You know healthcare reform has arrived on the really big issues scene when it garners the attention of the Federal Reserve Board chairman.
Last week, Ben Bernanke departed his home territory of monetary policy to offer some thoughts to the Senate Finance Committees health reform summit in Washington. The healthcare industry could take this as a sign that people in very high places are empathetic to its problems. Or it could mean that the upper echelons are getting frustrated and delivering a warning much as Bernankes predecessor, Alan Greenspan, did with his irrational exuberance comment about froth in the stock market. In that case, Wall Street initially shuddered at Greenspans words and then proceeded to ignore them until the inevitable crash.
There is good reason to believe that healthcare reform might follow the same trajectory.
Certainly there was cause to pause from Finance Committee Chairman Max Baucus (D-Mont.), who often consults Bernanke on policy issues and who invited him to the summit. I wonder if were (Congress) competent to answer some of the questions were being called upon to legislate, Baucus said.
The Fed chief gave the senators a good overview of the U.S. healthcare system, discussing the economic challenges of reform and outlining the problems of access, cost and quality. He noted that healthcare, now constituting more than 15% of the U.S. economy, will at current rates surpass 22% of the gross domestic product by 2020 and half of all federal spending by 2050.
Bernanke did not endorse any specific proposals. He did say that perplexed and conflicted lawmakers could establish an independent board akin to the military base-closing panel. The health panel would present Congress with recommendations that lawmakers could accept or reject but not amend. Or Congress could create a panel like the Federal Reserve Board to set health policy.
He also cautioned the senators not to expect a single set of reforms to solve all problems. We may need to first address the problems that seem more easily managed rather than waiting for a solution that will address all problems at once.
While Bernanke offered a sober and realistic view of healthcare reform, history suggests his assessment actually may be too optimistic. Getting anything meaningful done on the national stage means confronting powerful and well-funded lobbies that would rather commit suicide than give an inch for the common good. Ifin one option Bernanke raisedreform required insurance companies to accept all applicants and mandated the covered conditions, you can imagine how insurers would react. Faster than you can say Harry and Louise, we would witness a reprise of commercials slamming the plan as some kind of communist plot.
Or watch all the lobbies join in if Congress tries to institute drug pricing or a rationing scheme to control costs.
Members of Congress are much more concerned about taking lobby money to get re-elected and continuing to act like important people even if they dont do anything important. Its questionable whether the country has reached the point at which the public, which is even more confused than lawmakers, will put the overwhelming pressure on the new president and Congress needed to achieve real change. One thing that could tip the balance is a prolonged and severe recession that results in more job loss and loss of health services.
Of course, Bernankes day job is to try to head off such a catastrophe. Ironically, any success he has with the economy could take the wind out of the sails of healthcare reform.