As reported in Bloomberg:


June 16 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said rising government spending on health care in coming years will require tradeoffs in the form of cuts in other government programs, higher taxes or wider budget deficits.


“Taking on these challenges will be daunting,” Bernanke said today at a health-care conference sponsored by the Senate Finance Committee in Washington. “We should not expect a single set of reforms to address all concerns. Rather, an eclectic approach will probably be needed.”


Bernanke’s remarks echo his prior comments that a failure to address the rising costs of retirement and medical benefits for an aging U.S. population would widen the federal deficit and cause other problems. He warned in 2007 that the U.S. government may face a “fiscal crisis” in coming decades and today discussed the implications of bigger deficits.


“It will have effects on interest rates, it will have effects on economic growth and on stability,” Bernanke said in response to a question from Montana Senator Max Baucus, the panel’s chairman. “It’s not just balancing the federal budget. It’s really a much broader question of the stability and strength of our economy over a long period of time.”


Our Perspective:


Rising health care cost have had a crippling effect on businesses. Each year when the renewal comes in, large rate increases accompany the renewal. Many times I see this increase as an incentive to restructure the existing plan and look for possible alternatives for the renewal.


Employers start by looking at the co-pays and deductibles. In the end you have lowered the projected increase but also have reduced the coverage.


The original concept of offering employee health coverage was well received. It gave employees the opportunity of providing coverage for their families. However the cost have continued to trend upwards, increasing over 10% a year. The result, employees and employers are paying more and coverage is decreasing.


Steps must be taken to control these cost and introduce long-term solutions that will provide better coverage. The current system is broken and must be fixed. If a solution is not found more people will forgo coverage in the hopes of saving money. Without coverage, cost will continue to rise. This will cost us all more in the long run, for the cost of underwriting the uninsured is also factored into any future renewals.


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