Backtracking On Health Care Savings

On May 10 I wrote a post about the alliance of health care associations that had pledged to cut the rate of increase in health care spending by 1.5% a year for a 10 year savings of $2 trillion. Aside from noting that it was mostly spin, I questioned how long this rather strange amalgamation of industry groups would hang together with the Obama administration. We received the answer to that question this morning and it’s — not long at all.

In fact, they are back pedalling so fast that they now deny ever having made the commitment in the first place. Here’s how the NYT is reporting it:

After meeting with six major health care organizations, Mr. Obama hailed their cost-cutting promise as historic.

“These groups are voluntarily coming together to make an unprecedented commitment,” Mr. Obama said. “Over the next 10 years, from 2010 to 2019, they are pledging to cut the rate of growth of national health care spending by 1.5 percentage points each year — an amount that’s equal to over $2 trillion.”

Health care leaders who attended the meeting have a different interpretation. They say they agreed to slow health spending in a more gradual way and did not pledge specific year-by-year cuts.

“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.”

Nancy-Ann DeParle, director of the White House Office of Health Reform, said “the president misspoke” on Monday and again on Wednesday when he described the industry’s commitment in similar terms. After providing that account, Ms. DeParle called back about an hour later on Thursday and said: “I don’t think the president misspoke. His remarks correctly and accurately described the industry’s commitment.”

The Washington office of the American Hospital Association sent a bulletin to its state and local affiliates to “clarify several points” about the White House meeting.

In the bulletin, Richard J. Pollack, the executive vice president of the hospital association, said: “The A.H.A. did not commit to support the ‘Obama health plan’ or budget. No such reform plan exists at this time.”

Moreover, Mr. Pollack wrote, “The groups did not support reducing the rate of health spending by 1.5 percentage points annually.”

He and other health care executives said they had agreed to squeeze health spending so the annual rate of growth would eventually be 1.5 percentage points lower.

It looks like the White House was taken by surprise on this one. Either the President misspoke or he didn’t but they have both versions. More broadly, this will probably take a considerable amount of the wind out of the sails of the proponents for major health care overhaul in Congress. They’ve been acting as if they have a mandate on the issue, to the point that the Senate has paved the way for any measures to go through with a simple majority vote as opposed to the more usual procedure of requiring sixty votes for passage.

While this will probably be spun as a simple misunderstanding among the parties, I think the fact that they so quickly and so unambiguously refuted the President’s characterization of the meeting speaks volumes about the concern over a new health mandate. It’s typical of major initiatives such as this that once you start digging into the details the solutions become much more complex than you thought.

We’ve been down this road before. If you are old enough to remember Hillary Care, you know how difficult this sort of reform can be. I expect that the Obama health reformers are about to learn a very hard lesson.

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