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Health Care Stakeholders to Pledge $2 Trillion in Reductions

This from the Wall Street Journal on Sunday:

Major health-care providers are planning to pledge Monday to President Barack Obama that they will work to reduce cost increases in the nation’s health-care system by $2 trillion over the next decade, officials said…

Groups representing hospitals, health-insurance companies, doctors, drug makers, medical-device makers and labor are joining in Monday’s announcement. According to a letter from the groups, reviewed by The Wall Street Journal, they will promise to help reduce the growth of national health-care spending by 1.5 percentage points in each of the next 10 years. “The times demand and the nation expects that we, as health care leaders, work with you to reform the health care system,” the letter says.

Is it possible for these stakeholders to find $2 trillion in excess health care costs over the next ten years?

Are there ice cubes in Antarctica?

During the next ten years, we are on track to spend something approaching $40 trillion on health care in America. The stakeholders need to be proposing something that is more than a rounding error–it needs to actually make a difference toward making entitlements and private health insurance affordable.

According to CMS, the U.S. is projected to spend over $2.5 trillion on health are in 2009—or 17.6% of GDP.

In 1970, U.S. health care spending was about $75 billion—7.2% of GDP.

Health care costs have risen about 2.4 percentage points faster than GDP since 1970.

In 2018, CMS projects that we will spend more than $4.3 trillion on health care—20.3% of GDP.

So, these key stakeholders are going to visit the White House tomorrow and tell us that after 39 straight years of blowing the lid off of GDP they are now going to control costs?

That is if the President and the Congress mandate that everybody buy their health insurance products and therefore get funding to visit their doctors offices and hospitals as well as buy their drugs and devices.

OK.

But I would suggest some hard questions:

  1. What measurable and verifiable benchmarks are the stakeholders willing to set?
  2. What consequences are they going to suffer if they don’t make a real difference in controlling costs?

I think Ronald Reagan had it right when he was negotiating disarmament with the Soviets—“Trust but verify.”

Is this $2 trillion offer a big deal?

Is it more than just a rounding error in the grand scheme of things?

Is it is measurable, verifiable, and are there are consequences for falling short.

If the answer is “Yes” to each of these elements, then it is scorable.

If the answer is “No” it’s just good PR.

One other thing is clear–the pressure is building on the Congressional Budget Office to agree on some health care reform savings. Recent post: An Open Letter to the Men and Women Over at the CBO–Hang In There!

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Daniel
Guest

A website that is brings down the price point for health professionals so they can focus on care and not the high expenses of software for practice management: http://DrChrono.com

Ron
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Ron

Nate, Geez, you are a genius! Perhaps you can be Secretary of HHS in the Palin administration. Seriously, now that I’ve satisfied your Napoleonic complex, your arguments might have more credibility if you didn’t insist upon making them like an abrasive megalomaniacal jerk! There is no doubt that rationing of some sort exists in all healthcare systems. My point is that in U.S. we don’t do it rationally. Furthermore, for all that we spend on healthcare our metrics are abysmal. One third of all patients admitted to U.S. hospitals acquire nosocomial infections or suffer iatrogenic injuries as a consequence of… Read more »

Nate
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Nate

Peter, sadly I see your no smarter today then you were last week. Once again I repeat I am not an insurance company and I am not a broker or middleman. If you can’t even figure out what it is I do after telling you 50 times how can you advocate policy for something far more complex? Ron, Lay off the assumptions no one wants to be an ass. “what could be more efficient than one large pool that includes everyone?” Well for starters multiple small and medium pools competing with each other to make sure they stay efficent. The… Read more »

Peter
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Peter

“what could be more efficient than one large pool that includes everyone?”
Cutting out the middleman, marketing, and the chain profits and commissions (sorry Nate, we don’t need you) is how single-pay would also save.

Ron
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Ron

Nate, How arrogant of you to assume that I don’t know how the U.S. system works. I’ve been a licensed healthcare provider and health educator for the past 30 years. I’ll bet my credentials against yours anytime. I’ve seen people sign themselves out the ER against medical advice worried that the cost of treatment would bankrupt them despite the fact that they had insurance. I witnessed the “drive through” deliveries that were forced upon new mothers by the HMOs and the 24 hour limit on hospital stays following mastectomies. I’ve seen insurers nickle and dime providers and deny legitimate claims… Read more »

pontius
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pontius

Nate – You write: “To factually slap you around for having the audacity to cite out right lies off MSNBC and the NYT, please cite any study showing private insurance administrative cost of 30% for any insurance company of any significance. In fact that sort of loss ratio would be illegal in some States.” First, I did not say that Insurance companies had 30% administrative costs. Read my post again. What I said was that in the US, about 30% of all expenditures on health care go to administrative costs. This includes, for example, the armies of billing personnel hospitals… Read more »

pontius
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pontius

/snark

pontius
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pontius

Nate – Right. Insurers add value because only a private insurance company would push for prenatal care. ONLY a private insurer would care enough to do that. You’d never see prenatal care as part of a public health program, now would you. Yep, that would explain why all those countries with Single Payer variants have lower rates of infant mortality and lower rates of birth defects. Care to rethink that one? Ah, so it appears you work for an insurance company. Surprise surprise. But it’s really only those liberal politicians in favor of a public option who have a huge… Read more »

Nate
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Nate

Barry,
are entitlement coultures changed or do they die off? I can’t think of any example where a country or even generation of those who feel entitled to something changed how they felt willingly. Societes of entitlement die at the hands of their greed, they are never cured of it.
No study or national movement is going to change how people consume healthcare, only the inability to purchase it will.

Ray
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Ray

Much of the coverage on blogs and media coverage on this 2 trilllion savings by vested intersts is regarded as a PR at the most. Looks at least for now they are not bearing arms and raising to opposition. They put themselves on spot and the WH is seeking proposals from them by June 1st.

DrMilan
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DrMilan

Peter…did you ever hear of State Medical Boards,peer reviews and periodic reviews of insurance companies(to name just a few) ?
The idea that we need trial lawyers to “keep us honest”
is absurd.And to imply that doctors are not accountable(if that is what you mean by”questioned”) only shows your bias and ignorance.

Barry Carol
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Barry Carol

People who know a lot more about this subject than I do tell me that among American physicians, the perceived “standard of care” always or almost always maximizes the use of expensive high tech interventions. That’s the culture, but it’s not the culture among doctors in other developed countries. As it happens, this expensive, high tech approach is also the most lucrative for doctors and hospitals and it provides the best protection from potential lawsuits as well. With respect to end of life care, nobody will pay for time consuming consults with palliative care specialists to help patients and their… Read more »

Nate
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Nate

Ron, What system would you propose? I don’t think you can name a single Universal HC System that isn’t having major financial problems. I have yet to see one that is sustainable. Do you not agree it would be foolish to implement a UHCS we know will fail in 30 years? It’s unfortuenate you don’t know how the US Healthcare System works, if you had this understanding you could form better opinions on what needs done to fix it. PPOs, UR, Large Case Management, Disease Management, and countless other programs have all come form insurers. It’s really annoying to see… Read more »

Ron
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Ron

Nate,
Having spent time in nations with true universal healthcare systems, yes, I would prefer a single payer plan. Insurers add nothing but cost to our system, there are significant demonstrable savings to be had in eliminating this non-contributing layer. The efficiency of a government run social insurance system has AHIP terrified. Furthermore, U.S. companies will not be able to compete much longer in the global economy unless they can get the monkey of employer sponsored insurance off of their backs.

Nate
Guest
Nate

Pontius, Have you ever heard that Cheny or Rumsfeld ramble about knowing what we know, knowing what we don’t know and now knowing what we don’t know? Like most people of your ideology your base of knowledge is so lacking you can’t even form basic arguments. To the annoyance of us all we must listen you try anyways. Your first major error is making comparison to this fictional US Healthcare system. There is no such thing as a US healthcare system similar in any means to any other country. We have 3-4 distinct Federal Healthcare Systems, 50 Distinct State Healthcare… Read more »