Will health care savings add up?by Ricardo Alonso-Zaldivar on May. 12, 2009, under Body, Opinion
The White House trumpeted the news: health care providers taking a $2 trillion scalpel to their costs and pushing the U.S. toward Barack Obama’s vision of health coverage for all. But don’t line up yet for those insurance cards.
First, a reality check for the nation’s 50 million uninsured.
Medical providers have a long track record of avoiding fiscal constraints, as witnessed by the government’s efforts to tamp down Medicare costs.
And none of the groups that went to the White House can actually dictate prices to their members. Doctors in New York or hospitals in Los Angeles are free to charge what the market can bear.
There’s one more catch: Even if every penny of the promised savings shows up, not all of it would be used to help cover uninsured Americans. Actual savings to the government are all that can be counted as Congress tries to pay for subsidies that will be needed to help make health insurance affordable for everyone.
The medical groups’ pledge is “a very hopeful sign,” said economist Robert Reischauer, head of the Urban Institute. “But when we get down to hammering out the details, health care reform remains both complex and philosophically and politically difficult to accomplish.”
Costs could still turn out to be the greatest obstacle to Obama’s health care plan.
Outside experts estimate the taxpayers’ tab could total between $1.2 trillion and $1.5 trillion over 10 years. Some go as high as $1.7 trillion. Obama’s budget proposal includes a down payment that may cover less than half the bill.
Pledging restraint on costs Monday at the White House were groups representing hospitals, doctors, drug makers, medical device manufacturers and a major health care labor union – a who’s who of health care interests. The president posed proudly with them and called it “a watershed event.”
Obama wants to build on the current system in which most people get coverage through private insurers. But he wants to change the rules so the sick can’t be turned down. And he wants to provide subsidies to help low-wage workers and even some in the middle class afford their premiums.
House Republican leader John Boehner of Ohio isn’t impressed. “Today’s announcement promises savings with no concrete plan to achieve them and no enforcement mechanism if they don’t,” he said Monday.
Indeed, it’s too early to tell whether the White House meeting will be remembered as a turning point or as a political mirage. The administration is projecting an image of a new coalition for health care, with Obama and most of the health care industry and consumer interest groups claiming the political center.
Left out, for now, are conservative Republicans, who oppose Obama’s direction but have yet to articulate their own vision, and liberal Democrats who have been hoping to move toward a nationalized system like Medicare for all. As the debate heats up, the voices from both ends of the political divide will get louder – and the pressure on the center will increase.
Still, the sight of health care industry leaders volunteering to hold back spending is pretty unusual.
By joining Obama, providers are acknowledging at least some responsibility for a bloated and dysfunctional system that economists say is unaffordable.
In the 1990s, when President Bill Clinton attempted to overhaul health care, the battle lines quickly hardened. Obama, who has gone out of his way to woo the interest groups, praised their willingness to sacrifice on Monday.
The groups don’t just have the national interest in mind. Industry is worried that Congress will create a government health plan to compete with private insurers.
Such a plan would quickly become the biggest in the country and could use its power to set lower payment rates, driving costs down on the backs of medical providers.
“I think the reason all these groups want to actively participate in the process is they don’t want to see a blunt instrument used to get spending down,” said Mark McClellan, who ran Medicare for President George W. Bush. “This is an opportunity to get everyone behind a better approach to improve the way health care works.”
That’s just what the groups say they want to do. Their proposals include coordinating care for people with chronic illnesses, rewarding quality not quantity, and using technology to root out waste and prevent errors that get patients sicker.
But it’s hard to put numbers next to any of those ideas. For example, what if better care for chronically ill patients turns out to increase costs? None of the groups has set a target for how much its members should have to pony up.
Congress is going to need hard numbers to pass Obama’s plan this year.
Robert Laszewski, a former health insurance executive turned policy consultant, said he’s betting the consensus won’t last.
“When Congress comes up with mechanisms to reduce costs that actually take money out of the hands of doctors, hospitals and insurance companies,” he said, “that’s when we’re going to find out if things are really different this time.”
Ricardo Alonso-Zaldivar reports on health care policy for The Associated Press.