Industry Pledges to Control Health Care Costs
The New York Times
May 10, 2009
The officials said the plan could save $2,500 a year for a family of four in the fifth year and a total of $2 trillion for the nation over 10 years. That could make it less expensive for Congress to enact comprehensive health insurance coverage, a daunting challenge facing the Obama administration.
At this point, administration officials said, they do not have a way to enforce the commitment, other than by publicizing the performance of health care providers to hold them accountable.
By offering to hold down costs voluntarily, providers said, they hope to stave off new government price constraints that might be imposed by Congress or a National Health Board of the kind favored by many Democrats.
In remarks prepared for delivery to health care providers on Monday, Mr. Obama says: “These groups are voluntarily coming together to make an unprecedented commitment. Over the next 10 years, from 2010 to 2019, they are pledging to cut the growth rate of national health care spending by 1.5 percentage points each year — an amount that’s equal to over $2 trillion.”
“Reform is not a luxury that can be postponed, but a necessity that cannot wait,” Mr. Obama says.
In a letter addressed to Mr. Obama, six leaders of the health care industry say: “We will do our part to achieve your administration’s goal of decreasing by 1.5 percentage points the annual health care spending growth rate, saving $2 trillion or more. This represents more than a 20 percent reduction in the projected rate of growth.”
The letter was signed by executives of the Advanced Medical
Technology Association, a lobby for medical device
manufacturers; the American Hospital Association; the American
Signers of the letter said that large amounts could be saved by aggressive efforts to prevent obesity, coordinate care, manage chronic illnesses and curtail unnecessary tests and procedures; by standardizing insurance claim forms; and by increasing the use of information technology, like electronic medical records.
Administration officials said private insurers and government programs could also save money by paying for entire episodes of care, rather than for each service separately.
An administration official, speaking in a conference call on Sunday, said, “The savings are crucially dependent on getting health care reform done this year.” The administration insisted that the official not be identified.
Some of the savings could be achieved by voluntary action in the private sector. But most of the savings in Medicare and Medicaid could not be achieved without changes in federal law and regulations.
In the abstract, slowing the growth of health spending is a goal on which consumers and health care providers agree. But experience shows that specific proposals touch off fierce battles among interest groups fighting to expand their share of health care money.
In a relatively rosy forecast, the White House said Sunday that the savings from a more efficient health care system would far exceed the costs of achieving universal health coverage, with federal subsidies for people who could not afford insurance on their own.
The Department of Health and Human Services estimates that health spending will grow an average of 6.2 percent a year in the coming decade, to $4.4 trillion in 2018 from $2.4 trillion last year.
Health care now accounts for about 17 percent of the overall economy and, with no change in existing law, the share will grow to 21 percent in 2019, administration officials said. The commitments made by health care providers would hold down the share to 18 percent of the economy, and that difference is equivalent to savings of nearly $700 billion in 2019 alone, the officials said.
The goal set forth in the letter resembles a proposal made in
In a report being sent to Congress on Monday, two research and advocacy groups, the Center for American Progress and the Democratic Leadership Council, say that productivity growth in health care has lagged behind that of other industries.
The government could save nearly $600 billion over the next decade if the health care industry increased its productivity growth by 1.5 to 2 percentage points a year, said the report, by David M. Cutler, a Harvard economist.