$2 Trillion in Hope
The White House and a health-care coalition promise savings, but no one's offering specifics.

Tuesday, May 12, 2009

TWO TRILLION dollars in health-care savings, as hailed by President Obama in the White House yesterday, would be nothing to sneeze at. It was encouraging to hear pledges of cooperation on that front from groups that in the past have fought against health-care reform, and against each other. But we wouldn't take the savings to the bank just yet, and we hope Mr. Obama won't, either.

Associations representing hospitals, health-care providers, insurance companies, device manufacturers and pharmaceutical makers, as well as the Service Employees International Union, offered their commitment to help reduce the annual growth of health-care costs by 1.5 percentage points. If implemented, this would mean the country would spend $2 trillion less during the coming decade than currently projected, with somewhere between $500 billion and $1 trillion accruing to the federal government. This would help alleviate the cost of health care for families and go a long way toward solving the nation's budget woes.

But it is important to note what wasn't included yesterday. None of the interest groups signed up for a specific number; no one is saying who will sacrifice what, or how much. All are promising to "do our part," but the actual share of the $2 trillion that would fall on each pair of shoulders was not laid out. What would make up the substance of the plan? That remains to be seen. How would the private sector be held accountable for this promise to reduce costs? That, too, remains to be seen.

The White House has emphasized repeatedly that health-care reform is entitlement reform -- that is, an answer to the nation's long-term fiscal challenge. Yet, so far, it is backing a plan to expand coverage that would cost taxpayers between $1 trillion and $1.5 trillion over 10 years, while it has proposed health-care savings of only $309 billion. There is a danger that the administration and Congress alike will be tempted to "pay for" actual government expenditures with presumed but unspecified savings, like those promised yesterday. In fact, even as they promise cost control, a number of the groups that met with the president yesterday also have argued that health-care reform should not be held to Congress's pay-as-you-go rules.

There's no doubt that the U.S. health system today pays for a lot of wasteful and unnecessary care. But, as with "fraud, waste and abuse" in the Defense Department, it's easier to rail against such care than to identify and eradicate it. Smarter use of technology, and more preventive care, could reduce health bills in the long run but would be very expensive in initial stages. Pressure will mount on the Congressional Budget Office to change its rules to "score" certain dubious savings to make it easier to offset the costs of expanding coverage.

The White House has stated clearly that any reform bill should be fully paid for. To ease suspicions that the associations he met with yesterday are only talking a good game on cost control to ensure a seat at the bargaining table of health-care reform, the president will have to reaffirm his commitment to pay fully for health care and get to that goal without gimmicks. Nonetheless, for the same reason that one could view this coalition of strange health-care bedfellows suspiciously, their coming together is a positive sign for health-care reform. It is far better having them on the inside and committed to change than having them on the outside throwing rocks. It is particularly heartening that they are committed to controlling costs, the most challenging, yet indispensable, part of health-care reform.

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