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Health Care Leaders Say Obama Overstated Their Promise to Control Costs

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That was the headline in Thursday’s New York Times regarding Monday’s promise by health care  stakeholders to reduce spending by $2 trillion.

A couple of snipets from the Times article:

Hospitals and insurance companies said Thursday that President Obama had substantially overstated their promise earlier this week to reduce the growth of health spending.

“There’s been a lot of misunderstanding that has caused a lot of consternation among our members,” said Richard J. Umbdenstock, the president of the American Hospital Association. “I’ve spent the better part of the last three days trying to deal with it.”

One of the lobbyists, Karen M. Ignagni, president of America’s Health Insurance Plans, said the savings would “ramp up” gradually as the growth of health spending slowed.

Right after the $2 trillion announcement I posted:

Don’t also assume that the American Medical Association (AMA) really represents doctors—I don’t think anyone or anything really represents doctors. If the AMA makes a commitment that actually means sacrifice among the docs you will see just what I mean—especially if the national association folks do a deal with the insurers “on behalf” of all the docs back home requiring real sacrifice. To some degree, you can say the same for the thousands of hospitals out there.

If these stakeholders don’t deliver $2 trillion in something Orszag can take to the bank will the Democratic response be a “public health plan?” Watch the fireworks.

Someone dug themselves one heck of a hole yesterday.

Is it the stakeholders that now have to do in a few weeks what no one has done in decades of pondering this dilemma—make a tangible, measurable, and enforceable offer that cuts real money? If you think coming up with $2 trillion was a big deal actually figuring out the mechanism to carry it off will be a dramatically bigger challenge.

Was it the Obama administration that just raised expectations exponentially trusting these guys can actually deliver something measurable? Or, is the Obama administration just setting them up?

Or was the Obama administration just setting them up?

When those stakeholders walked into the White House on Monday they never intended to make more than a vague promise. When they walked out it was to headlines that they would make “scoreable” proposals by June 1st.

They also had some very angry constituents across the country wondering just what kind of deal they were doing.

They never had $2 trillion and now they have one big problem!

As one insider told me this week, “They got smoked!”

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13 replies »

  1. “But when well people become the worried well, watch out for the budget.”
    “And when people get sick, they want to live forever, no matter what it costs and no matter whom it costs”
    MD, you must be talking about the need for rationing?

  2. Healthy people don’t need healthcare, after basic immunizations. Families with certain histories need to screen for these. We are not talking about a lot of money per capita. But when well people become the worried well, watch out for the budget. Without tort reform, people will still get unnecessary test galore. And when people get sick, they want to live forever, no matter what it costs and no matter whom it costs, (since it not their direct cost. You can’t mortgage the farm for healthcare. There is not enough money in China to do it. It is immoral to try to do it.
    Ther will be no cost cuts without political pain and tort reform

  3. I had the same thought, Health Insurance Guy. What were they thinking their shareholders would think when they saw the leaders of these companies promising not to make too much money? That their stock didn’t plummet that day shows that nothing real was intended or perceived with this “commitment”.

  4. I’m not sure how publicly traded companies can lower costs without some promises from govt. The insurers themselves will need tax incentives or health insurance mandates before they can help others lower premiums.

  5. Just to note, “I told you so” in the satirical post I made to this blog on May 12, “Voluntary Cost Control? Never Mind.” See: https://thehealthcareblog.com/the_health_care_blog/2009/05/voluntary-cost-control-never-mind.html#more
    I implied that if their cost containment promises were taken seriously, the companies’ stocks would plunge and the membership of the trade group would results. Within a few days, fact followed fiction. Or, as I put it, “Spokesmen…said their members could continue to enjoy near-obscene profits without in any way weakening what was, after all, a strictly voluntary commitment that might well be affected over time by employees retiring, changing responsibilities or feeling a sudden urge to pursue other interests. They also noted that control of Congress or the presidency could easily change within ten years.”
    Separately, another coalition member, the Service Employees International Union (SEIU), assured its members that cost-cutting by hospitals would have no impact on either the number of jobs held by its members or their pay.
    Asked about this claim, an American Hospital Association official who declined to be identified, responded simply, “As if.”

  6. I think this whole kerfuffle proved what Matthew has said here all along about Ms. Ignani, and I’m sure the leaders of the others in this stakeholder coalition — AHA, PhRMA, SEIU, et. al. — are deserving of the same scorn. They are profligate liars.
    Here, copy and pasted from my personal PDF of the letter this group released last Monday, before they met with the president:
    “To achieve all of these goals, we have joined together in an unprecedented effort, as private sector stakeholders—physicians, hospitals, other health care workers, payors, suppliers, manufacturers, and organized labor—to offer concrete initiatives that will transform the health care system. As restructuring takes hold and the population’s health improves over the coming decade, we will do our part to achieve your Administration’s goal of decreasing by 1.5 percentage points the annual health care spending growth rate—saving $2 trillion or more. This represents more than a 20% reduction in the projected rate of growth. We believe this approach can be highly successful and can help the nation to achieve the reform goals we all share.”
    And now, following, is what the AHA’s executive vice president, Richard J. Pollack said on Friday:
    “The groups did not support reducing the rate of health spending by 1.5 percentage points annually.”
    I don’t know what other way there is to interpret “1.5 percentage points in the annual health care spending growth rate” but it pretty much reads to me like Richard J. Pollack is a lying sac of . . . well, you get the idea.
    Truth be told, I think these stakeholders are scared witless that they will be singled out for massive revenue cuts post-reform, so they believe they will do better by sticking together. So they went and played nice with the president, and then for the better part of three days, took all sorts of heat from their constituencies for their statements, which they then had to walk back. They are indeed desperate. I hope the administration sees the weakness and goes right for the financial jugular, and really does engage in meaningful cost-containment measures.

  7. Originally, I was upset as I think 2 trillion dollars were nothing when put in the context of total expenditure.
    There should be a cost reduction of the order of 30-50% and that is possible with prudence and persistence.
    Now, I am impressed how the administration called the bluff. And the sad thing is that IF PEOPLE CAN NOT EVEN deliver such a tiny amount of saving, Should they be trusted to DO ANY GOOD!
    rgds
    ravi
    blogs.biproinc.com/healthcare
    http://www.biproinc.com

  8. I’m not surprised by the separation, only by the speed that is occurred. See http://mdwhistleblower.blogspot.com/2009/05/obamas-health-care-reform-indecent.html
    Obama will discover that health care reform, like Guantanamo, military commissions, etc, are easier to campaign on than they are to implement. The presdent’s overstatements of what the medical groups agreed to last Monday will cause other players in the medical arena to dig in and hold back.

  9. I am really not surprised by this at all. I think that Obama has overstated on a whole lot more than just this as well.

  10. I will start with my last blog entry:
    For anyone who missed the opinion page in the Saturday WSJ–read Peggy Noonan’s column.
    Money fuels health care. The government’s responsibility is to define through legislation what universal health care is, how universal health care will be enacted in our country; and, how it will be paid for–as I indicated in my last blog entry. The rest as outlined by Peter Orszag is as Peggy Noonan defines: “New class gobbledygook, which is more prevalent than ever, is also more destructive than ever…” We are a great society–but have somehow lost our sense of social justice and responsibility. As the legislative process for “health care reform” is being put into place, the government should task the health care professionals/stakeholders with the role of aligning and collaborating: “to “figure-out” how to create more efficient models for care, implement the VA health care record for all, work with our national groups like the ACP, ASCO or other specialty societies to perform meaningful comparative and cost effective analysis and demand a coding system that acknowledges management of preventive services and chronic disease. Let’s get the right people performing the right roles in the health care system before the remaining primary care base quits. Peggy Noonan’s statement that “Do members of the administration speak obscurely because they can’t help themselves, or do they speak the way they speak because they really aren’t that keen to have people understand them?” resonates. Our country needs a defined blueprint to reform America’s health care system that is aligned, collaborative, based in safety/quality and retains a voice for primary care physicians (and the sanctity of the patient-physician relationship) and as she says: “It would be nice if America were allowed to know what exactly the plan is, and how it would work, and who would pay, and how.”
    Universal health care coverage may be a high deductible catastrophic coverage plan. All stakeholders goes beyond those contained in this quote “Hospitals and insurance companies said Thursday that President Obama had substantially overstated their promise earlier this week to reduce the growth of health spending.
    “There’s been a lot of misunderstanding that has caused a lot of consternation among our members,” said Richard J. Umbdenstock, the president of the American Hospital Association. “I’ve spent the better part of the last three days trying to deal with it.”
    “We the people” are also stakeholders. There is a need for us to have “skin-in-the game”–financial and personal. Preventive health requires a commitment by each of us to a healthy lifestyle (exercise, die, abstaining from tobacco and limited alcohol consumption, etc.)and knowledge about our health. Each of us requires appropriate cost effective preventive health measures (vaccination, and guideline tested medical testing). Physicians and mid level health care providers, especially primary care, need to be paid for compassionately and carefully providing the opportunity to create the environment to provide those services (P4P). The Hospital Medical Complex as defined by Arnold Relman needs to provide thoughtful and compassionate care. Further building of highly reimbursed “factories” for specialty technologic procedures requires thoughtful input by community physicians, boards and consumers. There is a need to use hospital data to understand the “expanding indications” for some of these procedures and perform comparative effectiveness research by physician led groups in conjunction with economists. Hospitals must be commited to safety and embrace the tenets of Peter Pronovost. Pharma needs to be encouraged to pursue innovation to cure Alzheimer’s, cancer; but, chronic diseases like hypertension or diabetes may be handled equally effectively by “old strandby” therapies. Zeke Emmanuel has written an article entitled “Tier 4 Drugs and the Fraying of the Social Compact. His final words echo, “Providers could agree that considering costs in treatment decisions does not violate the Hippocratic oath and that improved efficiency is a core value of medicine today. We could strive to ensure that everyone receives effective treatment, rather than spending more and more on ineffective interventions that end up not just wasting money, but also breeding resentment and conflict over who can afford to live and who cannot.” Insurers need to collaborate with the process as stakeholders with a moral responsibility that is collaborative.
    Finally, Risa Lavizzo-Mourey, thoughtfully wrote a President’s message for the Robert Wood Johnson Foundation in 2007. She quoted a Nigerian tribal proverb, “In the moment of crisis the wise build bridges, the foolish build dams.” She speaks to alignment, collaboration and quality. She defines AF4Q (aligning forces for quality). She came from a family of dedicated physicians and recognizes the importance of local, public participation with public reporting. That is where the savings will come from. We are all in this together.

  11. I thought we were all done with “lobbyists”…..
    These “stakeholders” have exactly what “stakes” in healthcare reform? Maintaining the status quo? Increased share holders profit?
    Why are we turning to the same “stakeholders” that created this mess (cost, coverage, HIT, etc.)to provide resolutions?

  12. What a shock! The American Public, the media, industry constituents, the Obama administration, Congress, bloggers, and even my trusting mom — just didn’t take promises of saving $2 T at face value!

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