Obama: Health overhaul could save U.S. trillions

WASHINGTON Mon May 11, 2009 6:07pm EDT

1 of 2. A clinical supervisor sets up monitoring equipment in a hospital trauma center in a file photo.

Credit: Reuters/Lee Celano

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WASHINGTON (Reuters) - President Barack Obama said on Monday a coalition of U.S. health groups would cut rising costs by $2 trillion over the next decade, a move he said would encourage Congress to adopt major healthcare reform this year.

Obama, who has made reform a centerpiece of his political agenda, said a coalition representing doctors, hospitals, drug manufacturers, insurers and laborers had agreed to help reduce the rise in healthcare costs by 1.5 percentage points per year for 10 years.

"From 2010 to 2019 they are pledging to cut the rate of growth of national healthcare spending by 1.5 percentage points each year -- an amount that's equal to over $2 trillion," Obama said at an appearance announcing the pledge.

The president, flanked by representatives of the different industry groups, called the commitment "a watershed event in the long-elusive quest for healthcare reform."

Others were skeptical about the industry groups, some of which opposed reform in the 1990s. They asked how the administration would ensure the groups lived up to their pledge and whether there would be a way to enforce it.

"Today's announcement promises savings with no concrete plan to achieve them and no enforcement mechanism if they don't," said John Boehner, the Republican leader in the House of Representatives. "The administration has yet to answer the fundamental question of how to pay for its massive multi-trillion (dollar) health care plan."

None of the groups, which included the American Medical Association, the American Hospital Association and others, offered detailed specifics on how they would pare costs. Many of the measures that have been discussed would require action by Congress.

It's "really dependent in some part on improving the overall health of the population," said Stephen Ubl, the head of the Advanced Medical Technology Association, which represents medical device makers. He said savings would be tied to improving Americans' eating and exercise habits.

Savings also would be achieved by using computers and technology to achieve better coordination and reduce ineffective care, for example by eliminating unnecessary or duplicate testing.

Since the U.S. government is the nation's largest purchaser of healthcare, a cumulative 20 percent cut in the growth of healthcare costs over 10 years could have an enormous economic impact. It "would virtually eliminate" the deficit, White House budget director Richard Orszag said.

The reductions would save the average family of four $2,500 in healthcare costs in the fifth year, an official said.

The pledge to cut costs came as the White House raised its forecast for the budget deficit for this fiscal year by $89 billion, predicting it would reach $1.84 trillion. The higher estimate may add to challenges Obama faces in getting congressional approval for his agenda.

COMPREHENSIVE HEALTHCARE REFORM

The United States has the most costly healthcare system in the world but still leaves some 46 million Americans without health insurance to pay for care. Studies show it lags other developed nations on indicators of healthcare quality, including life expectancy and infant mortality.

Revamping healthcare and expanding coverage for the uninsured is a top domestic priority for Obama. He is pushing the Democratic-led Congress to pass a measure this year.

"The only way these steps will have an enduring impact is if they are taken not in isolation but as part of a broader effort to reform our entire healthcare system," Obama said.

Obama urged Congress to make sure any healthcare reform bill lowered costs, let Americans choose their own doctor and health plan and ensured quality, affordable care for everyone.

"These are principles that I expect to see upheld in any comprehensive healthcare reform bill that's sent to my desk," Obama said.

The industry and lawmakers broadly agree that the health system needs to be improved but big differences remain on how.

Obama's proposal would establish a new government health insurance plan to compete with private insurers and cover the uninsured, but many Republicans and insurers argue that would undermine the private healthcare market.

But in the wake of the industry's cost-reduction pledge, several groups and lawmakers urged the president on Monday not to abandon the option of a government plan.

"This commitment to cost-cutting is a good-faith gesture by the healthcare industry, but it does not mitigate the need for a public plan option in the upcoming reform bill," said Senator Chuck Schumer.

(Additional reporting by Susan Heavey and Doug Palmer; Editing by Philip Barbara)

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