Healthcare groups pledge to slow rising costs

A group of trade associations is pledging to reduce the growth rate of national health care spending by 1.5 percentage points a year for the next decade in a show of support for President Barack Obama’s call to overhaul the nation’s health insurance system.

The group is scheduled to present its commitment to the president on Monday at a White House event where Obama will speak about the need to overhaul the nation’s health care system to reduce individuals’ costs and to provide health insurance coverage for more Americans.

Among the groups behind the pledge are the American Hospital Association, the American Medical Association, Pharmaceutical Research and Manufacturers of America, America’s Health Insurance Plans and the Service Employees International Union.

While the trade groups’ voluntary pledge may sound small, officials said Sunday that by the fifth year it could translate to $2,500 in annual savings for a family of four, and by 2019, it could yield $2 trillion in savings for taxpayers. That’s according to two senior administration officials who briefed reporters about the pledge on Sunday and spoke on condition of anonymity at the insistence of the White House.

The savings, they said, could come from industry concepts such as administrative simplification, care coordination and bundling of payments, as well as other steps still being developed. Some would require congressional action.

At Monday’s event, Obama plans to say in part, according to excerpts of his speech released in advance: “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….

“That is why these groups are voluntarily coming together to make an unprecedented commitment.”

The cost-reduction commitment comes as the president and Congress are starting to grapple with how to structure legislation to reach their goals without unintended consequences, such as dismantling the private insurance system or significantly rationing care or raising taxes.

The Senate Finance Committee is set to discuss health care costs this week. Obama’s budget includes $634 billion toward a healthcare overhaul, which experts say would be only a down payment.

Once detailed legislation emerges, likely controversies include expanding public coverage versus private coverage, and whether to tax a portion of employer-provided health insurance benefits. The trade associations have not asked for specific provisions in exchange for their cost containment pledge, administration officials said.

“I think they want to be on board with the president,” one official said of the trade groups.

While the group’s pledge would slow rising costs, health care still would get more expensive every year. National health care costs are now rising by about 7 percent annually, one official said Sunday.

It also could prove difficult to measure precisely how close these associations ultimately come to meeting their commitment. In addition, because the pledge is voluntary, there could be no penalty if the various insurers, hospitals, doctors and drug makers fell short of their target.

Still, the two administration officials said the pledge could have “massive consequences” and it “makes even clearer than ever that health reform is going to happen in the Congress.”

(c) 2009, McClatchy-Tribune Information Services.