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I am curious about this as someone who reveres WEB but who knows much less about his views than many posters here.

I know from some time ago (~early 2000s) that Buffett has expressed concern about the US current account deficit (aka trade deficit as I understand it). I remember an interview I saw (maybe 20 years ago!) in which he stated that the current account deficit was of more concern to him than the fiscal deficit.

Has he recently expressed such concerns? Has he expressed his views on tariffs as a way of addressing the current account deficit?

Ismr409 wrote:


I know from some time ago (~early 2000s) that Buffett has expressed concern about the US current account deficit (aka trade deficit as I understand it). I remember an interview I saw (maybe 20 years ago!) in which he stated that the current account deficit was of more concern to him than the fiscal deficit.

Are you referring to WEB's article on Squandersville and Thriftville? I haven't read it in over 20 years. Maybe it's time to read it again?

https://www.rbcpa.com/commentary-archive/warren-bu...

tairbear00

an easier to read version is hosted on the Berkshire Hathaway W.E.B. site

https://www.berkshirehathaway.com/letters/growing....


Buffett's most recent public comment on tariffs was CBS This Morning
https://www.youtube.com/watch?v=0z_Ujm3lmcU


I'm sure he would love to discuss the most fascinating subject at this year's annual meeting

Thanks so much for the links nola, I'd forgotten that the original link is on the BRK site!

Watching the video you linked, it seems like Warren hasn't changed his view very much regarding tariffs being a tax on consumers over the years that producers may elect to pay at least partially, as they have in the past. Seems like Warren was proposing a modified tariff-like solution in 2003 using Import Certificates (IC):

The time to halt this trading of assets for consumables is now, and
I have a plan to suggest for getting it done. My remedy may sound
gimmicky, and in truth it is a tariff called by another name. But this
is a tariff that retains most free-market virtues, neither protecting
specific industries nor punishing specific countries nor encouraging
trade wars. This plan would increase our exports and might well lead to
increase overall world trade. And it would balance our books without
there being a significant decline in the value of the dollar, which I
believe is otherwise almost certain to occur

<clipped>

The likely outcome of an IC plan is that the exporting nations –
after some initial posturing-will turn their ingenuity to encouraging
imports from us. Take the position of China, which today sells us about
$140 billion of goods and services annually while purchasing only $25
billion. Were ICs to exist, one course for China would be simply to fill
the gap by buying 115 billion certificates annually. But it could
alternatively reduce its need for ICs by cutting its exports to the U.S.
or by increasing its purchases from us. This last choice would probably
be the most palatable for China, and we should wish it to be so.
If our exports were to increase and the supply of ICs were
therefore to be enlarged, their market price would be driven down.
Indeed, if our exports expanded sufficiently, ICs would be rendered
valueless and the entire plan made moot

I hope Warren does expand upon and possibly update his view of Squanderville and Thriftville to today's economy and circumstances! I wonder if he still feels the same about using his plan today?

The entire article is a very worthwhile reread!

When the article was written in 2003 the deficit was about 4.5% of GDP. In 2024 the average deficit was about 3%. It did get to 6% in 2006.



https://fred.stlouisfed.org/graph/?g=dyFq

Aussi

The time to halt this trading of assets for consumables is now, and
I have a plan to suggest for getting it done. My remedy may sound
gimmicky, and in truth it is a tariff called by another name. But this
is a tariff that retains most free-market virtues, neither protecting
specific industries nor punishing specific countries nor encouraging
trade wars. This plan would increase our exports and might well lead to
increase overall world trade. And it would balance our books without
there being a significant decline in the value of the dollar, which I
believe is otherwise almost certain to occur

This is so painful to read. It is, of course, the macroeconomic equivalent of pseudo-science. I am so embarrassed for him. It's a fine demonstration that skill in one area does not translate to skill in another. Family analogies do not work in macroeconomics, you have to follow the identities. If your population doesn't save, you'll have a trade account deficit and a capital account surplus.

Admittedly it has the advantages he claims: it does not cause distortions by fixating on specific industries nor countries. It also has the advantage of targeting the balance overall, not bilateral balances. It seems (?) to include services as well as goods, though that isn't made clear (the US runs a huge trade surplus in services). These are all head and shoulders above recent developments. But the notion that it would increase world trade is eyebrow raising ("barking mad"), and skipping the observation that would cause a global depression is a bit of an oversight. (a depression is a viable way to cut consumption, but might not boost savings if the cut to incomes is just as big). It is provincial and protectionist in all the most blind ways: lamenting the ownership of US businesses by foreigners while not noticing that US investors own very comparable amounts of all non-US businesses, for example, and thus skipping the rather startling observation that US investors reap very much higher returns on their non-US investments than non-US investors do on their US investments.

One could go on, but there are Bollywood dance videos on TikTok with better economic advice.

Jim

About Buffett's 2003 article and proposals, Mungofitch writes:
Admittedly it has the advantages he claims: ... These are all head and shoulders above recent developments. But ... It is provincial and protectionist in all the most blind ways: lamenting the ownership of US businesses by foreigners while not noticing that US investors own very comparable amounts of all non-US businesses, for example, and thus skipping the rather startling observation that US investors reap very much higher returns on their non-US investments than non-US investors do on their US investments.

I concluded, among other things, that Buffett's proposals seemed more like "capital controls" (where debt and equity in the US is not purchasable by foreigners) than like Tariffs. And looked at as a Tariff, it was a closed system where all the revenues from the "Tariffs" on imports were spent to subsidize American Exports. I had ChatGPT clean up my thoughts and published them here: https://kazart.blogspot.com/

In 2003, the foreign ownership that Buffett provincially bemoaned was $2.5Trillion more ownership by foreigners of US debt and equity than American's owned of Foreign debt and equity. In 2025, that difference is more like $25Trillion, amounting to about 1/7 the "Market Cap" of the USA being owned by Foreigners without a countervailing amount of equity owned by American's in the rest of the world.

I guess I am more provincial and protectionist myself in 2025 than Buffett was in 2003. But I would very much like to have it explained to me just why neither Buffett nor I ought to be concerned with, as Buffett put it, selling and/or mortgaging pieces of the country off to support THIS generation's consumption at the cost of some future generation having to pay foreigners rent for living in the USA.

Thank you in advance,
R:/

In 2003, the foreign ownership that Buffett provincially bemoaned was $2.5Trillion more ownership by foreigners of US debt and equity than American's owned of Foreign debt and equity. In 2025, that difference is more like $25Trillion, amounting to about 1/7 the "Market Cap" of the USA being owned by Foreigners without a countervailing amount of equity owned by American's in the rest of the world.
I guess I am more provincial and protectionist myself in 2025 than Buffett was in 2003. But I would very much like to have it explained to me just why neither Buffett nor I ought to be concerned with, as Buffett put it, selling and/or mortgaging pieces of the country off to support THIS generation's consumption at the cost of some future generation having to pay foreigners rent for living in the USA.

It is entirely reasonable to want to fix this.

But protectionism won't help, nor will tariffs, capital controls, nor building more factories, nor taking over other countries, nor devaluation. They have all been tried in a number of places, over and over, along with other magical fixes.

US individuals and government, together, simply spend more than they make. With only a pinch of simplification, the difference is borrowed from abroad. It's not such a difficult concept.

An increased individual savings rate would help, but there is no simple way to arrange that. However a modest tax rise would fix it all. There is no need to pay off all the debt, as all you need is to get the rate of increase of government debt lower than the trend rate of GDP growth and the problem fades away. Back of the envelope, I estimate a US national VAT of 5-7% on all goods and services (other than the usual like food and rent) would make the debt problem go away. Pretty much right away, too, as observers would see the new direction of travel.

Current policies are burning down the forest to find the gold, but it's not even the right forest.

Jim

* someone with a bit of care for the poorest would make the rate 1.3% higher, and send $600 cheques to every household annually. Back of a different envelope, that would leave the bottom ~15% of households slightly better off, not worse. There might even be a bit of money left over to fund some of the necessary things often being ignored, like repairing bridges, or pensions promised a few years in the future.

OK, first of all, I am against the recent tariffs for a nummber of reasons.

That said, Jims statement:
"I estimate a US national VAT of 5-7% on all goods and services (other than the usual like food and rent) would make the debt problem go away."

If we change to word "VAT" to tariffs on "all" goods (figuring that the vast majority of "goods" are made from imported content if not imports themselves), what would the pragmatic difference be?

Jeff

If we change to word "VAT" to tariffs on "all" goods (figuring that the vast majority of "goods" are made from imported content if not imports themselves), what would the pragmatic difference be?

At first glance, it seems similar with the added "whack the foreigners", but there are quite a few differences.
The US is a very big country, so a lot of stuff is mainly local origin.

For one thing, the rate would of course have to be much higher to raise the same amount of money overall.
It would cause much more distortion to the economy, for a variety of reasons (such as the above), probably the biggest argument against it. Very broad, very constant taxes have been shown to raise the most money with the least breakage.
It would of course violate a number of treaties, cheese off a lot of trading partners, and lead to retaliation of several kinds.
It is applied on import, not on end use, so things going back and forth across the border like car parts and cars can get hit multiple times.
It hits goods imported from US owned non-US enterprises, which may or may not be the intended result. They have a motive to close their non-US operations, which may currently be very profitable for the US.
In some ways, surprisingly, it's easier to dodge a tariff. Transfer pricing, services spoofing.
It is not as good as VAT at accomplishing a big macro goal of encouraging saving relative to consumption. (the lack of savings / excess of consumption across private and public sector is the cause of the US deficit and international borrowing).

Mr Colbert (the French finance minister of a previous century, not the TV host) once remarked that the art of taxation is getting the maximum number of feathers from the goose with the least amount of hissing. VAT and GST are, to date, the best in that regard.

To cut back on trade is to make people poorer in both places, by a lot. Imagine living your life consuming only those things produced wholly by your own household, or even your own city. Let me know when you've made your first integrated circuit : )

There are wonderful examples from my favourite historical economist, a Monsieur Bastiat, about some tariffs that were introduced on the fantastic new railroad between France and Spain. He pointed out that if using tariffs to reduce the benefits of trade were such a good idea, they'd be even better off simply blowing up the railroad. To those who thought that all exports were good and all imports bad, he pointed out that the logical conclusion was that everyone in the world would be better off if all the cargo-laden ships sank en route.

In short, it's not a good idea to gum up trade. A few deals are win-win, many are win-lose, but that one is a lose-lose.

Jim

If we change to word "VAT" to tariffs on "all" goods (figuring that the vast majority of "goods" are made from imported content if not imports themselves), what would the pragmatic difference be?

A tariff is essentially at tax on consumption; so it should have the same impact as a VAT (with some important additional side effects which might be viewed as positive or negative).

* It will impact imported goods more than domestically produced
* It will impact exporters due to counter tariffs imposed by other countries


tecmo
...

Jim: "Market Cap" of the USA being owned by Foreigners without a countervailing amount of equity owned by American's in the rest of the world.

Well, maybe I'm an aborition, but a very large portion of my equity portfollio is made up of foreign businesses. One of the deep fears I have is that, at some future date, nationalistic tendanceies will make it (again) illegal to own foreign stock shares.

In a world where citizens of any nation can own shares of "any" country it is both difficult to acertain who owns what as well as expected for "foreigners" to have domestic interests (as demonstrated by the US government's sudden interest in protecting South Africa's Afrikaner demographic against racial bigotry).

Jeff

However a modest tax rise would fix it all. There is no need to pay off all the debt, as all you need is to get the rate of increase of government debt lower than the trend rate of GDP growth and the problem fades away.

That "all you need" is doing a lot of heavy lifting.

Problem is, what has happened EVERY TIME that Federal taxes were increased, Congress increased spending as much or (usually) more than the additional tax.

I have also seen this happen in every one of the 3 states we have lived in. Colorado, Illinois, and my present state.


I don't feel like googling it, but I bet that the same thing has happened with VAT tax rates.

Oh, heck, let's try one:
UK VAT

From		Standard rate
1-Apr-73		10.00%
Jul-74		         8.00%
18-Jun-79		15.00%
19-Mar-91		17.50%
1-Dec-08		15.00%
1-Jan-10		17.50%
4-Jan-11		20.00%

Or raise the payroll tax cap to $1m or $5m (individuals only, not businesses) to make funding of Social Security solvent in a hurry.

Top executives, Athletes, "entertainers" and professional sports players paying the same amount into SS as the "great unwashed" is... the opposite of fair. Yeah, yeah they'll probably never file for SS when they're making $10,20,50M a year. Whatever. They won't miss the 5%.

Problem is, what has happened EVERY TIME that Federal taxes were increased, Congress increased spending as much or (usually) more than the additional tax.
I have also seen this happen in every one of the 3 states we have lived in. Colorado, Illinois, and my present state.
I don't feel like googling it, but I bet that the same thing has happened with VAT tax rates...


Well, in the US, the problem is that the tax system is sort of a 19th century design. It simply isn't capable of raising the tax needed without breaking some industries. The US desperately needs a national sales tax. I think Hong Kong is the largest economy, other than the US, without one. The modern world way of life that the US has adopted requires some money for old-school government goods like defence, and newer ones like pensions. That money is better raised mostly from taxes rather than from borrowing. In the US, the decision has been to move to the sorts of expenditures that voters want and absolutely will never give up, but simply to refuse to raise the tax to pay for them, borrowing the money instead. This is politically expedient, but as so many people have noticed, it can't go on forever. Debt can rise forever in real terms, but it can't rise faster than GDP forever.

As for VAT rates climbing, yes, they do tend to. New Zealand is another example of rising rates. That's because countries that introduce them rapidly realize that they really work: they raise huge amounts of money WITHOUT breaking the economy or impoverishing people, so taxes shift towards consumption taxes and away from other types of tax. The other reason is that introducing a national sales tax is political hurdle...easier to introduce a small rate and raise later than to introduce a big one at the start. In Canada the rate has vacillated a bit, but is now lower than when it was introduced (from 7% to 5%). The reason for the drop is partly populist political posturing, and partly because the money isn't needed as much: debt to GDP across all levels of government is half the level it was when it was introduced, largely because of the GST. Provincial taxes are on top, and vary. Note that Canadian long inflation-protected bonds yield are quite a bit lower than American ones: the finances have been in better shape and the economic management better, so the payment promises are considered more reliable and people are willing to pay more for them.

Turkeys don't like voting for Thanksgiving, and many voters are hesitant to back a new tax. But consider: would you like to have no income tax? Monaco has a high VAT rate, moderate corporate income tax for international companies based in Monaco, no personal income tax, no income tax on local businesses, and no property tax other than a hefty transaction tax and a small 1% tax on rent. The sales tax is the biggie, about half the budget as I recall. It works. It works despite the fact that a big chunk of the sales tax collected within Monaco is sent straight to France. Big countries bullying small ones isn't a new idea.

Jim

oh , trust me, the executives do claim their SS ...

Turkeys don't like voting for Thanksgiving, and many voters are hesitant to back a new tax. But consider: would you like to have no income tax?

The issue is that 40% of the population in the US already pays zero federal income tax; so you will be "raising taxes" on that very large group. Agree the current tax structure is a mess... but the pollical friction to fix it is extreme.

tecmo
...

Turkeys don't like voting for Thanksgiving, and many voters are hesitant to back a new tax. But consider: would you like to have no income tax?
...
The issue is that 40% of the population in the US already pays zero federal income tax; so you will be "raising taxes" on that very large group. Agree the current tax structure is a mess... but the pollical friction to fix it is extreme.

Well, yes, people dislike taxes. But my back-of-the-envelope suggestion would actually be a net after-tax benefit for 1/5 of households, so at least that section probably wouldn't complain too much! And for the next quintile up, it wouldn't be very material. There is an old American saying that has guided tax policy for perhaps a bit too long: Don't tax you, Don't tax me, we'll tax that fellow behind the tree...

Though perhaps a European saying of more recent vintage is more appropriate: we all know what to do, we just don't know how to get re-elected afterwards.
Not enough elected representatives around the world remember that it's their job to actually govern, not to run for election.

Jim

Turkeys don't like voting for Thanksgiving,...

Are you sure Jim?
77 million, as 8th&20eth reminded us, seem to have.

Anyway.
I think a broad VAT or national sales tax is regressive. A flat tax that hurts those who consume a bigger proportion of their income, i.e. the poor.
Unfortunately, I believe US cannot have a wealth tax due to our constitution. Otherwise, a mix of VAT, income tax, and wealth tax would be a fairer distribution of pain. Without that, I am good with having no national sales tax.

This board continues to be informative though it’s understandably not much about BRK recently.

Jim’s VAT discussion is a great example of how most of the “problems” and “goals” that have surfaced have well known solutions that are not about destroying everything immediately (a silly valley idiocy presented as brilliance).

If surgeons prove incompetent they are subject to financial penalties and possible ejection from their profession. Why should powerful government officials be any different? Cause huge financial damage, pay the price. Indirectly cause illness or loss of life, pay the price. Professional malpractice by government officials is not currently a concept in the justice system. An appeal to vote them out is not justice.

I can’t understand how people interested in Buffet-Munger thinking can be interested in Trump who is pretty much the opposite.

Shaun

I think a broad VAT or national sales tax is regressive. A flat tax that hurts those who consume a bigger proportion of their income, i.e. the poor.

Not the one I mooted.

First, it's proportional to wealth to a first approximation, as rich people spend more on goods and services than poor people. Again, to a first approximation, that doesn't sound unfair.
("regressive"/"progressive" are a propaganda terms in taxation policty which I avoid. "Progressive" is usually used to advocate something like quadratic taxation in tax versus wealth while sneakily connoting modernity and good moving forward).

Next, the bottom quintile of households would be richer, not poorer, as they would get more in the $600 flat rebate than they would be paying in incremental tax. There would also be pretty minimal tax for the second-from-bottom quintile, for much the same reason: the rebate would be somewhat material relative to the tax paid.

And lastly, as there is no VAT on food in my mooted proposal or almost any version in use that I know of, and since poorer households spend a lower fraction of their income on food than richer ones do, the tax paid would be greater-than-linear with income.*

VAT is like what they say about democracy: it certainly has its flaws, it's just better than all the other things that have been tried.

Jim


* The greater-than-linearity would bend down slightly at the top end, as there is a greater propensity to save versus spend among the very wealthy. Still, other than Mr Buffett, rich people generally spend a whole lot more than poor people do.

Back of the envelope, I estimate a US national VAT of 5-7% on all goods and services (other than the usual like food and rent) would make the debt problem go away.

How much higher would the VAT have to be to add in universal health care?

since poorer households spend a lower fraction of their income on food than richer ones do, the tax paid would be greater-than-linear with income.*

Jim, did your fingers type the opposite of what your brain told them to?

Elan

Unfortunately, I believe US cannot have a wealth tax due to our constitution.

Never heard that. Property taxes are a form of wealth tax, including the portion of an auto registration fee that is based on the value of the car. The estate tax is a form of wealth tax.

Elan

Never heard that. Property taxes are a form of wealth tax, including the portion of an auto registration fee that is based on the value of the car. The estate tax is a form of wealth tax.

It is a grey area. The constitution forbids "direct taxes" which many people believe would preclude wealth taxes. But the states are not bound by this requirement, hence property taxes.

Estate taxes are a transfer tax, and technically paid by the heirs of the estate.

How much higher would the VAT have to be to add in universal health care?

We already have almost universal health coverage. The problem is it's a mish mash. Many people are covered by corporate benefits. The elderly are covered by Medicare. The poor are covered by Medicaid. Veterans are covered by the VA. And many of those who fall between the cracks are covered by the ACA. So to reach universal health coverage we mostly have to shuffle the funding sources, not add much net new funding at all.

Elan

So to reach universal health coverage we mostly have to shuffle the funding sources, not add much net new funding at all.

Based on the numbers from almost every other first-world nation, universal single-payer coverage would cost maybe 50-60% as much as we're paying now in aggregate, with better outcomes and longer lifespans.

How much higher would the VAT have to be to add in universal health care?

There are probably two issues to address in the US.

A lot of people are uninsured or have to pay out of pocket themselves (for insurance, treatment or both), leading to all kinds of unpleasant consequences like random bankruptcies and deaths from lack of basic healthcare, or economic effects like people who should change jobs or start new companies but can't afford to. Changing who pays is something that could probably be solved by a single payer model as in many other countries. Funding it with a national sales tax would probably be doable. But it might not help that much.

The other bigger issue is that the US healthcare sector is spectacularly badly structured. The US government spends more per capita on public healthcare than Canada does, then has a huge private system on top. The total spending is staggering, largely because the incentives and structures are skewed. Sadly, there are probably way, way too many vested interests to allow the possibility of ever changing that. There are probably some things that would help, but anything you touch is ruining the livelihood of someone, and probably someone with an effective lobbyist. (note, this is a problem that several countries have run into: once a health care system is up and running, you tend to be stuck with it). I'd probably start with something small, like forcing public disclosure of the price paid for every drug, by customer, at every stage of distribution and payment.

For fun really radical ideas, I read a paper that argued out that drug patents might not be a good idea in the US. The obvious retort is that without the prospect of profits, the drug companies would have no incentive to do the expensive research, which seems like pretty compelling logic on the face of it. But the weird thing is that their aggregate drug research budgets are way smaller than their aggregate extra profits from patent exclusivity; for society as a whole, it would be much cheaper for the government to pay for all the R&D and have no drug patents at all. This would also remove the bias towards research on diseases of rich people who can pay a lot for a drug relative to research targeted solely based on the biggest aggregate disease burden. It would naturally go along with publishing all research results, positive and negative.

Jim

I read a paper that argued out that drug patents might not be a good idea in the US. ... it would be much cheaper for the government to pay for all the R&D and have no drug patents at all. This would also remove the bias towards research on diseases of rich people who can pay a lot for a drug relative to research targeted solely based on the biggest aggregate disease burden.

This is a great idea. I'm surprised I've never heard it discussed before.

US healthcare coverage is an expensive kludge. The easiest way forward is through incremental reform: building on ObamaCare and Medicaid to extend coverage to all legal residents, while hacking away at some of the more obvious inefficiencies in the system, like expanding the ability of Medicare to negotiate the prices of drugs. But, that will still leave us with an expensive kludge of a system.

It'd be dreamy to elect a President and Congress with the mandate and will to make a cohesive national system so we could capture the ~50% savings and improved results that most other advanced countries get.

Elann makes a good point. Universal coverage is not a problem. The problem is the lack of a single payer.

26,440,000 people in the US lacked health insurance as of 2023, 8% of the population. Then there's a slew of people who are under-insured, covered with high deductible plans that do not adequately protect them against financial disaster.

So, I'd say that universal coverage is indeed a problem. It was a huge fight that lasted a decade to get the Affordable Care Act settled in place, with a big increase in the number of people insured. It will take a similar effort to extend insurance to the last 8%.

I think that higher wages in the United States is a factor in higher healthcare costs.

Oh great.
Now we add health care to the topics that get debated on internet message boards, uselessly.

I've been reading the same heath care arguments for the last 40+ years.

"Oh great.
Now we add health care to the topics that get debated on internet message boards, uselessly."

For some people, the discussions are not useless. Lots of readers here use these boards to learn new things or at least get a better grasp on things.

For others, the discussions are probably useless because just use these boards to express their views and hopefully have them reinforced. They aren't looking to learn. When encountering differing information they just throw their hands up and say the discussions do not matter anyway.

26,440,000 people in the US lacked health insurance as of 2023, 8% of the population. Then there's a slew of people who are under-insured, covered with high deductible plans that do not adequately protect them against financial disaster.

So, I'd say that universal coverage is indeed a problem. It was a huge fight that lasted a decade to get the Affordable Care Act settled in place, with a big increase in the number of people insured. It will take a similar effort to extend insurance to the last 8%.

What percentage of those 26m people without coverage are either (a) not legal residents of the USA and thus would also not qualify for a universal healthcare insurance plan; or (b) sufficiently wealthy that they would just as soon pay out of pocket, rather than purchase a plan?

I have heard that most of the 8% are in the first category, and there must surely be a not insignificant percentage that would fall into the second category, but I don’t know what the numbers are.

or C0 young and throwing the dice... thats almost 100% anecdotally from folks I've met....and they go to A&E for everything, which is why A&E's are closing down at a rapid rate, and payers are taking up part of the cost, and everyone sufferes creating medical deserts...

system of perverse incentives....

One of the things I like about some OT posts, makes me do a bit of thinking.

(b) sufficiently wealthy that they would just as soon pay out of pocket, rather than purchase a plan?

Do wealthy people self insure for medical? Also makes me wonder whether wealthy people self insure homes? Anyway, from the 2020 census:

28M without medical insurance

5M of those 28M have incomes greater than 400% of the poverty level. For a single person 400% is about $60k per year ($30/hour). For a family of 4, 400% is about $130k per year. Is this sufficiently wealthy to self-insure?

https://www2.census.gov/programs-surveys/demo/tabl...

Aussi

What percentage of those 26m people without coverage are either (a) not legal residents of the USA and thus would also not qualify for a universal healthcare insurance plan; or (b) sufficiently wealthy that they would just as soon pay out of pocket, rather than purchase a plan?

I'd be happy to pay out of pocket if I could get the same rates the insurance companies pay. Without that you are going to get ripped-off. We buy a high deductible plan and expect to pay plenty out of pocket and typically write some of that off on our taxes.

DTB: What percentage of those 26m people without coverage are either (a) not legal residents of the USA and thus would also not qualify for a universal healthcare insurance plan; or (b) sufficiently wealthy that they would just as soon pay out of pocket, rather than purchase a plan?

For (a), 25.8% were noncitizens.

In 2023, of the total uninsured population ages 0 to 64, nearly three in four (73.7%) had at least one full-time worker in their family, and 11.2% had a part-time worker in their family (Figure 4). More than eight in ten (80.9%) uninsured people were in families with incomes below 400% of the federal poverty level, and nearly half (46.6%) had incomes below 200% FPL. White people made up 37.1% of the uninsured, and the remaining 62.9% included Hispanic (41.1%), Black (12.5%), and Asian (3.7%) people and people of other racial or ethnic backgrounds. Most uninsured individuals (74.2%) were U.S. citizens, while 25.8% were noncitizens. Almost three-quarters (73.9%) of uninsured people lived in the South or West.

https://www.kff.org/uninsured/issue-brief/key-fact...(Figure%201).

DTB: What percentage of those 26m people without coverage are either (a) not legal residents of the USA and thus would also not qualify for a universal healthcare insurance plan; or (b) sufficiently wealthy that they would just as soon pay out of pocket, rather than purchase a plan?

For (a), 25.8% were noncitizens.

A clarification

(a) in DTB's note was discussing people who are not legal residents. Lots of people (think green card holders as a minimum) are legal residents but not citizens.

So of that 25.8% that are non citizens, a much smaller percentage would be non legal.

Aussi

I'd be happy to pay out of pocket if I could get the same rates the insurance companies pay.

My wife went into the hospital unexpectedly for a major but undiagnosed problem.
Healthcare policies generally require preapproval before hospital admission.

Four days later, she was still in the hospital, I got the EOB letter from the insurance company. They refused coverage, saying that her labs & tests did not indicate a problem. No elevated white blood count, no fever, etc. It seemed that they thought she was in for appendicitis, but she had none of the markers.

I spoke to the hospital's Floor Case Manager who said, "Don't worry, we work with them. In any case, if they won't cover you we will not charge you any more than you would have to pay if they did cover you."


“If you think health care is expensive now, wait until you see what it costs when it's free.” - PJ O'Rourk

A number of interesting questions have been brought up. Before I get into my comments, I want to point out that I am neither a financial consultant or an insurance specialist, so what I do is what I do, but it’s not meant as a recommendation. Also, my comments on based on Medicare coverage, rather than commercial.

1) What percentage of those 26m people without coverage are not legal residents of the USA and thus would also not qualify for a universal healthcare insurance plan?

In the absence of seeing the wording of a potential plan, the answer is "who knows?". That said, in its current configuration (at least in NY State), I believe Medicare would cover many of these and the rest head to hospital emergency rooms for free care. That's one reason that I'm guessing, despite their denials, the Powers that Be are going to slice up Medicare to help hit their $1T in cost cutting.

2) Sufficiently wealthy that they would just as soon pay out of pocket, rather than purchase a plan? I'd be happy to pay out of pocket if I could get the same rates the insurance companies pay.

Being "sufficiently wealthy" and taking a chance on catastrophic costs are two different things. My sister (WendyBG who I think sometime shows up on this board) recently weent through some work on her ticker which, after the Medicare discounts, still came in in the mid-six figures. While she has a high-deductible "medigap" plan (G, I think), her out of pocket expense was less than three grand. Like her, after doing back-of-envelope scribbling, I have elected to carry the cheaper between type F and type G high-deductible versions. As far as getting the same price as Medicare? Dream on. My wife's doctor ordered a battery of blood tests to track here high-cholesterol and the same battery for me as part of an annual physical. Hers were free and mine cost a few hundred bucks. Different coding, different pricing - mine ended up at retail as they were not covered.

... sufficiently wealthy that they would just as soon pay out of pocket, rather than purchase a plan?

Well, I travel a lot (sometimes six months at a clip) and do some of this with travel insurance. The big-ticket items on this sort of insurance are "trip cancellation" and "trip interruption" insurance. The policies also cover sundry other stuff including luggage insurance, rental car insurance, etc., etc. Most importantly, it includes medical insurance. What I do is, regardless of the cost of a trip, I cover $500-$1000 recoverable cancelation/interruption costs and some pretty high levels of medical insurance come along for the ride. (Sometimes, paying with appropriate credit cards can augment this somewhat). We tend to purchase this from Allianz and in NYS it tends to cost less than a couple hundred bucks. We also take out annual air-ambulance contracts, as we travel to some pretty out-of-the-way places and that phrase "nearest adequate medical facility" is a bit too fuzzy for me.

So, while the medical aspects of our trip are well covered, if we had to cancel the trip, other than a pittance, we'd likely eat a major portion of the cost. I figure we've already paid for the trip, so obviously we can afford the loss. The insurance cost, if we covered the whole trip would run about 10% of the cost. We have probably taken about 30 trips without a loss, so if we ever did get a major ding (which probably gets more likely as we age), I can always console myself by saying we still beat the system.

So, context determinate rather than a consistent answer.

Jeff

I spoke to the hospital's Floor Case Manager who said, "Don't worry, we work with them. In any case, if they won't cover you we will not charge you any more than you would have to pay if they did cover you."


Are you saying that you would only have to pay your deductible?

Aussi

"I spoke to the hospital's Floor Case Manager who said, "Don't worry, we work with them. In any case, if they won't cover you we will not charge you any more than you would have to pay if they did cover you." "

Are you saying that you would only have to pay your deductible?

No. The hospital doesn't know or care about any deductible, so that's not an issue. Anyway the deductible gets taken care of early in the year, first couple of doctor vists.

We would have only had to pay them the copay, which IIRC was a couple hundred dollars a day for the first N days.

"CHI St. Vincent, a division of CommonSpirit Health"
"CommonSpirit delivers clinical excellence across a system of over 2,200 care sites in 24 states."

What percentage of those 26m people without coverage are either (a) not legal residents of the USA and thus would also not qualify for a universal healthcare insurance plan; or (b) sufficiently wealthy that they would just as soon pay out of pocket, rather than purchase a plan?

I would guess that many of the 26m are young and healthy, and think they will stay that way forever, and don't want to spend any money on insurance. If they work at a job with a paycheck, chances are their employer covers them. But if they own their business or work as a contractor, they won't bother. Then, when they find themselves in a hospital after a bike crash, we all pay the bill.

Elan

Well, in the US, the problem is that the tax system is sort of a 19th century design. It simply isn't capable of raising the tax needed without breaking some industries.

I'm afraid I may come across as MAGA. I am absolutely kicking the MAGA tires, partially because I thought the clown car the Democrats were offering was a complete POS and partially because, like it or not, we have already bought the MAGA clown car and so I'd really like to understand as well as I can how it likely to perform. If it is likely to burst into flames while we are driving it across Europe or Asia in the next two or three years, I'd really like to know ahead of time.

But I read this post from Jim and, frankly, most of the other posts from Jim even when I challenge aspects of them, and I think "Damn skippy." There's plenty of economists who question our fetish for income taxes and against VAT. I described to a friend earlier today that, in my opinion, The US resists a VAT for metaphorically similar reasons to why the US resists the Metric System. Which is to say, I think, out of a perverse conclusion that anything the Europeans like must be wrong. Considering that Europe is actually where (nearly) everything that is great about American culture was developed over about 2000 years, up until fairly recently. And as to recent cultural innovations from our hemisphere, it is not at all apparent to me that we are net improving ANYTHING.

But I will continue to kick the MAGA tires. Even knowing that the tariffs are virtually certainly a dumb idea brought about by a commitment to even dumber ideas, I need to know enough about it to estimate just what is the likely downside of going the way we are going. It is facile to say "they are wrong therefore we are doomed and by extension, the rest of the civilized world with us" even though that is almost certainly an exaggeration. I need to figure out how to retain some significant value in my IRA so that I might retire in the comfort to which I would like to stay accustomed sometime before I am 75.

I just thought I'd briefly try to blend into the crowd before resuming my destructive testing of economic ideas.

Cheers,
R:)

Though perhaps a European saying of more recent vintage is more appropriate: we all know what to do, we just don't know how to get re-elected afterwards.
Not enough elected representatives around the world remember that it's their job to actually govern, not to run for election.

How have the European politicians solved the problem of being able to get elected in order to implement policies that may make them unelectable? Are they just (even) better at lying about what they plan to do than are American politicians?

Looked at this way, it could be that our current president's fatal flaw is that he is actually doing so much of what he campaigned on.

R:

Ralph,

My answer necessarily is a gross oversimplification, but there are a number of other differences between most (there are a couple of exceptions) European nations and the US - both tax/economics-wise and political structure.

Most nations in Europe do not have the "reserve currency" Status of the US dollar. They generally have a VAT/GST type of sales tax embedded in the price of manufactured goods (and possibly services) as well as income tax rates which we, in the US, would deem laughably high. That gives them the ability to finance national health programs and free education (in some cases, through post-graduate school). Their minimum wage and benefit programs allow for much more vacation time, liberal maternity leave etc. In short, far happier general populations than we have in the US.

Politically, countries generally follow the "parliamentary" system of government with loads of parties. This forces sometimes awkward coalitions to choose their chief executives. In the United States version of democracy (but certainly, not one-person, one-vote), our two-party system has protected our three-pillared government quite well since its inception - with a break or two including a bloody civil war. That said, the concentration of power which has gravitated to the executive branch seems to have shaken people up. As far as enacting policies which might make them unelectable - well, forgetting about past generations, Europe currently is home to Puttan, Orban and Erdogan (well, more or less Europe).

Jeff

Even knowing that the tariffs are virtually certainly a dumb idea brought about by a commitment to even dumber ideas, I need to know enough about it to estimate just what is the likely downside of going the way we are going.

It is, as you comment, a dumb idea, but let's look at what the less-dumb variants of the same strategy might entail.

I imagine there are ways tariffs could be done in a relatively prudent way. Say, a low rate applied to all goods from all countries, without special exceptions for loud or high-donation special interest groups, so it really did resemble a national sales tax that merely exempted locally made goods. Announced well in advance, phased in, and well enough organized and explained that there wasn't a huge reason for other jurisdictions to apply countervailing duties. This would still make the US poorer and its economy weaker, but in a modest and gradual way, and if done gently enough it might raise a useful amount of money. It doesn't typically reduce a trade deficit partly because it would drive up the dollar, but it might help forestall even further erosion of some local producers and might delay any day of reckoning for the government debt.

Another alternative would be to adopt a strategy actually suited to the main stated goal of the tariffs (well, the goal that could in theory be achieved), being re-industrialization in the specific areas which are prudently required for defence and critical infrastructure. The US might arguably have to do something to maintain a viable steel industry and chip fabs, but probably does not have to make its own clothes and toys. One could probably come up with an industrial policy that accomplished that large but relatively narrower goal without undue chaos, with some mix of tariffs, subsidies, tax breaks, or subsidized lending. It looks like the UK is about to re-nationalize its last remaining blast furnace, for similar reasons.

When it comes to the reactions of non-US players, this is all complicated by the observation that the tariffs are not really the biggest problem causing the chaos these days, which is really the stance of the geopolitics and the management thereof. Trust in the US has been holed at the water line, from rule of law to defence commitments to stable regulatory frameworks to treaties to basic economics to safe returns on bonds, but in particular the de-alignment with what was previously known as "the west" (Nato, WTO, Five Eyes etc). I saw an article that included a analogy from the past. "Lech Wałęsa once remarked, you can’t turn a fish soup back into an aquarium." In a slightly perverse way, that part is accomplishing one of the goals: driving down the value of the US dollar to make US exports more attractive.

Jim

How have the European politicians solved the problem of being able to get elected in order to implement policies that may make them unelectable? Are they just (even) better at lying about what they plan to do than are American politicians?

There are occasional flashes of prudence and spine, and yes, that is sometimes probably accomplished by deception: sell optimism, govern with reality. That's not such a bad thing I guess, if the mismatch is in the direction of good governance.

But on the whole I wouldn't hold them up as glowing beacons of skill and prudence, just adequate.

The UK in particular has suffered from what I call "performative governance": doing not the things which have to be done or which could possibly work, but something that can be pointed to as doing something about some issue. One example might be a recently introduced huge regulatory system to ensure that no-one without a permanent residence permit can rent a flat, on the theory that this will halt illegal immigration since they won't have any place to live.

A couple of countries simply aren't good at figuring out how to be electable and at the same time staying within the real world range of fiscal possibilities. Maybe they don't lie enough?

All that could constitute muddling through, which has largely worked for a long time. The bigger threat, of course, is the fresh crop of apprentice dictators following the classical playbook: invent an enemy (one internal, one external), gut the courts, control the press and TV, divide and jail the opposition, position yourself as the one true patriot who can fix things, then remove term limits. Seems to be a lot of that going around.

Jim

Looked at this way, it could be that our current president's fatal flaw is that he is actually doing so much of what he campaigned on.

Yup, sure is. "I'll be a dictator on day 1", "Vote for me once and you'll never have to vote again".
However, he denied that he knew anything about Project 2025 or that he was going to implement any of it. How's that working out?
He promised to protect Social Security. How's that working?
He never said a word about annexing Canada. Doing what he campaigned on?
And I guess when he kinda promised to be Putin's lap dog nobody took him seriously.
It's not only about tariffs and your IRA you know. It's the destruction of every assumption you're making about the future of the world.

Elan

One could probably come up with an industrial policy that accomplished that large but relatively narrower goal without undue chaos, with some mix of tariffs, subsidies, tax breaks, or subsidized lending.

Yeah, it was called the CHIPS Act, until Trump trashed it.

Elan

It's not only about tariffs and your IRA you know. It's the destruction of every assumption you're making about the future of the world.

I love when you loons start lying about Medicare and Social Security. Too funny 😂.

It's not only about tariffs and your IRA you know. It's the destruction of every assumption you're making about the future of the world.

I love when you loons start lying about Medicare and Social Security. Too funny 😂.

Setting aside the ad hominem, I guess none of the rest of it bothers you.

i would never self insure medical in usa.. a few days in intensive is easily a million bucks here....as to homes, given the crap and the tripling in premiums lately, if i were staying here, I would. I have run the numbers, and the value is 40% the land.if I add all the land together its almost 65%. trees will regrow. the insurers have their own numbers which are very low..at around 40% of real cost to repair to status quo ante... ask me how I know ? yeah..I'm locked in battle right now...

i would never self insure medical in usa.

We are rather new to having to obtain our own insurance, last year being the first time, as DH being eligible for Medicare kicked us off retiree health care and sent me scrambling. The ACA for us is no bargain, so we looked elsewhere, eventually being hoodwinked into buying into a much cheaper plan that essentially provided little to nothing. We are not stupid people, but insurance has been made so complicated that it is unlikely that you will understand it until you need coverage. You don't know what you don't know, including the right questions to ask, particularly when dealing with a salesman that knows the topics to steer you away from. The insurance we went with sounded great, until pretty far in I discovered max coverage was $150K/year. That is worse than self-insuring. We went with the much more expensive ACA for me this year. Being healthy, I am unlikely to use it, but at least now I feel as though my premiums are at least making it easier for those less well off to be insured, rather than simply making a for profit health insurance company more profitable. More importantly, to be part of ACA, there are essential basics you must provide. We still are constantly flummoxed by my plan, and Medicare for that matter, but at least for me it has been positive surprises, not negative, with them covering in full things I expected to have to be paid for until my deductible was paid for.

Regarding property insurance, while ours has gotten much more expensive, we do insure. We are however selling off one of our properties and possibly not replacing it. Insurance and taxes are part of that equation, but not all, as we expect to step up our travel and use 30 day + furnished rentals to explore areas in depth. On our riverfront property we are keeping, we are self insured for flooding. Even if we do eventually get water in the house, the payout is limited, with our already having saved about $85K in premiums. (Flood insurance is much higher for second homes, even when out of the floodplain.) We mitigated the degree of risk with our choice of properties. Many downstream from us get flooded repeatedly. I guess when that property becomes our primary residence, we will re-evaluate with the new premium.

For dental, we pay into something that gives us negotiated rates for dental work. It basically pays for itself just with two cleanings a year, and still offers some protection for bigger jobs like the crown DH needed last year. Regular dental insurance premiums were astronomical for us, once we got off corporate coverage.

IMO, insurance is something you pay for if the alternative could ruin you. Medical insurance is never optional. Product insurance on things like TVs a no brainer to decline. Everything else is somewhere in between.

IP

Insurance is always about balancing risks.

5M of those 28M have incomes greater than 400% of the poverty level. For a single person 400% is about $60k per year ($30/hour). For a family of 4, 400% is about $130k per year. Is this sufficiently wealthy to self-insure?


No, I wouldn’t think so. But lots of people have a few million dollars. For them, paying out of pocket would make sense, rather than buying insurance in the traditional sense (coverage against catastrophes).

Of course, in the USA, you might also need a lawyer, or at least someone who could negotiate with hospitals who seem to try to take advantage of individuals who are often charged far more than an insurer would be charged.

My point is that if 8% of USA residents are not covered, and 2% are not legally in the country, and 1-2% are independently wealthy, the problem of non-insurance, should be pretty easy to solve. Credit where credit is due, Obamacare has taken care of most of the problem and the remaining bit is small.

I love when you loons...

You found a perfect way to say "I have nothing of significance to say".

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