As Washington fixated Tuesday on expletive-laced excoriations of Goldman Sachs executives, Federal Reserve Chairman Ben Bernanke was across town delivering some grim warnings about America’s fiscal future to President Obama’s fiscal commission.
But Bernanke also voiced a surprisingly pessimistic view of Obama’s recently passed health plan, questioning whether the nearly $1 trillion piece of legislation will do much of anything to reduce overall health care spending.
“At this point, the effects of the recent legislation on federal health-care spending over the long term are uncertain, in part because they depend importantly on implementation,” Bernanke said.
Bernanke’s oblique reference to implementation would likely cover roughly $500 billion in cuts to Medicare that must be authorized by future Congresses as well as the identification of ways to deliver care that are more efficient and reduce costs. The health bill authorizes trial runs of numerous such experiments.
Robert Reischauer, the president of the Urban Institute, also addressed the fiscal commission during its first meeting. He said that “while the health reform act contains many promising demonstrations and pilot projects designed to test incentives and organizational changes that might slow spending growth, it will be more than five years before the results from these experiments can inform policy.”
Like Bernanke, Reischauer sounded some doubtful notes about the likelihood that ObamaCare will bend the cost curve of health spending down.
“Medicaid costs will rise significantly because the program plays the primary role in expanding coverage among low-income populations,” Reischauer said.
“While a recent report from UnitedHealth concludes that significant savings are possible in the program, realizing them would require adopting effective coordinated care for Medicaid’s regular population and community-base/coordinated care for Medicaid’s long term care beneficiaries.”
“Effective coordinated care is unpopular and difficult to do well,” he said.
Some Republican members of the fiscal commission seized on Bernanke and Reischauer’s remarks.
“Our fiscal trajectory was bad and now it’s getting worse,” said Rep. Paul Ryan, Wisconsin Republican, blaming the president’s health plan for exacerbating the problem.
The White House did not respond when asked to comment on Bernanke and Reischauer’s comments.
But it is the latest in a string of revelations about the Obama health plan to come to light after the bill passed a little over a month ago.
Perhaps the most significant finding came last week when the Centers for Medicaid and Medicare Services issued a report showing that health spending will increase by $311 billion over the next decade.