REFORM: Senate Summit on the Health of the Economy and the Economy of Health

Usually, when the chairman of the Federal Reserve speaks, the subject is the health of the economy. This time, it was the economy of health.

"Health care is not only a scientific and social issue; it is an economic issue as well. The decisions we make about health care reform will affect many aspects of our economy, including the pace of economic growth, wages and living standards, and government budgets, to name a few," Federal Reserve Chairman Ben Bernanke said as he kicked off a Senate Finance Committee summit on the cost, quality, and coverage challenges in health reform.

The Fed chief neither endorsed nor opposed any particular policies for health reform, but he did link the problems of cost, quality, and coverage, and joined in the growing chorus of medical and economic experts who argue that when it comes to health care dollars and services, more is not always better. "Cost-effective approaches may be at least as useful as more costly approaches in delivering good health outcomes," he said.

The day-long, bipartisan event held at the Library of Congress wasn't an official hearing, but it was a chance for the committee members and other members of Congress to hear from a variety of experts (including New America's Len Nichols), and spend time talking and thinking about how to move ahead in addressing the health care challenges of cost, quality, and the uninsured. (See the webcasts here)

Bernanke said spending on health care already consumes more than 15 percent of the nation's economy and about a quarter of the federal budget—and unless Congress acts, it's going to get worse. It is already "the single largest component of personal consumption," Bernanke said, "larger than spending on either housing or food." He added, "A piece of wisdom attributed to the economist Herbert Stein holds that if something cannot go on forever, it will stop. At some point, health-care spending as a share of GDP will stop rising. But it is difficult to guess when that will be, and there is little sign of it yet."

Bernanke acknowledged the complexity of health care, which has prompted a number of politicians and policymakers to suggest creating a health equivalent of the Federal Reserve, a "Health Fed" that would make technical decisions about government spending on health care and services, protected from home-town politicking and lobbying.

The lawmakers didn't try to pin down details; that's for next year. But there was significant degree of consensus across party lines. As the Robert Pear of the New York Times summed it up, the lawmakers generally believe "that Americans should be insured, but they should have a choice of private health plans competing in the market alongside government programs."

"Democrats are right in saying that if you are going to fix the system, you have to cover everybody," said Senator Ron Wyden, an Oregon Democrat who is a lead author of a rare bipartisan health reform bill. "Republicans are right in saying that you have to have markets, choices and private alternatives."

At the summit's closing session, Senators gathered to report on the day's events. We found an exchange between Senators John Kerry (D-MA) and Bob Bennett (R-UT) particularly interesting (and we are paraphrasing here.) After much talk about the need for bipartisanship, Senator Kerry highlighted the damaging effect of the "socialized medicine'" rhetoric that he said he often hears from Republicans during health care debates. Senator Bennett responded that he believes that most Senate Republicans are willing to have a serious conversation about covering all Americans, but that they are very resistent to the idea of a new entitlement program. Both Senator Bennett and Senator Gordon Smith (R-OR) emphasized that in order to get Republican buy-in, individual responsiblity will need to play a central role in comprehensive health reform. So while there was no grand bargain at the end of the exchange, we were impressed wtih the overall level of constructive and honest dialogue from Kerry, Bennett, Smith, and others. This is progress.

Nothing was decided but that wasn't the point. The point was to stop, listen, and learn. Senator Kent Conrad (D-ND) got a good laugh out of the crowd when he joked that when he was elected to the Senate he expected thoughtful policy-rich events like the summit to be the rule, rather than the exception. Finance Committee chairman Max Baucus, a Montana Democrat, expressed his commitment to addressing health care seriously next year. Iowa's Chuck Grassley, the top Republican on the panel, complained that Congress often doesn't follow through on the really complex and challenging problems like health care. Grassley, nevertheless, set quite an example, managing to find the time to attend at least a portion of the summit, despite the flooding emergency back home in Iowa.

To read more about the summit, see the Washington Post, and AP articles, and also the WSJ's blog.