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President Barack Obama praised the health care industry's promise to cut $2 trillion in costs over 10 years, but lawmakers questioned how much it really helps in coming up with a solution for the millions of uninsured.

It's "a watershed event in the long and elusive quest for health care reform," Obama said Monday at the White House with representatives of the insurance industry, doctors, hospitals, pharmaceutical companies and a top labor union at his side.

It was a noteworthy sight as leaders of the industry who have killed past attempts at overhauling health care stood behind the president with a proposal to curb their costs.

The proposal, however, was short on specifics. And it appeared to do little to shift positions in Congress as lawmakers attempt to write legislation to implement Obama's goal of extending health care to some 50 million uninsured Americans.

Within moments of Obama's appearance with the industry leaders, lawmakers praised the effort but suggested it didn't go to the heart of the health care debate.

Several lawmakers made clear that the industry proposal would do nothing to stave off the outcome health insurers and others are trying to avoid — a new government insurance plan that would be available to middle-income Americans. Health insurers say such a plan would drive them out of business.

"This commitment to cost-cutting is a good-faith gesture by the health care industry, but it does not mitigate the need for a public plan option in the upcoming reform bill," said Sen. Charles Schumer, D-N.Y., a member of the Senate Finance Committee that's writing a health reform bill.

The industry groups said they would slow the growth of health care costs by 1.5 percent a year by coordinating care, reducing administrative costs and focusing on quality, efficiency and standardization. Health care costs would still grow faster than the economy as a whole, but not as fast as they otherwise would.

The specifics, industry officials said, would come later.

Obama has spoken often of the exorbitant costs in the nation's health care system, but slowing the rate price increases doesn't translate directly to paying the estimated $1.5 trillion cost of covering the uninsured. Money saved by the private sector doesn't flow directly to the federal treasury.

The top Republican on the Senate Finance Committee, Chuck Grassley of Iowa, called the announcement a "move in the right direction," but said it would be more significant if the Congressional Budget Office, Washington's arbiter of what costs or saves money for the government, determined it saved money.

"When the White House and the industry put concrete proposals on paper and get a score from the Congressional Budget Office, then we'll know if the suggestions really achieve that kind of savings, and it'll be big news," Grassley said. "For health care budgeting purposes, CBO's word is the only one that counts."

Karen Ignagni, president of America's Health Insurance Plans, contended that the voluntary cost-containment effort would help lawmakers who are aiming to craft health overhaul legislation by August.

"They need help from the stakeholder community on cost containment and what you're hearing from all of us is we intend to help and that I think is the story today," Ignagni said.

The groups who signed onto Monday's effort were the American Medical Association, America's Health Insurance Plans, the Pharmaceutical Research and Manufacturers of America, the Service Employees International Union, the American Hospital Association and the Advanced Medical Technology Association.

Officials said they could bring costs down even while continuing to stay profitable — noting that if health care legislation passes they'd be able to tap into a huge pool of currently uninsured people.

That's a message that will resonate, said veteran GOP pollster Tony Fabrizio. "People don't want government agencies, boards or regulators standing between them and their doctors. . . . They understand that government control inevitably leads to rationing."

Pushing that message is the Conservatives for Patients' Rights Action Fund, a new group founded by former hospital executive Richard L. Scott and assisted by CRC Public Relations, the conservative public affairs firm that worked on the Swift Boat Veterans for Truth campaign against Sen. John F. Kerry (D-Mass.) in the 2004 presidential election.

The fund is in the midst of what the group said would be a monthlong, $1-million television advertising campaign featuring doctors from Canada and Britain -- both of which have single-payer systems -- discussing waiting lists and limited patient choices. A new ad featuring dissatisfied patients from those countries began airing this weekend.

At the same time, MoveOn.org, the liberal grass-roots powerhouse, has been mobilizing its 5 million members to pressure Congress not to compromise on the creation of a new public plan option.

Last week, the group aired its second healthcare ad of the year, featuring a pair of undertakers bemoaning a public plan that could make people live longer. MoveOn's first ad went after the insurance industry for opposing Obama's public option.

"We're not taking anything for granted," said Nita Chaudhary, MoveOn's national campaigns director. "This is likely to be our biggest fight for the year."

MoveOn has been joined by other liberal advocacy groups such as Health Care for America Now, which aired its own ad last month promoting a public plan. Last week, it aired a second ad highlighting Scott's former work for healthcare giant Columbia/HCA, which a decade ago paid $1.7 billion to settle fraud charges against the company.


President Obama has pledged to find a middle ground in his drive to reshape the nation's troubled healthcare system.

But even before Congress debates a healthcare bill, the president is getting sucked into a fiercely polarized fight over a centerpiece of his agenda: a new government insurance program that patients could choose instead of private coverage.

The battle over the "public option" has mobilized interest groups on both sides of the political spectrum with millions of dollars in their campaign war chests. Television ads promoting and attacking the insurance provision are already hitting airwaves.

The Obama administration and its allies are now scrambling to contain a full-throated ideological debate that some fear could threaten the most ambitious healthcare campaign in nearly a generation.

"Everybody needs to keep their powder dry," Senate Finance Committee Chairman Max Baucus (D-Mont.) said in an interview. "We have a huge opportunity to accomplish very significant health reform. . . . Let's not have any sparks that could light a fire."

The sparks, however, are already flying.

Conservatives have zeroed in on the insurance proposal as a potential Achilles' heel in Obama's healthcare plan, casting it as a move toward Canadian-style government healthcare and contending that federal bureaucrats will dictate personal medical decisions.

Meanwhile on the left, longtime advocates of a single-payer system are also fomenting a showdown with the right to force Obama and Democratic leaders to stand firm behind a new government program.

"This has become a lightning rod," said Maine Sen. Olympia J. Snowe, a Republican who Democrats hope will work with them on healthcare. "There is a lot of suspicion. . . . I'm afraid this could easily be used as an excuse for not moving any further."

Policymakers and politicians have battled for decades over the government's role in a system that relies on both public programs such as Medicare, which serves the elderly, and private insurance, which covers most workers and their families.

Fifteen years ago, the Clinton administration's healthcare campaign was derailed in part by an insurance industry campaign featuring a fictitious couple named Harry and Louise who worried aloud about government making their medical choices.

Now, with the debate flaring anew, Obama and his congressional allies are struggling to head off the conservative assault and tamp down a liberal revolt, even as they work to keep major healthcare groups, including insurers, at the negotiating table and off the political warpath.

At a recent White House meeting, the president assured a group of House Democrats that he was still committed to a government insurance option.

Last week, Health and Human Services Secretary Kathleen Sebelius tried to defuse the issue on the other side of the aisle, telling GOP lawmakers on the House Ways and Means Committee that the administration had no intention of driving private insurers out of business.

Sebelius noted that many state governments offer their employees a choice between public and private health insurance.

Baucus, who plans to introduce sweeping healthcare legislation next month, said he had recommended starting with less controversial elements of healthcare reform. "We don't have to deal with the public [insurance] option on the first day," he said.

Baucus, Obama and others see a new government program as crucial to covering the approximately 46 million people in the United States who have no insurance. They also argue that a public alternative would pressure private insurers to control costs and improve quality.

The federal government already provides health insurance to about 83 million Americans through Medicare, Medicaid and other public programs, including those offered by the military.

Private insurers, meanwhile, face growing criticism for refusing to cover people with preexisting conditions and dropping coverage for sick customers. "This is a benchmark that will set a high standard that private plans have to meet," said Jacob Hacker, a political scientist at UC Berkeley who advocates a public option.

But insurers say more federal regulation could ensure affordable, high-quality insurance for all. In recent months, the industry has offered to guarantee coverage and stop charging more to people with preexisting medical conditions.

A government-run insurance program, industry leaders and many conservatives maintain, would have an unfair advantage and ultimately drive insurers out of business.

That would inevitably mean a single-payer system, said Stuart Butler, vice president for domestic policy at the conservative Heritage Foundation. "The probability that a monopoly would serve customers well is close to nil," he said.

GOP lawmakers are intensifying warnings that a public insurance plan will lead to nationalization of healthcare and new limits on patient choice.


Katie Hebert, age 4, is a very sick little girl. She gets severe seizure-like attacks that can last 11 hours from an undiagnosed neuro-developmental disorder. She is deaf in one ear, has a feeding disorder and requires daily medication for asthma. In her short life, she has been rushed to the emergency room six times and hospitalized twice. Her health was put at even greater risk when she lost her health coverage -- which meant no more regular doctor's visits, weekly therapy or attention from specialists.

To deal with this crisis, Katie's father tried to buy private insurance, but he couldn't afford the roughly $1,000 a month, about 30 percent of his salary, to pay for the insurance plan offered by his employer. And even if he could have afforded the insurance, it would not have covered all of Katie's health needs. On top of that, other private insurers would not accept Katie in their programs because of her pre-existing conditions.

The only alternative was the Texas Children's Health Insurance Program (CHIP). But her father made $260 a month above the limit that would enable Katie and her older brother, Nathan, 7, to qualify for CHIP. Mr. Hebert is a reliable worker who has helped maintain the computers for a banking system in Pasadena, Texas, over the last six years. He requested a voluntary pay cut in an already modest income so his children could get insurance, but his employer didn't respond.

The family eventually spent down its income by paying for unnecessary child care to become financially eligible for CHIP. That wasn't the end of it, however. When Katie's father got an automatic three percent cost of living raise in December, the family's income once again exceeded the CHIP limit, this time by $20.54 a month. During the period that her father went through the process of having his wages lowered, Katie was without health coverage -- again.

Katie is one of millions of children in working families who face impossible barriers to obtaining health coverage imposed by insurance companies that make enormous profits and pay their CEOs and top managers fat compensation packages. They have the power to decide who gets coverage, what medical treatment they'll pay for, and they set the prices for coverage. The premiums these companies charge and the restrictions they impose are major reasons why 46 million Americans are without health insurance today -- including nine million children.

Insurance companies' massive profits and outsized executive salaries are largely made possible by soaring premiums, high deductibles and rising co-pays that put private health insurance beyond the reach of many moderate- and middle-income families. The average annual family insurance premium in 2008 was more than $12,500 or above $1,000 each month.

Since 2001, the cost of family coverage from an employer climbed by almost 80 percent, compared with only a 24 percent rise in workers' earnings. Uninsured and underinsured Americans have had to bear the financial burden of high medical costs. About half the people in the United States with homes in foreclosure and a large portion of those who have filed for bankruptcy have named medical expenses as a cause.

There are a variety of ways insurance companies boost their profits while limiting payouts to cover health care costs for people they insure. Insurance companies routinely deny coverage to people like Katie with pre-existing medical conditions. They also refuse to cover those they think will become ill in the future. In these cases, the cost of treatment may come to tens of thousands of dollars that must be borne by the family as out-of pocket expenses. Individual health insurance policies bought by people who are self-employed or not covered through their employer are among the most expensive and frequently the most restrictive.

All of these restrictions harm insurance policy holders and increase the bottom line of insurance companies while decreasing the choices of families that work hard and play by the rules but never feel secure that their children will have health coverage from one year to the next. Congress must establish a strong public health insurance plan if we are to give families choices and foster competition in the private health insurance market that will bring escalating health care costs down.

Why should we continue to let children fall between the chasm of profit-driven health insurance companies -- some pay their CEOs between $10 and $30 million annually -- and income-restrictive Medicaid and CHIP programs that are different in each of the 50 states?

Children need urgent help and all of us must act now to ensure that all children have access to affordable, comprehensive health coverage, wherever they live in whatever family. Our fragmented system of health coverage for children allows too many of them to go without the critical health services they need. God did not create two classes of children. Our children simply can't wait any longer. Let's make sure Congress hears this from us.


Several big health-care interest groups say they’re going to slow the rise in health costs over the next decade. Here are stories from this morning’s WSJ, Washington Post and New York Times.

Later today, several big players — including the American Medical Association, the Service Employees International Union, and the main trade groups from the drug, hospital, medical-device and health-insurance industries — are expected to meet with President Obama and pledge to slow the growth of health-care costs by 1.5 percentage points per year in each of the next 10 years.

The specifics seem pretty thin. The pledge includes perennial cost-control favorites such as “simplifying administrative costs, making hospitals more efficient, reducing hospitalizations, managing chronic illnesses more effectively and improving health-care information technology,” the WSJ says. All stuff that everybody agrees sounds good, but has been hard to put into practice.

What’s more, even if the health establishment slows the growth as promised, the cost of health care will continue to grow faster than the economy as a whole, rising to 18% of GDP by 2019, the WSJ says. (Health spending was 16.6% of GDP last year.)

Still, the fact that such a wide range of players with often conflicting interests (doctors and health insurers, for example) are speaking as a single group is pretty significant. It shows they all want to look like they’re on board with health reform, a top priority this year in Washington. That’s a big change from the last major health-reform push, in the early 1990s, which failed in part due to fierce industry opposition.

But keeping that broad-based support will become more difficult in the coming weeks and months, as the details of health-reform legislation emerge from Congress. Later today, in fact, the Senate Finance Committee is expected to release several possible options for a public insurance program that would compete with private insurers. That’s one of the most contentious elements of the health-reform plans, and one the insurance industry vigorously opposes

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