Ben Bernanke: 'The Elephant In The Room Is Really Health Care Costs'

Federal Reserve Chairman Ben Bernanke warned Thursday that rising health care costs must be curbed if the U.S. government is to reduce the federal debt to sustainable levels.

"We need a much broader set of policies," Bernanke said at a House Budget Committee hearing. "The elephant in the room is really health care costs."

Health care costs have grown as the U.S. population ages and health care equipment becomes more expensive. The average family spent $13,770 on health care in 2010, a 3 percent increase from the year before, according to the Kaiser Family Foundation. The health care industry will account for one-fifth of the U.S. economy by 2020, according to a government report.

Americans' health care spending in 2008 was triple what it was in 1990, according to a separate Kaiser report. The report noted that health care technology has become more state-of-the-art, driving up costs, and that chronic diseases have become more common as Americans live longer.

Bernanke said that even eliminating discretionary spending altogether would "still not solve the problem," and that raising taxes on the rich would not do nearly enough. He said that Congress needs to focus on the long term.

"The biggest problems we have are beyond the next decade," Bernanke said. "They stretch out in the next 20 to 30 years."

He noted that federal spending on health care costs is projected to rise to more than 9 percent of the United States' gross domestic product in 2035, from 5 percent of GDP in 2011.

"These structural fiscal imbalances did not emerge overnight," Bernanke said. "To a significant extent, they are the result of an aging population and, especially, fast-rising health care costs, both of which have been predicted for decades."

He also warned that cutting spending too much now could harm the recovery. "'Do no harm' is a very important piece of advice I would offer you," he told the congressional committee.

The U.S.' national debt now tops $15 trillion, according to usdebtclock.org. The federal government needs to save $4 to $6 trillion over the next 10 years in order to place itself on a sustainable fiscal path, Bernanke said.

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Comments

[KingKrabby]

06:00 AM on 04/21/2012

Try getting rid of Free Heath care for congressional millionaires. There's 4.6 billion.
While you're at it, introduce 8 year term limits for these crooks.

[Roger Feeley]

03:59 PM on 03/16/2012

I want 4 things:
1. I want the United Stated to be one giant risk pool. My company of 35 is drowning in health care costs because we are risk pool of 35.
2. I want every person in the United States to participate in some way. It's cheaper to give someone basic health care than have them go to the ER for the flu.
3. I want health care coverage options to be fungible. That is, I want them to be comparable so market forces can do their thing. Right now, its comparing apples and oranges.
4. I want health care decoupled from employment. Why is business not screaming for this?

[boomer314]

09:31 PM on 04/20/2012

Universal healthcare.

[DjDiverDan]

03:45 PM on 02/07/2012

There are two major causes for the rise in health care costs to the private paying few. First, the Federal Government is the biggest villain when it comes to "cost shifting", the very basis for the PACA individual mandate (at least according to the SG's Brief filed in the Supreme Court). The Medicare and Medicaid programs account for nearly 40% of all health care costs, but the Federal Government reimburses at less than 80% of actual cost of service, leaving private payers (and privately insured users) to make up the shortfall through grossly inflated health care costs. Second, the American Public is much less healthy than it was only 40 years ago, adjusting for age. We eat refined sugar at 4 times the per capita rate in 1970, fats at 6 times the rate, and we get much less exercise. But the Federal Government, by insisting that "medical care is a right" (what a load of crap!! Medical care is an economic good - limited supply and potentially unlimited demand) refuses to allow the types of economic incentives that would encourage Americans to make healthier lifestyle choices.

[Squiggie]

03:53 PM on 02/05/2012

"..."We need a much broader set of policies," Bernanke said at a House Budget Committee hearing. "The elephant in the room is really health care costs..."

No, Ben, you're lying through your teeth, AGAIN.
The Elephants in the room are:
1) Fractional Reserve banking, which is one of the most egregious scams ever foisted on humanity. It allows parasites such as yourself to contribute absolutely nothing of real value, (nary a good or service), to the economy and yet create out of thin air “claims” on the goods and services created by the rest of us.
2) Incessant wars waged around the globe solely for the aggrandizement of a handful of ruling-elite who haven't even a remote allegiance to the United States. All at U.S. taxpayer's expense, not to mention U.S. citizen's life and limb.
3) A financial system so corrupt that it defies credulity. This system that you and your cohorts foster and cultivate is awash in machinations designed to maintain a constant flow of wealth to the already wealthy and powerful at the expense of every one else on the planet. One example of this is the $600 Trillion in outstanding derivatives that are the tools you parasites use to vacuum up the world's wealth.
Go to your room, Ben...No dinner for you tonight...

[schlinky]

10:38 AM on 02/05/2012

Healt insurance has to be a not for profit organisation run by hired employees, everyone pays in everyone benefits, exess after expenses goes back into the kitty for development.

[JPHR]

10:05 AM on 02/05/2012

US cost per capita is twice that of western European countries (Check OECD statistics) and those countries have an insurance system which covers 100% of population.

Short answer: Regulate the insurance companies. Takes some political courage but the level of profit is unacceptable for administrative services.
Actually most are operating as local monopolies or oligopolies in collusion.

Recognize that the US legal system is causing quite unnecessary cost by forcing doctors to continually cover themselves against legal claims.

[weatherf]

11:13 AM on 02/05/2012

Your suggestions make a lot of sense and I totally agree. However, the public is so confused by the barrage of propaganda launched by the health insurance industry and their employees--the GOP, and their dupes, the TP--that I am pessimistic about any chance to rationalize our health care system.

[l78lancer]

11:58 PM on 02/04/2012

Even though spending tripled for health care services between 1990 and 2008 it's not clear if (adjusting for inflation) an "average" family actually used an increasing amount of services or if the same amount of services were used but the cost appreciated for those services?

[Grichde]

10:40 PM on 02/04/2012

Don't weary Obamacare has all that fixed.

[Roger Feeley]

04:02 PM on 03/16/2012

I don't think so. I think the current plan will probably make things worse in the short term. I think the insurance companies will seek ways to make it worse to try to reverse the plan. If it holds up in court, the only way out will be forward to join the rest of the world community in some sort of national health care.

[wsdave]

10:27 PM on 02/04/2012

Luckily, science will soon have us live to 100.

Imagine how expensive that will be...

[Joseph LeCompte]

07:19 PM on 02/04/2012

How many doctors did Humana train last year? What new surgical procedure did Kaiser invent. What new blockbuster drug did any health insurance discover? Yet they earn billions being the middle men between patients money and doctors treatments.

[Gonzo333]

04:29 PM on 02/04/2012

Thieves run the health care insurance companies and they are the Wreckpublicans lords and masters. The lap dog Wreckpublicans with do everything in thier power to continue the rape and pilliaging of the consumer in the name of profit. Single payer is the only answer.

[Salty too]

12:55 AM on 02/05/2012

Obamacare gave insurance companies billions more in profits than any Rep ever did.

[ZhyKitty]

06:53 AM on 02/05/2012

Last January, my Twin sister died at 38 of H1N1 - a preventable, treatable illness....if you have the money for insurance or a doctor, or even a flu shot, which she didn't even though she worked hard all her life right up until the last two weeks she was living when she became too weak to stand.
She had only the ER to turn to, and they just kept sending her home.
She left behind 3 children.
Somehow, someone has got to step up and make healthcare coverage for all citizens possible. For those of you for whom this is only a money issue (FSM forbid a penny of your tax money goes to save the life of another, I know), please know that for many millions of Americans and those who love them and will be left behind to grieve, this is life or death.
What has happened to our family is wrong and to know it will happen to 45,000 other Americans this year due again to lack of access to care, and that that will affect everyone who loves them, just makes it all that much more unbearable to live with.

[Bahgwan]

11:11 AM on 02/04/2012

For profit health care system. What did you expect? Best health care system in the world. IF
you can afford it.

[SamBaby]

10:24 AM on 02/05/2012

I don't think anyone should make $$ on the illness of individuals. But how do you get capitalism out of health insurance??

[MarcDel]

11:16 AM on 02/05/2012

There is only one industrialized country in the world that has private healthcare and that's Switzerland. All the rest are publicly funded with no profits. We spend almost twice what any other country spends yet we don't cover everyone as they do. There are numerous models around the world we could take the best from. Instead we have some idiotic idea that only we can decide the best ways to do it and fight about it. This is the most money driven self defeating behavior this country has ever engaged in.

[Sam Wheeler]

09:26 AM on 02/04/2012

$22 for an aspirin at hospital?

[nappyman]

08:47 AM on 02/04/2012

Yep. We need a system of clinics. We need to make medical school free for doctors that pledge 10 years to working at a clinic at a reasonable salaried wage. Stream line lawsuits and set guidelines for the amounts people can win. And seriously stiffer penalties for fraud. Doctors should lose their licenses and longer jail sentences for all involved.

[oceanye]

05:13 AM on 02/04/2012

Bernanke said; " "The elephant in the room is really health care costs."

He is so right - and it is so obvious to anyone who is now using heath care - and that is MOST of us.

My wife, who is a school teacher, has a health insurance policy that is DEVOURED by the doctors and insurance companies - doctors with their multiple referral FEES before she can even obtain health care for herself or our daughter; and when the health care is finally acquired the CO-PAY is exorbitant!

It appears to me the doctors and insurance companies treat the mostly County paid policy as their own, and she still PAYS the actual medical costs out of her pocket.

The costs to her, and the PROFITS to so called medical professionals appears to me to have doubled in the last 3 years.

[jalaroc]

04:42 PM on 02/04/2012

healthcare has become a business rather than a means of curing illness.

[JPHR]

10:11 AM on 02/05/2012

Got to realize that laissez-faire in economics is not the answer. The political system has a fiduciary duty to voters/citizens/consumers/patients to protect them against exploitation by the economic system. The failure of the political system in this fiduciary duty is of truly epic proportions. Instead of safeguarding against exploitations the political system sold out and allowed itself to be hijacked by corporate interest. That despicable Supreme Court exacerbated the problem.

[SamBaby]

10:30 AM on 02/05/2012

You are absolutely correct. My greatest anger is with doctors that own dialysis treatment centers. My grandson has a transplanted kidney from my daughter. What chance does a cure for kidney disease have against the lobbying of these doctors?