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…Is it possible for these stakeholders to find $2 trillion in excess health care costs over the next ten years?
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.
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:
- What measurable and verifiable benchmarks are the stakeholders willing to set?
- What consequences are they going to suffer if they don’t make a real difference in controlling costs?
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 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!
6 comments:
Sounds to me a lot like the Voluntary Effort that the hospital industry dreamed up in 1978 to trim 2 percent off spending in order to block cost containment sought by Carter Administration. It was good PR then and the Republicans backed it and the bill died--more of its own weight-- but the VE helped.
Michele RObinson
Your point about "trust, but verify" obviously leads to the secondary question - who is on the hook financially for cost overruns? As long as it is the payer savings are apt to be illusory. Financing reforms that align risk and reward could go a long way towards ensuring that these goals are attainable.
"...after 39 straight years of blowing the lid off of GDP they are now going to control costs?"
Yep -- hammer it Bob. Also liked the CBO blog entry.
If the "public plan" option goes into effect, just from the provider point of view, and they have no where to shift costs, they are in serious financial peril. No wonder they are pledging to get their houses in order.
How can this be done in light of state and federal mandates and federal requirements such as EMTALA? The wastes in defensive medicine? Unqualified docs prescribing medicines for misdiagnosed conditions? Is the AMA and AHA ready to drop the hammer?
Without these changes, what do the providers honestly think they can do?
THEY don't speak for US.
One person's cost is another person's revenue.
And as someone who sells healthcare for a living, I have no desire to reduce revenue.
Nor do I feel bound in the slightest to the promises made by my non-representative.
Agree wholeheartedly, Bob - if even $2 trillion in savings is so easy to achieve, where have these groups been? Each federal budget has included cuts in the programs near and dear to these groups - why agree to savings now?
And we will all lose 5 pounds after the holidays... I heartily agree with "trust but verify." In such a vast, interconnected system, the ability to point fingers may be much greater than a vague commitment to do one's part.
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