FRONT PAGE CONTRIBUTOR
Bernanke: Even a ‘Deficit-Neutral’ Health Care Overhaul Wouldn’t Fix the Cost-Debt Problem
Yesterday, Federal Reserve Chairman Ben Bernanke gave his semi-annual report on monetary policy and the economy to the Senate Banking Committee. With the hot Beltway topic being the health care overhaul President Obama is so desperate to get passed and signed before more people find out what the effects of such a policy will really be, a few Senators had questions for the Chairman about the fiscal implications of the three dueling health care bills being written in the House and Senate, all of which have been criticized by elected Democrats and the director of the non-partisan Congressional Budget Office alike for being costly expansions of government that will do nothing to reduce the cost of health care or to cover the millions of American uninsured.
At that hearing, Texas Republican Kay Bailey Hutchison made this spot-on comment:
[O]ne thing we’re trying to do is just slow this down enough that we can find the information and have the best facts that we can. And setting an arbitrary August deadline seems to many of us to be very unwise because so much could happen that would be irreversible if we really do change our health care system to this extent with the costs and in a hard economic time, anyway.
And many of us are concerned, as well, that employers are going to be encouraged to just drop health care coverage, pay the fine, and let people go into the public system, which then becomes a bigger burden on the government, but also the beginning of rationed health care, in many views.
So I thank you for saying that we ought to be very careful before we do add more entitlements to our health care system, and I hope you will work with us, as we are able to get more and more information about the — the real long-term consequences.
Below the fold, a couple more noteworthy points from Hutchison and Evan Bayh (D-IN), as well as Bernanke’s noteworthy answers.
SEN. BAYH: [T]he test that’s being applied around here, [proponents of the health overhaul bills] are looking at health care in isolation rather than as a part of the broader fiscal picture.
My concern is that the long-term fiscal policies that we’re on now are unsustainable. I know you’re concerned about the increasing debt of more than 2 percent per year. Some people would say it really can’t increase more than the annual rate of GDP growth.
If you look at this five-year budget and the likely five years after that, in no year will the growth of the debt be really below 3 percent, and in many years it will be substantially beyond that. So, as you know, it takes on a multiplier effect. And if we don’t come to grips with this, it really is going to get away from us.
So if all we did was even pass a health care bill that was deficit-neutral, didn’t make things worse, but didn’t make it better fiscally over the next 10 years, that really doesn’t get to the heart of the problem, either, does it?
CHAIRMAN BERNANKE: That’s correct.
BAYH: I think the standard we’re holding ourselves to from a fiscal point of view is inadequate. And when at least the initial analysis of a couple of the proposals suggested it might actually exacerbate the situation, well, that is a matter of some concern…because it’s just not sustainable, the financial path that — that we are on.
CHAIRMAN BERNANKE:[T]here a lots of reasons to look at our medical system and try to find better ways to deliver health care to more Americans, [but] I would urge Congress to pay a lot of attention to finding ways to bend the curve or to reduce the cost, particularly if the federal government is going to have a bigger share, because then the fiscal challenge becomes even greater.
So if I could just propose that there be a lot of attention paid to how the program, however you look at it, however you choose to design it, find ways to — either through — through consumer choice, through government choice, through however it’s designed, to try to limit the so-called — to limit this ongoing increase that will really challenge our fiscal stability over a long period of time.
SEN. HUTCHISON: Does it concern you that CBO recently came out and said that [the health care overhaul bills in Congress] would, in fact, raise the curve, not lower it or bend it?
CHAIRMAN BERNANKE: I don’t have any specific comments on the CBO’s analysis. But, again, to reiterate, I think we should make an important part of whatever health care reform we do close attention to the implications not only for the fiscal expenditure, but also for the fact — also for the private sector, because the cost of health care affects businesses and households, you know, even outside the government’s budget.
So addressing that cost issue, I think, is — really needs to be a central part of the discussion.
HUTCHISON: One of the things that has been brought out is the Medicaid mandate and the cost to the states. And in my home state of Texas, it’s estimated that it would add $3 billion a year to the state budget. And, of course, that is also a great concern and being raised in all of the states with that kind of mandate on top of the — the struggling state budgets, because revenue is down.
Do you see that the mandate on Medicaid also is an issue that is going to affect the economy in the long term and the big picture?
BERNANKE: Well, I understand the — the motivation and the objective of trying to cover more people and to help people who are not already covered by insurance. But not to sound like a broken record, but, once again, the cost is the issue.
And if — if governments want to add these costs, they need to think about where else they can cut, where else they can, you know, raise revenue, because we need to have fiscal stability, fiscal sustainability going forward.
So as a broad measure, we need to think about how our government’s fiscal picture will look, you know, not just this year, but 5 years from now, 10 years from now, and make sure that, however we choose to structure our health care programs, that we have a sustainable fiscal outlook.
As both Bernanke and CBO director Doug Elmendorf have made clear in their respective testimonies before Congress, these Democrat bills that the President is so desperate to get passed and signed before their (and his) popularity sinks further will cause the deficit to astronomically increase and the quality and affordability of care to drop precipitously, without solving a single problem facing our health care system today.
The think-skinned, hyper-partisan President Obama can continue attacking the tiny Republican minority for the fact that the American people as a whole realize what he’s trying to do to health care and want no part of it. However, as long as his own appointees (Bernanke), those of his allies (Elmendorf, who was jointly appointed by Nancy Pelosi and Robert Byrd), and his fellow Democrats continue to object to his hasty and poorly thought out attempt at a health care overhaul, such accusations will be plainly seen for what they are: the petty, partisan attacks of a President who can’t accept criticism or admit that he’s wrong, and who can’t set aside his rigidly leftist ideology long enough to entertain even the smallest dose of reality amidst his rush to remake the entire American economy.