President Barack Obama leaving the State Dining Room of the White House today after speaking on health care reform. (Photo by Charles Dharapak / AP)
by Noam Levey and Mark Silva
President Barack Obama, joined by an array of groups pledging to cut the cost of health care, said today that the commitment that insurers, hospitals, doctors and others have made to saving money will help him achieve the health care reform that he is pursuing on Capitol Hill.
"What's brought us all together today is a recognition that we can't continue down the same dangerous road we've been traveling,'' the president said. "The costs are out of control.''
The coalition that joined the president at the White House today contends that $2 trillion can be saved over a decade by cutting the annual growth in costs by 1.5 percent.
"This is an historic day, a watershed event in the long and elusive quest for health care reform,'' said the president, calling the commitment "complementary'' and completely in line with his administration's push for health care reform.
The president met with representatives of leading health industry groups, including hospitals, drug makers and doctors, who have agreed to slow the explosive growth of healthcare spending over the coming decade.
They have embraced several cost-saving strategies already being promoted by Washington policymakers, such as simplifying billing, restructuring the way hospitals are paid and improving information technology.
They have estimated that $2 trillion can be saved over the next decade, though details are lacking in a letter that they provided to the White House.
Still, the agreement shepherded by the Service Employees International Union signals a continued engagement by powerful healthcare interests in the Obama administration's push to overhaul the nation's troubled healthcare system.
Several industry groups -- including insurers, whose lobbying group signed a letter for the White House over the weekend projecting significant savings from their pledge to cut costs -- have played central roles in defeating prior efforts to reshape the system, including the Clinton administration's push in the mid 1990s.
In addition to the SEIU, signatories included the American Medical Assn.; the American Hospital Assn.; the Pharmaceutical Research and Manufacturers of America; the Advanced Medical Technology Assn., which represents device makers; and America's Health Insurance Plans, which represents insurers.
Spending on healthcare reached $2.2 trillion in 2007, and is expected to increase by more than 6% a year on average over the next decade, faster than the economy's growth in general, according to the federal Centers for Medicare and Medicaid Services.
In their letter to the White House, the groups estimated that they could slow the annual growth rate by an average of 1.5 percentage points over the next decade, although savings probably would vary in each individual year.
"They recognize one clear, indisputable fact: When it comes to health care spending, we are on an unsustainable course,'' Obama said.
"What is a growing crisis for the American people is also becoming an untenable burden for American business,'' said Obama, noting that employers are dropping health insurance for employees because of the rising cost.
"The explosion of health care costs has put our federal budget on a disastrous path,'' he added, pointing to the soaring budgets for Medicare and Medicaid. The commitment of these groups to contain those costs will support the administration's bid to extend government-supported health care to more Americans, with an estimated 47 million currently uninsured.
This could potentially mean enormous savings to the economy and to the federal government, a point highlighted Sunday by senior administration officials.
"Healthcare costs will continue to rise," said one official, who was not authorized to speak for attribution. "But achieving a slowdown in the rate at which they increase would be a huge accomplishment in terms of freeing up resources for other priorities and in terms of relieving pressure on the federal budget."
Yet some question the true impact of voluntary cost containment.
"We are very cautious about the particulars of the voluntary effort that groups proposed to the White House today,'' the National Coalition on Health Care said in a statement issued today. "Most of the measures that they cited would help to make the health care system more efficient over time, but, as the Congressional Budget Office has indicated, should not be counted on to produce substantial savings soon.
"Moreover,'' the coalition said, "voluntary efforts - without legislated requirements and enforcement - have not worked well in the past.
In addition to its rosy fiscal promise, the industry's call for savings also comes at an important political moment for the president and his allies.
Congressional Democrats are intensifying their efforts to develop healthcare legislation in the face of gathering opposition from conservatives warning of a drift toward government-run healthcare.
Republican lawmakers last week received a briefing from an influential GOP political strategist about how to challenge the administration's healthcare initiative, raising concerns among some Democrats on Capitol Hill.
The letter to the White House is the latest in a series of cooperative, "strange bedfellow" efforts undertaken over the last year by major healthcare interest group.
"While serious questions remain about the details, AARP believes the agreement of providers to slow the skyrocketing cost of healthcare is critical for the health reform we are all working toward," said John Rother, AARP public policy director and a veteran of past healthcare overhaul efforts.
"Reducing the skyrocketing cost of healthcare is the only way to create a healthcare system that works for all Americans,'' Rother said. "After all, what good is access to a system that we can't afford?"
Comments
One more issue that the republicans are out of touch with America on. So who do the republicans send out to oppose Health reform? Drum roll please......Rick Scott. Just who is Rick Scott? Mr. Scott was ousted by his own board of directors in 1997 amid the nation's biggest health care fraud scandal. The rights stupidity is amazing.
Posted by: bill r. | May 11, 2009 1:11 PM
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Posted by: bill r. | May 11, 2009 1:11 PM
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Read the article again. Obama appears to be poised to sign a pact with the devil (e.g. the collective forces of the insurance, medical and pharmaceutical industries) to achieve a “slowdown” in the cost of health care. You read that right: They are talking about a “slowdown” in the increase in health care costs, rather than a reduction. And you think “the rights (sic) stupidity is amazing”? Give yourself a pat on the back for being blind.
Posted by: John W. | May 11, 2009 2:06 PM
Forgive me John. I yield to your super vision. Funny, I see them falling in line knowing it is time to act as if they care as the president pushes for the final goal. Reductions. That's right...reductions and a "slowdown" certainly doesn't hurt in the mean time.......but of course, you would know the truth.
Posted by: bill r. | May 11, 2009 2:55 PM
ps....John....how about a comment on what you read in my post? That was about Scott......whom I guess you must support since all you could see in my post was what you percieved as what I didn't read.
Posted by: bill r. | May 11, 2009 3:23 PM
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Posted by: bill r. | May 11, 2009 2:55 PM
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And I don't see them falling in line. You’re kidding yourself if you think the insurance, medical and pharmaceutical industries are planning to act in anyone’s interest other than their own. They are out to take even more money for their mediocre services. As it now stands, only 39¢ out of every $1 in health care costs makes it to hospitals and doctors. That’s a rather high overhead cost, don’t you think? In turn, to gain these pennies on the dollar, doctors acquiesce in orders from the insurance companies to deny medical services that their good conscience and Hippocratic Oath would otherwise compel them to offer. And the best the industry plans to offer is a 1.1% improvement that results in a “slowdown”? That picnic isn’t worth more than an ant or two.
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The free hand the insurance companies have in the health care system is one of the main problems with the cost of health care, and it’s not going to go away as long as they remain in the loop without a leash. Sure, they will voluntarily make the system more cost effective to a degree. But they will do it for themselves, so they can keep even more of the profit.
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If this was some Republican administration striking the same deal with insurance, medical and pharmaceutical corporations, all of you neo-libs would be screaming foul. If they were representatives of any other part of corporate America, you would be crying foul even if Obama was cutting the deal. It’s only because they represent corporate interests in the area of health care that you look the other way at their obviously exploitative practices. Why your pseudo-liberal alarm bells aren’t going off is a mystery to me.
Posted by: John W. | May 11, 2009 3:40 PM
Isn't that Washingtonese, John W? If you want to reduce a proposed tax cut, the right will call it a tax increase. Got to be on our toes.
Posted by: Flo | May 11, 2009 3:56 PM
But hey John w, better our current system than any government involvement, right? Can't have any of that socialism stuff, no sirree. The market will do just fine managing health care costs, right John W? No need for anyone, especially the government, to regulate what those fine corporate citizens the insurance companies are doing. Our health care system is the finest example of capitalism, providing the least product for the highest cost, maximizing profits.
Posted by: Cal | May 11, 2009 6:14 PM
I started paying more attention to the comments that I forgot the point of the blog. (just joking). I might be too ignorant in health care to say this, but I feel that the problem with health care isn't that people are uninsured, but that we have hospitals overflowing with patients and are understaffed. To me, nursing during the recession seems to be taking the toll as we don't have the money to get these people working.
Posted by: Erin | May 11, 2009 6:30 PM
Another grandiose White House announcement with no hard, or even soft, numbers to back up the White House claims of $2 trillion (As long as we're picking big numbers out of a hat, why not $2 "gazillion"?) savings.
Does ANYONE take this announcement seriously?
Posted by: Speaking Truth to Power | May 11, 2009 7:18 PM
“But hey John w, better our current system than any government involvement, right? Can't have any of that socialism stuff, no sirree.”
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Posted by: Cal | May 11, 2009 6:14 PM
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That’s not true, Cal. Our current system needs a lot of renovation. However, change needs to occur in almost the opposite manner as that now being championed in Washington. Government mandates from both the federal and state governments have taken away much of the motivation of insurance companies to price health care insurance premiums competitively, like they do for auto or homeowner’s insurance.
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For example (and this is just ONE such example), government mandates in many states require insurance companies to issue coverage to people in higher risk categories (smokers, obese, etc.). Other places mandate such coverage without allowing insurance companies to compensate the price of coverage based on risk versus cost factors. The net result has been that insurance companies have raised the price of all health care policies to compensate for the potential loss on some of the riskier policies. Moreover, in many of the states with such mandates, businesses and private individuals are prohibited from acquiring insurance from out of state companies that are not subject to the same mandates. This has had the doubly deleterious effect of pricing many people out of the health care insurance market (who could otherwise afford it), and providing insurance companies with the pretext to keep insurance premiums high. This is just one of the reasons that insurance companies only pay out 39¢ out of every $1 they take in health care premium payments. This is just one example of the law of unintended consequences at work. This is something that happens when nearsightedness on the government level operates in lieu of thoughtful deliberation.
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As an aside, in my own personal experience, I can recall many more instances of health care professionals citing federal regulations as a reason NOT to do something beneficial for a patient than to do something for them. I don’t know how that can be any good.
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Moreover, since the federal government’s intrusion into the field of health care in the ‘60’s and ‘70’s, the cost of health care has gone through the roof. The federal government not only pays most of the nation’s health care costs now, it is singularly uncompetitive when it comes to what it is willing to pay. You might be amazed at how much less some of these health care businesses would take if they had to. But, if the federal government is willing to pay a certain amount for a service, then it is not unreasonable for the health care industry to ask the same price from the private sector. Thus, the very anti-competitive nature of the federal government’s involvement in the health care system is one of the reasons prices have remained high.
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I say that we should start from scratch. Remove all the anti- and non-competitive mandates from the books to allow for competitive pricing. Overreaching by insurance companies or health care professionals could and should be dealt with in the form of consumer protection laws. Tort reform is also necessary to keep any health care system from becoming an alternate to the lottery. As it stands now, malpractice insurance is one of the largest costs of the entire health care system, if not the largest. If this system still results in some people being unable to afford access to health care services on their own, notwithstanding the increased competitiveness of pricing, then allow state governments and (to a lesser extent) the federal government deal with those less fortunate - like they do now in the case of those receiving unemployment, welfare and Medicaid benefits. The government would then be dealing with a substantially smaller number of people than the 47 million that are now without health care insurance. To the extent the federal government remains involved in Medicare, Medicaid and SCHIP, it should demand more competitive pricing as a condition for receiving payment. This would be a substantially more efficient, more available, and less costly system overall.
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But, Cal, I have some questions for you. What happened to you in your travels that made you so inclined to accept the slavery that is socialism? Why are you so willing to accept the most intrusive form of government intervention into your life before other, less intrusive methods have been tried? (What I stated above has been suggested before, but hasn’t been tried before.) How can you assent to a system, and the precedent of its formation, that would allow the government to slowly take away all of your freedom? How can you trust a bunch of strangers to make better health care choices, sometimes involving life and death issues, than you can make yourself? How can you surrender such a large portion of your personal autonomy and privacy to people who have no particular respect or care for you? Does freedom mean nothing to you?
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In another thread, you accuse me of being willing to sacrifice only the poor and uninsured to evade socialism. You implied that my only aversion to socialism was the money I would have to pay for the poor. That was a nasty lie. I wouldn’t submit to socialism myself, even if it cost me personally, and dearly. My aim isn’t to deny the poor anything. I believe we are all in less of a favorable position to do anything for the poor if we are not allowed to be left alone and free. After all, where will all the money come from to pay for the poor if we are all slaves?
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“Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy.” - Winston Churchill
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“Necessity is the excuse for every infringement of human freedom. It is the argument of the tyrant and the creed of the slave.” - William Pitt
Posted by: John W. | May 11, 2009 10:32 PM