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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.

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 456490

Reported Deaths: 6174
CountyCasesDeaths
Hennepin947071506
Ramsey40752750
Dakota33684355
Anoka31437368
Washington20627237
Stearns18137190
St. Louis14032251
Scott1224899
Wright11831107
Olmsted1085175
Sherburne831970
Carver706139
Clay661384
Rice625674
Kandiyohi559172
Blue Earth549633
Crow Wing491178
Otter Tail465468
Chisago461838
Benton424388
Winona395648
Douglas380366
Nobles374847
Mower374729
Goodhue359163
Polk330860
McLeod328947
Beltrami316648
Morrison314845
Lyon306340
Becker290039
Itasca288043
Isanti286543
Carlton285243
Steele279610
Pine270815
Freeborn254923
Todd233730
Nicollet230938
Brown219134
Mille Lacs216145
Le Sueur215016
Cass211024
Meeker201733
Waseca193916
Wabasha17493
Martin172126
Roseau166617
Hubbard151438
Redwood141427
Houston141114
Dodge14014
Renville138740
Chippewa133432
Cottonwood129218
Fillmore12838
Wadena120918
Rock112212
Aitkin111633
Faribault110316
Sibley11017
Watonwan10708
Pennington101316
Kanabec100118
Pipestone97523
Yellow Medicine95017
Murray9137
Jackson87510
Swift84718
Pope7485
Stevens7078
Marshall70315
Clearwater68814
Lake66515
Lac qui Parle66116
Wilkin63510
Koochiching61010
Lincoln4912
Big Stone4703
Grant4398
Unassigned43568
Norman4268
Mahnomen4177
Kittson37420
Red Lake3214
Traverse2673
Lake of the Woods1991
Cook1160

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 313284

Reported Deaths: 4437
CountyCasesDeaths
Polk47198465
Linn18187280
Scott15975172
Black Hawk14184243
Woodbury13161181
Johnson1234453
Dubuque11678159
Pottawattamie9204115
Dallas915472
Story886638
Cerro Gordo476172
Webster475077
Warren463939
Clinton461068
Sioux460757
Marshall433262
Buena Vista397731
Muscatine397379
Des Moines396243
Plymouth354270
Wapello353098
Jasper335159
Lee327132
Marion312253
Jones275650
Henry269931
Carroll258934
Bremer251048
Crawford235524
Boone224717
Washington224333
Benton214550
Mahaska198937
Jackson196532
Tama191659
Dickinson189429
Kossuth182244
Delaware177736
Clay173421
Wright167824
Fayette166824
Buchanan162924
Hamilton162930
Winneshiek161420
Harrison159162
Hardin158731
Cedar156819
Clayton154349
Butler152524
Page148715
Floyd142036
Cherokee140527
Mills139017
Lyon138233
Poweshiek136024
Hancock133024
Allamakee131630
Iowa128522
Madison126210
Calhoun12409
Grundy123428
Winnebago123329
Jefferson122625
Mitchell117337
Louisa116830
Cass115443
Chickasaw114012
Appanoose113340
Sac113215
Union112823
Emmet111332
Shelby108027
Humboldt107819
Guthrie104624
Franklin104018
Unassigned10290
Palo Alto92611
Montgomery90024
Keokuk86526
Howard86419
Monroe82820
Clarke8219
Pocahontas78811
Ida76930
Davis70421
Adair69820
Greene6987
Monona69618
Lucas67110
Osceola65011
Worth6224
Taylor6029
Fremont5296
Van Buren50615
Decatur5004
Ringgold46311
Audubon4278
Wayne42021
Adams3023
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