San Jose Mercury News, May 12: The latest indication that America is ready for health care reform is also the strongest: The insurance industry, hospitals, pharmaceutical companies, doctors and a union representing about 1 million workers delivered a pledge to President Barack Obama on Monday to reduce health care costs by 1.5 percent a year over the next decade.
This could save the government $2 trillion, which could be put toward the goal of health insurance for all. But the savings estimate is less significant than the sea change this indicates in the movement toward health reform. No longer are the major players in the health care industry trying to block it. They’re just trying to make sure they’re partners rather than casualties in the plan.
Ironically, the recession may be helping the cause. Fewer and fewer companies are comfortable shouldering the bulk of health insurance costs for workers. And as more workers face unemployment, the ranks of uninsured in the middle class, let alone the poor, are growing.
With Monday’s historic announcement, the debate now shifts from whether national health care reform is possible to when and how it can be accomplished.
St. Louis Post-Dispatch, May 12: Promises to cut health costs in the future are a bit like protestations of love in the back seat of a parked car: No matter how heartfelt they sound, they’re subject to future revision.
So while we’re pleased to hear about President Barack Obama’s meeting Monday with a coalition of health industry groups, we’re also realistic about the worth of all that sweet talk and flattery.
Groups representing health insurers, hospitals, doctors, drug and medical device makers – many of whom fiercely opposed past reforms – say they’re on board with Obama’s efforts to transform health care. Pledging to “do our part,” they promised to wring out $2 trillion in savings over the next decade. That works out to a reduction of about 1.5 percent per year from projected future spending growth.
It’s no small amount of money, but it has to be taken in context.
Overall health spending in 2007 was about $2.2 trillion, or $7,421 for every American man, woman and child. It probably will reach $2.5 trillion this year. By 2018, overall health spending is projected to exceed $4.3 trillion, or about $13,100 per person. That would amount to about $1 of every $5 in the national economy.
The promised savings would reduce spending for a family of four by $2,500 a year, the White House estimates. So by 2018, the average American will be paying just 68 percent more than today, instead of 76 percent more.
That’s good, but it’s certainly not cheap. We already spend about twice as much per person for health care as citizens of other developed countries, and on average people in those other countries have longer, healthier lives than Americans.
It’s unlikely that any of these promised savings would be on the table without Obama’s determination to reform health care. The offer is an auspicious sign that he will succeed in getting at least some legislation through Congress.
The failure of the Clinton health plan in 1994 demonstrated how easily well-heeled, entrenched interests can defeat even the most popular reforms. This time, industry groups seem to be acknowledging that reform is inevitable. They’re betting they will be better off with a seat at the table as it’s being put together than outside trying to scuttle it.
But the promise to cut costs comes with few specifics and no actual enforcement mechanism. The groups say they will achieve the savings through increased efficiencies and by reducing wasteful spending.
Everyone’s in favor of that. But when it comes time to talk about specifics, the consensus evaporates.
The promised savings are big enough to provide political coverage for universal coverage – health insurance for everyone. Opponents argue that it’s just too expensive to insure everyone, especially in light of projected increases in health spending. Doing so, they say, would require massive tax increases.
But if health spending is cut by $2 trillion over the next 10 years, no tax increase would be required to pay for universal coverage, and one of the biggest political objections would disappear.
The health insurance industry promised similar savings last fall in return for legislation requiring all Americans to have or buy health insurance. That so-called individual mandate hasn’t been part of Obama’s reform proposal, but it enjoys wide political support.
This time, industry groups may want something more. Obama has proposed allowing a government-run insurance plan to compete with private health insurance companies, something the insurance industry and many Republicans oppose.
That government option, provided by Medicare or some other public entity, is key to controlling costs and promoting efficiency. It must remain in whatever health reforms are approved by Congress.
Without it, all the talk about future savings is just hot air and promises.
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