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April 14, 2009 -- President Barack Obama on Monday called a pledge by health industry groups to shave $2 trillion from rising costs voluntarily "a watershed event" in a years-long campaign to make coverage available to all Americans.
Their voluntary commitment suggests that these interests, some of which fought President Bill Clinton's health care overhaul attempts in 1993-94, now think that some congressional action is inevitable and want a hand in controlling how they're affected.
"Politically, I think it's a very important event," said Emory University health policy professor Kenneth E. Thorpe. "I think it's realistic. There's no reason why we can't get growth in spending down if we do a lot of the stuff they've talked about."
Industry experts, however, said that the voluntary target won't mean much unless Congress requires some of the cost-containment mechanisms by law.
"Do I have confidence in their ability to deliver? Absolutely not," said economist Paul Ginsburg, president for the Center for Studying Health System Change. "It'll be great if they not only looked into things they can do voluntarily, but also supported concrete efforts, through legislation, that would make sure that these savings are achieved."
Meanwhile, some Republicans who resist Obama's talk of creating a public alternative to private insurance as part of a national health care overhaul suggested that the president was trying to use the new private-sector pledge to create the impression of funding in the absence of a real revenue stream.
"Reining in costs is important," said Rep. Roy Blunt, R-Mo., the chairman of the House Health Care Solutions Group, "but we cannot overlook the fact that this pledge alone doesn't save the federal government any money." Blunt said Americans deserve to know how Obama would pay for a plan that has been estimated to cost more than $1.2 trillion over a decade, and "we still haven't seen a plan."
A coalition of insurance, hospital and pharmaceutical makers presented their cost-containment plan Monday in a letter to Obama and a private meeting at the White House.
The president, in remarks following the meeting, was careful to characterize the groups' pledge as "complementary to" and "completely compatible with" the effort Democrats are leading in Congress — but not a substitute for it.
"By curbing waste, fraud, and abuse and preventing avoidable hospital re-admissions and taking a whole host of other cost-saving steps, we can save billions of dollars, while delivering better care to the American people," he said.
He said the voluntary pledge was significant, but that "the only way these steps will have an enduring impact is if they are taken not in isolation, but as part of a broader effort to reform our entire health care system."
Key lawmakers, including the chairman of the Senate Finance Committee, Max Baucus, D-Mont., have talked for months about the need for many of the ideas the industry offered Monday.
These include bundling payments to hospitals and doctors, and increasing preventive coverage and coordination of care for people with chronic diseases.
"The times demand and the nation expects that we, as health care leaders, work with you to reform the health care system," said the letter to Obama. It was signed by representatives of the Advanced Medical Technology Association, American Medical Association, America's Health Insurance Plans, the Pharmaceutical Research and Manufacturers of America, the American Hospital Association and the Service Employees International Union.
Still, it's not clear how long the stakeholders' affable attitudes will last.
Health and Human Services Secretary Kathleen Sebelius said that in the private meeting with stakeholders Obama made clear "he wants them at the table" beyond the photo op. However, "once details begin to be identified, that's where tension often begins," said Sebelius, a former Kansas governor and insurance commissioner. "Everybody right now says, 'I want to pass health reform.' An underlying and often unsaid piece of that is, 'as long as it looks like I want it to look.'"
One group promoting comprehensive legislation, the National Coalition on Health Care, issued a statement saying that "voluntary efforts — without legislated requirements and enforcement — have not worked well in the past," and urging legislation that imposes "short-term constraints to slow the rate of increase in reimbursements of health care providers, sooner rather than later."
Ron Pollack, the executive director of the consumer health organization Families USA, said of the voluntary pledge, "I believe they will follow through, but I also think it's important that we get the specifics and enforceability of these promises. You can trust the statements being made and still want a guarantee."
One free-market health care advocate, Grace-Marie Turner, president and founder of the Galen Institute, said the letter released Monday lays out general ideas but not details on how they would be implemented.
"It's a great promise. But I don't see anything here that tells me mechanically how they're going to do it," she said.
And Ginsburg, the economist, said the pledge may be an attempt to do an "end-run around the Congressional Budget Office," which would have to analyze and estimate the cost and savings if the plan was introduced as legislation.
The average cost of family coverage rose 119 percent from 1999 to 2008; that's roughly four times faster than the rate of inflation — 29 percent — during the same period, according to a recent survey by the Kaiser Foundation and the Health Research and Educational Trust.
In 2008, workers paid an average of $3,354 — about 27 percent — toward the $12,680 annual cost for family coverage. Workers with single coverage pay about $721 a year, or about 16 percent of the $4,704 annual cost of their coverage. Both rates are up about 5 percent from 2007, which is the slowest annual growth rate since the survey began in 1999.
Because of the recession, government experts say the portion of the U.S. economy that's devoted to health-care spending will experience its largest annual increase ever this year. Total public and private health-care spending will go from nearly $2.4 trillion — 16.6 percent of the gross domestic product last year — to more than $2.5 trillion, or a projected 17.6 percent of the GDP this year, government experts have predicted.
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