The Health Care Industry's Promises on Spending
by Maggie Mahar
You’ve seen the headlines: “Health Care Industry Offers to Rein in Spending”; “Stakeholders to Obama: We’re Ready to Cut Costs.” What does this mean? I think it means that the industry—and in particular the insurance industry—is afraid, very afraid that the healthcare reform train is going to leave the station without them. They’re desperate to have “a seat at the table.”
And so they are admitting what President Obama, White House Budget Director Peter Orszag and bloggers like yours truly have been saying for more than a year: we must rein in health care spending. Over the weekend, the Wall Street Journal announced that the president would be receiving a letter signed by leaders of of Pharma, Advamed (device manufacturers), the American Medical Association (doctors), the American Hospital Association, America's Health Insurance Plans, and the Service Employees International Unions. In that letter, the signers pledge “to do our part to achieve your Administration’s goal of decreasing the annual health care spending growth rate” by 1.5 percent a year, “saving $2 trillion or more . . . we are developing consensus proposals to reduce the rate of increase in future health and insurance costs through changes made in all sectors of the health care system." Today the president announced the industry’s promise.
In truth, the industry is not making a concession. It is recognizing an irrefutable fact. Current spending patterns are unsustainable. The nation’s health care bill is set to grow by 6.2 percent a year over the next 10 years. Unless you expect your wages to grow by 6.2 percent a year over the coming decade, this means that pretty soon, you probably won’t be able to afford healthcare.
Of course what can't happen won’t. We’re not going to let the healthcare system swallow GDP.
Something will have to give. This could mean that we’ll wind up with a two-tiered system. The wealthiest 5 percent will continue to undergo far more tests and aggressive treatments than they really need, while consuming enough pills to turn many into walking pharmacies. They’ll continue to over-pay for over-treatment, and most will not be aware that too much medical care in the form of ineffective, often unproven remedies can be fatal. As for the rest of us, our employers just won’t be able to keep up with levitating costs. At best, we’ll wind up on something equivalent to today’s Medicaid. At worst, we’ll receive precious little healthcare.
Alternatively, spending will be pared throughout the system as we trim the fat from our health care budget. But, as I have said before, that fat is not hanging out on the edge of steak; it is marbled throughout the meat. Removing the waste will difficult and time-consuming. And it will have to be done with a scalpel, not a butcher’s knife. But if done right, we don’t have to sacrifice the quality of care. We will simply be cutting the dollars spent on inefficient, ineffective, unproven and over-priced products and services.
From a patient’s point of view, this is good news. But for those who make their living in the health care industry, a $2 trillion reduction in spending means that their revenues will fall. One man’s overtreatment is another man’s income stream.
Why, then, are they offering to help shrink the nation’s health care bill?
According to Ron Pollack, director of Families USA, a liberal group that supports coverage for all, the health insurance industry came up with the target of a 1.5-percentage-point reduction. Karen Ignagni, president of the insurers trade group, America’s Health Insurance Plans, took the idea to other major interest groups, said Pollack, who was familiar with the talks among the industry groups. .”
Is There A Quid Pro Quo In the Works?
As regular readers know, the insurance industry is terrified by the prospect of having to compete witth a public sector insurance plan. President Obama has said that public-sector alternative would “give Americans choices. And help keep the private sector honest,” presumably by setting high tandards for coverage while keeping preimums, deductibles and co-pays as low as possible.
Insurers claim that they cannot possibly compete with something like Medicare E (for Everyone.) It’s too good. Okay, they don’t put it that way. They say a government plan would have an unfair advantage because it doesn’t have to spend a fortune on advertising, lobbying and exectuive salaries. It doesn’t have to produce profits for shareholders. And , by being part of the federal government, it enjoys certain economies of scale. Finally, because of its sheer size, Medicare E would have clout when negotiating prices with drug-makers, device-makers, hospitals and physicians. Of course, the nation’s biggest insurers also have size on their side. They just haven’t chosen to use it. Instead, they have accepted sky-high prices for many products and some services—and then passed the cost on to patients in the form of spiralling premiums.
So perhaps, some observers are speculating, Ignani is hoping for a quid pro quo here? Over at the American Prospect, one of Ezra Klein’s reader’s envisions the scenario:
Administration: "OK"
But yesterday, senior administration officials told Bloomberg : There was no concession from the administration . . .as a result of the letter.”
I’m inclined to believe them. The administration doesn’t have to make concessions. It now has the votes needed to pass the president’s health care bill. It would like to have the industry on board, and it would like the vote to be bi-partisan. It does not want to create a rift within the Democratic party. But the administration doesn’t need Karen Ignani.
Meanwhile, what the industry is offering is merely a promise: They provided few details about how the cuts would occur,” Bloomberg observes, “and said they don’t have a way to enforce the commitment.”
Details about exactly how industry would save $2 trillion were extremely hazy and included boilerplate references to “Reducing over-use and under-use of health care by aligning quality and efficiency incentives . . . “ There was no mention of sacrifice. No one said “we were willing to give up . . .”
The National Coalition on Healthcare’s response to the news seems appropriately skeptical “We are very cautious about the particulars of the voluntary effort that groups proposed to the White House today . . Most of the measures that they cited would help to make the health care system more efficient over time, but, as the Congressional Budget Office has indicated, should not be counted on to produce substantial savings soon.”
"Moreover,'' the coalition said, "voluntary efforts - without legislated requirements and enforcement - have not worked well in the past.”
In other words, this is all PR.
Why, then, did President Obama seem so delighted by the industry’s pledge? First, because it would be less than gracious to look a gift-pledge in the mouth. Secondly, if I am right, the
insurance industry has blinked. They have admitted that U.S. health
care cannot continue to be a growth business. This means that
for-profit health insurance won’t be a growth business.
Going forward, spending on health care cannot grow more than GDP. And we know that GDP is not going to be growing by 6.6 percent –the projected annual growth rate for health care spending. Over the next year or two , GDP might grow by 1% to 2%. If we are going to provide coverage for all Americans, and provide subsidies for those who cannot afford it, we’ll need to save more than 1 ½ percent a year that the industry is talking about—or raise taxes substantially.
No doubt, the industry representatives hope that, by reaching out to the president, they will be included in discussions about how and where cuts should be made. If and when that happens, one can expect the “strange-bedfellows coalition” of doctors, hospitals, insurers, drug-makers and device-makers will break down, with each party pointing a scalpel: “Don’t cut me, cut him.”
All these tips seem to be pretty good, if one starts to implement. Frankly speaking this is a long process to stop hair from failing. But for a immediate results there are different techniques for hair restoration. The only thing we need to do is to find good surgeon for hair loss treatment
Posted by: siva123 | June 01, 2009 at 07:18 AM