2018: Does Berkshire's struggles imply that the healthcare industry has high barriers to entry?

AUDIENCE MEMBER: Austin Merriam, from Jacksonville, Florida.

Mr. Buffett, with the recent news of the partnership between you, Mr. [Jeff] Bezos, and Mr. [Jamie] Dimon, to challenge the health care industry and the self-admitted difficulties you are running across, this would lead me to believe the industry has higher barriers to entry than may have originally been hypothesized; a larger moat, if you will.

Would that justify a higher earnings multiple for established players in the industries, such as PBMs, for example?

WARREN BUFFETT: Well, just — though the system may have a moat against intruders, it doesn’t mean that everybody operating within the system has individual moats, for one thing.

Now, I — we are — if this new triumvirate succeeds at all, we are attacking an industry moat. And I’m defining industry very broadly; health care, not just, you know, health care insurers or this or that.

We’re trying to figure out a better way of doing it and making sure that we’re not sacrificing care. And the goal is to improve care.

And like I say, that is a — that’s a lot bigger than a single company’s moat. It’s bigger than a component of the industry’s moat. The moat held by the whole system, since it interacts in so many ways, is actually — that’s the moat that essentially has to be attacked, and that’s a huge moat.

And like I say, we’ll do our best. But — I hope if we fail, I hope somebody else succeeds.

Charlie?

CHARLIE MUNGER: Well, I suspect that eventually when the Democrats control both houses of Congress and the White House, we will get single-payer medicine. And I don’t think it’s going to be very friendly to many of the current PBMs. (Applause)

And I won’t miss them. (Laughter)