Healthcare: $2 Trillion Saved, But Not Penny Lost?

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Organizations representing the biggest players in the health care market promised President Obama on Monday that they'd find ways to cut national health spending by an astonishing $2 trillion over the next 10 years. Later that day, executives from these industries told the press that their companies' bottom lines would not suffer as a result. Whatever happened to Alfred E. Neuman's Cosmic Health Care Equation?

Among other things, this seems to be the latest example of health care industry lobbyists and executives trying to reassure investors that the sweeping reform plan being assembled by the Obama administration and the Democratically controlled Congress isn't going to put them out of business.

The argument, mostly implicit but still pretty clear, seems to be that even if Obamacare means lower prices or stricter regulation, if it also means access to 46 million or so new customers (i.e., the currently uninsured), then the price-volume trade-off might turn out to be worth it (or at least not disastrous).

The pharmaceutical industry's top lobbyist essentially said as much a few months back.

At a press briefing in Washington Monday, health care executives were asked to explain how, for example, physicians and hospitals could maintain their incomes if spending were $2 trillion less over 10 years.

"I do believe that these savings can be achieved without detrimental impact on all of the groups that you described," Thomas Priselac, the president and CEO of Cedars-Sinai Health System said. "It will be important as we go through this reform that the payments that are provided be adequate for people to do what it is we're talking about in a new and different system."

Here's what Jay Gellert, President and CEO of the insurance company Health Net said: "I think we believe that we can do it without undermining the viability" private health care companies, he said. "The unique opportunity that we have now is to provide care to 40 or 50 million people if we successfully do this."

"I think that overall, that the efficiencies we'll bring will more than make up for the cuts, for the savings that we gain," Gellert said.

It is perhaps not too obvious to note that these special interests have not warmly embraced all of the health care reform proposals Obama campaigned on, starting with the notion of creating a new public plan. Whatever else it is, this pledge to reduce the rate of growth in national health care spending  by 1.5 percent a year for 10 years is a guarantee of a seat at the table as the reform package is finalized.

I'd also be remiss if I didn't point the curious reader to Megan McArdle's cogently skeptical take on Obama's announcement, though I do feel obliged to point out that even if this is merely political theater, it's still a dramatic endeavor of note. 

(The groups behind the $2 trillion target are the Advanced Medical Technology Association, America's Health Insurance Plans, the American Hospital Association, the American Medical Association, the Pharmaceutical Research and Manufacturers of America and the Service Employees International Union's healthcare division.)

Jeffrey Young is a staff writer at The Hill.

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Jeffrey Young

Jeffrey Young is a staff writer at The Hill, the newspaper for and about Congress, where he covers health care, lobbying, politics, and the intersection thereof for the "Business & Lobbying" section. He's been covering health policy in Washington for a decade and still hasn't heard that one good idea that will fix everything. Email Jeffrey at jeffrey.young.atlanticbusiness@gmail.com
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