Health industry offers big cost cuts

Step may speed insurance for all By Ricardo Alonso-Zaldivar and Philip Elliott • ASSOCIATED PRESS • May 11, 2009 WASHINGTON — President Barack Obama's plan to provide medical insurance for all Americans took a big step toward becoming reality Sunday after leaders of the health-care industry offered $2 trillion in spending reductions over 10 years to help pay for the program. Hospitals, insurance companies, drugmakers and doctors planned to tell Obama today that they'll voluntarily slow their rate increases in coming years in a move that government economists say would create breathing room to help provide health insurance to an estimated 50 million Americans who now go without it. With this move, Obama picks up key private-sector allies that fought former President Bill Clinton's effort to overhaul health care. Although the offer from the industry groups doesn't resolve thorny details of a new health-care system, it does offer the prospect of freeing a large chunk of money to help pay for coverage. And it puts the private-sector groups in a good position to influence the bill Congress is writing. 'Unprecedented commitment' Obama has offered an outline for overhauling the health-care system, and he wants Congress to work out the details and pass legislation this year. His plan would build on the current system in which employers, government and individuals share responsibility for paying the cost, and in which care is delivered privately. The government would play a stronger role by subsidizing coverage for many more people and spelling out stronger consumer protections. "We cannot continue down the same dangerous road we've been traveling for so many years, with costs that are out of control, because reform is not a luxury that can be postponed, but a necessity that cannot wait," Obama said in prepared remarks the White House released Sunday. "That is why these groups are coming together to make an unprecedented commitment." Industry compelled to act The industry groups are trying to get on the administration bandwagon for expanded coverage now in the hope they can steer Congress away from legislation that would restrict their profitability in future years. Insurers, for example, want to avoid the creation of a government health plan that would directly compete with them to enroll middle-class workers and their families. Drugmakers worry that in the future, new medications might have to pass a cost-benefit test before they can win approval. And hospitals and doctors are concerned that the government could dictate what they get paid to care for any patient, not only the elderly and the poor. Obama has courted industry and provider groups, inviting their representatives to the White House. There is a sense among some of the groups that now may be the best time to act before public opinion, fueled by anger over costs, turns against them. It's unclear whether the proposed savings will prove decisive in pushing a health-care overhaul through Congress. There's no detail on how the savings pledge would be enforced. And, critically, the promised savings in private health-care costs would accrue to society as a whole, not just the federal government. That's a crucial distinction because specific federal savings are needed to help pay for the cost of expanding coverage.