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Health industry spells out cost saving to Obama

WASHINGTON (Reuters) - A coalition of U.S. health industry groups on Monday outlined how they plan meet President Barack Obama’s goal of cutting $2 trillion in costs industrywide over the next decade.

President Barack Obama makes remarks in the Grand Foyer of the White House in Washington, June 1, 2009. REUTERS/Jason Reed

In a letter to Obama, the groups said some of the proposed savings can be achieved now but others depend on “good public policy” in a proposed health industry overhaul that Obama wants Congress to enact by the end of the year.

“We are committed to doing our part to make the system more affordable and effective for the nation,” wrote the groups, which included representatives of doctors and private insurers as well as the pharmaceutical industry and hospitals.

The proposals included savings of as much as $700 billion from streamlining the insurance claims process and other administrative savings.

The groups said that better management of chronic illness could save between $350 billion and $850 billion. Another $150 billion to $180 billion could be saved by avoiding unnecessary treatments and duplications, they said.

The American Medical Association said billions could be saved by following evidence-based treatment guidelines. For example, they noted that a growing number of births are done by electively induced labor and that the practice is not always consistent with treatment guidelines.

The AMA noted that births by caesarean section account for 45 percent of the more than $79 billion in annual hospital charges for childbirth.

Some of the proposals are already being considered by lawmakers to help pay for Obama’s goal of providing medical coverage to 46 million uninsured Americans. But at least one lawmaker questioned whether the proposed industry savings will really avoid adding to huge government budget deficits.

“I’m skeptical that these proposals will add up to anywhere near $2 trillion,” said Senator Charles Grassley, the top Republican on the Senate Finance Committee which is helping write the overhaul.

Grassley said it remained to be seen whether the proposals would help lawmakers stay within their budget guidelines.

Reporting by Donna Smith; Editing by Cynthia Osterman

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