Industry Groups Pledge to Stem Health-Care Cost Increases

The Washington Post's Ceci Connolly discusses Nancy-Ann DeParle's role as director of the White House Office for Health Reform. Video by Sarah Lovenheim
By Michael A. Fletcher and Ceci Connolly
Washington Post Staff Writers
Monday, May 11, 2009

Volunteering to "do our part" to tackle runaway health costs, leading groups in the health-care industry have offered to squeeze $2 trillion in savings from projected increases over the next decade, White House officials said yesterday.

The pledge comes amid a debate over how, or whether, to overhaul the nation's health-care system, and Obama administration officials predicted that it will significantly increase momentum for passing such changes this year.

The groups aim to achieve the proposed savings by using new efficiencies to trim the rise in health-care costs by 1.5 percent a year, the officials said. That would carry huge implications for the national economy and the federal budget, both of which are significantly affected by health-care expenses.

Representatives from half a dozen health industry trade groups are scheduled to make a formal offer today in a White House meeting with President Obama.

"I don't think there can be a more significant step to help struggling families and the federal budget," a senior administration official said in a conference call with reporters. The official spoke on the condition of anonymity because the offer remains tentative.

The White House projects that the savings after five years under the proposal would mean about $2,500 a year in lower health-care bills for a family of four. Within 10 years, the savings would "virtually eliminate" the nation's budget deficit.

Despite such heady predictions, many aspects of the plan remain unclear. The groups did not spell out yesterday how they plan to reach such a target, and in a letter to Obama they offer only a broad pledge, not an outright commitment.

In addition, White House officials said, there is no mechanism to ensure that the groups live up to their offer, only the implicit threat of public embarrassment. And it would be difficult to track whether they come up with the promised savings, other than the imprecise measure of comparing current projections of health-care cost increases with future actual costs.

Nonetheless, White House officials were optimistic about the offer from industry officials, who previously tried to put up obstacles to health-care reform.

The trade groups making the pledge represent a broad spectrum of health-care interests, including the American Medical Association, the Pharmaceutical Research and Manufacturers of America, the American Hospital Association, America's Health Insurance Plans, and the Service Employees International Union.

"We are developing consensus proposals to reduce the rate of increase in future health and insurance costs through changes made in all sectors of the health system," the groups wrote to the president. "We are committed to taking action in private-public partnership to create a more stable and sustainable health care system."

The groups declined to elaborate on their proposal yesterday, saying they wanted to meet with Obama before doing so.

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