Warren Buffett is right. Health care costs are swallowing the economy

Controlling the growth of health care spending without compromising care has been the holy grail for years.So ...

Posted: Jan 31, 2018 3:55 AM
Updated: Jan 31, 2018 3:55 AM

Controlling the growth of health care spending without compromising care has been the holy grail for years.

So news that business leaders Jeff Bezos, Warren Buffett and Jamie Dimon want to create a company to provide hundreds of thousands of employees with better quality health care at a lower cost -- without regard to profit incentives -- is intriguing.

Health care spending accounts for an ever-larger share of the economy. It's a growing expense for businesses and individuals. And at the federal level, it's a driver of U.S. debt.

"The ballooning costs of health care act as a hungry tapeworm on the American economy," Buffett said. "We share the belief that putting our collective resources behind the country's best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes."

Related: Jeff Bezos, Warren Buffett and Jamie Dimon want to fix health care

National health spending -- which includes spending by federal and state governments, the private sector and individuals -- has risen from just 5% as a share of the economy in 1960 to 17.9% in 2016, according to the most recent data from the Centers for Medicare and Medicaid Services. It's projected to rise to 19.9% by 2025.

How much money does that really represent? Trillions. Health care spending rose 4.3% to $3.3 trillion in 2016, or $10,348 per person. CMS estimates spending will grow 5.4% in 2017 due primarily to faster growth in Medicare and private health insurance spending. It projects 5.9% growth for 2018 and 2019 fueled largely by Medicare and Medicaid.

Private-sector employers paid nearly $665 billion in 2016 in health-related costs, up 5% from the prior year, according to CMS data.

The lion's share of that ($504 billion) went to subsidize employees' health insurance premiums.

Related: 8 ways Trump hurt Obamacare in his first year

Americans are paying more

The average premium has risen 19% over the past five years, to $7,000 for single coverage in 2017, and to nearly $19,000 for family coverage, according to the Kaiser Family Foundation.

Employers pay about three quarters of their workers' premiums, according to the Society for Human Resource Management.

Despite that large subsidy from their companies, individual workers' health costs have gone up as well.

In addition to premium increases, their out-of-pocket costs, which include what they shell out for deductibles, co-pays and co-insurance, have risen too. Between 2005 and 2015 average out-of-pocket costs grew 66%, or more than twice the growth rate in wages during that period, according to Kaiser.

And they are projected to continue growing faster than the economy in the years ahead -- along with other health care costs.

- CNNMoney's Chris Isidore contributed to this story.

Mississippi Coronavirus Cases

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Confirmed Cases: 31257

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CountyConfirmedDeaths
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Madison131434
Jones112849
Neshoba99271
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Harrison93311
Lauderdale91079
Forrest87842
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Panola3526
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Newton3399
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Tate28810
Marion28411
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Clay25111
Marshall2343
Smith21811
Union2109
Clarke20724
Walthall2045
Coahoma2016
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Lawrence1782
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Carroll16611
Humphreys1509
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Itawamba1368
Montgomery1352
Calhoun1324
Tippah13111
Hancock13013
Webster12710
Jefferson Davis1124
Jefferson1083
Prentiss1083
Greene1058
Tunica1053
Wilkinson949
Amite912
George893
Tishomingo831
Quitman780
Choctaw744
Alcorn712
Perry674
Stone651
Franklin452
Benton380
Sharkey380
Issaquena91
Unassigned00

Alabama Coronavirus Cases

Confirmed Cases: 44375

Reported Deaths: 984
CountyConfirmedDeaths
Jefferson5410152
Montgomery4158103
Mobile4129134
Tuscaloosa232142
Marshall172410
Madison14917
Lee141137
Shelby133423
Morgan11215
Walker97824
Elmore94314
Franklin89814
Baldwin8949
Dallas8919
Etowah75013
DeKalb7375
Chambers64227
Butler63428
Autauga61012
Tallapoosa60569
Russell5650
Houston5074
Unassigned50323
Limestone5010
Lauderdale4966
Lowndes47221
Cullman4594
Pike4375
Colbert4086
St. Clair4022
Escambia3966
Coffee3812
Calhoun3765
Covington3707
Bullock36910
Barbour3532
Talladega3177
Hale31421
Marengo31211
Dale2990
Wilcox2948
Sumter28512
Jackson2842
Clarke2776
Winston2633
Chilton2522
Blount2431
Monroe2392
Pickens2366
Marion23313
Conecuh2107
Randolph2099
Macon1999
Choctaw19512
Bibb1941
Greene1868
Perry1791
Henry1363
Crenshaw1253
Washington1117
Lawrence1100
Cherokee1027
Geneva830
Lamar781
Fayette711
Clay692
Coosa591
Cleburne381
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