So what to make of the news that major players in the health care industry are vowing to “do our part” to rein in health costs as part of the Obama Administration’s drive to get a major reform bill passed this year? The White House seems to think it is a great step forward. Yesterday, it held a background briefing to impress upon reporters the numbers we could be talking about here, if the industry actually reaches its stated goal of cutting costs by 1.5% a year: $2 trillion in savings over the next decade, which means the typical family of four would be spending $2,500 a year less within five years. And instead of growing to 21% of GDP, health care costs would rise only one percentage point to 18% of GDP by 2019.
Paul Krugman thinks this is “some of the best policy news I’ve heard in a long time.” Jonathan Cohn declares: “This is a big deal, if only for the clear political signal it sends.” But the industry offers almost no details of how it intends to do this, and it would be virtually impossible to track how well the individual players–insurance companies, drug firms, hospitals, unions–are doing at meeting that mark.
The fact is, this idea–first floated, as best I can recall, by Karen Ignani, the top insurance industry lobbyist, at the White House health care summit in March–is designed to make sure that the health industry has a seat at the negotiating table. Which suggests they think health reform is actually going to happen, and that they are better off helping to shape the final product than fight it, as they did 15 years ago. (Others, including Tom Daschle, Obama’s first pick for HHS Secretary, are still giving it only a 50/50 chance.)
It is also a reflection of the fact that the health industry wants reform–at least, it wants it on their terms. That’s because universal coverage means 47 million new customers who can actually pay their bills. Assuming, of course, that private insurers are not competing with a Medicare-like, government-financed “public plan.” The non-partisan Lewin Group has estimated that, given that option, more than 130 million Americans would enroll in a government plan — which private insurers say would effectively kill their own business model. Heading off a public plan is what is implicit in this gesture the health industry is making this morning.
UPDATE: The White House has put out a list of the participants in today’s meeting with the President:
George Halvorson, Chairman and CEO of Kaiser Foundation Health Plan
Karen Ignagni, President and CEO of America’s Health Insurance Plans (AHIP)
Jay Gellert, President and CEO of Health Net Inc.
Thomas Priselac–President & CEO, Cedars-Sinai Health System
Rich Umbdenstock– President & CEO, American Hospital Association (AHA)
Ken Raske–President,Greater New York Hospital Association
J. James Rohack, M.D.– President-Elect, American Medical Association (AMA)
Rebecca Patchin, M.D.– Chair-Elect of the AMA
Rich Deem– Senior Vice President of the AMA
Medical Device Companies
Michael Mussallem–Chairman & CEO, Edwards Lifesciences
Steve Ubl– President & CEO, AdvaMed
David Nexon– Senior Executive Vice President, AdvaMed
Richard Clark–Chairman, President & CEO, Merck
Billy Tauzin—President & CEO, PhRMA
Rick Smith–Senior Vice President, PhRMA
Andy Stern, SEIU
Dennis Rivera, SEIU Health
Nancy-Ann DeParle, Director of the Office of Health Reform
Peter Orszag, Director of the Office of Management and Budget
Larry Summers, Director of the National Economic Council
Kathleen Sebelius, HHS Secretary