-to-quarter growth will look like, Buffett said he doesn’t “have the faintest idea.”
“My experience is that economists don’t either,” he said.
CNNMoney (New York) First published September 4, 2018: 6:35 AM ET