Industry groups say White House overstated pledge to reduce health spending growth

Groups representing hospitals and insurers on Thursday said that President Obama considerably overstated their pledge to rein in health care spending, the New York Times reports.

Obama on Monday announced that the group of six major health care organizations had vowed to "cut the rate of growth of national health care spending by 1.5% each year -- an amount that's equal to over $2 trillion," from 2010 to 2019. However, industry leaders who attended the meeting with Obama said that they did not promise specific year-by-year savings, but instead agreed to a more incremental approach.

American Hospital Association Executive Vice President Richard Pollack -- in a bulletin to state and local affiliates -- wrote, "The groups did not support reducing the rate of health spending by 1.5% annually." According to Pollack and other executives, the groups agreed to reduce the rate of spending growth so that the annual rate of growth eventually would be 1.5% lower. HHS estimates that health spending will grow by an average of 6.2% in the next 10 years, reaching $4.4 trillion in 2018.

America's Health Insurance Plans President Karen Ignagni, who participated in the White House meeting, said the savings would "ramp up" gradually as the growth of spending slowed. Advanced Medical Technology Association Senior Executive Vice President David Nexon said that "there was no specific understanding" of exactly when the growth rate could be lowered. Nexon added, "It's a target over a 10-year period" (Pear, New York Times, 5/15).

AHA President Richard Umbdenstock in a conference call to 320 member organizations said that the group's pledge was "spun way away from the original intent," adding, "There has been a tremendous amount of confusion and frankly a lot of political spin." He added, "I want to assure you that [AHA] is at the table and a responsible part of this, but that we've been very clear on what we have committed to" (Budoff Brown/Frates, Politico, 5/15).

According to the New York Times, White House Office of Health Reform Director Nancy-Ann DeParle said that Obama "misspoke" when he described the pledge as saving $2 trillion over 10 years. However, she later called the New York Times back and said, "I don't think the president misspoke. His remarks correctly and accurately described the industry's commitment" (New York Times, 5/15).

Groups Were Unprepared for Public Statement

The six groups -- AHA, AHIP, AdvaMed, the Service Employees Industry Union, the American Medical Association and the Pharmaceutical Research and Manufacturers of America -- had been meeting in private for several weeks on a plan aimed at cutting the nation's health care spending, but late last week found out that the Obama administration wanted to make a public announcement of their agreement, Politico reports. An unidentified health care lobbyist said the group was not ready to go public with its pledge when reporters were told that the administration would make its $2 trillion cost reduction vow public. The groups had distributed a fact sheet offering general areas where savings could be achieved, but the sheet included few specific proposals. The lobbyist said, "This was all a general commitment to be part of bending the cost curve and nobody had specifics and all of sudden right before the weekend hit, [administration officials] said, 'Get us a list of their specifics'" (Politico, 5/15).

NFIB

Donald Danner, president of the National Federation of Independent Business, said in an interview that the pledge made by the health care industry groups was the equivalent of "putting the fox in charge of henhouse security," the Washington Times reports. Danner added that insurers, drugmakers, doctors and hospitals "clearly have been a major part of the problem, and they have been slow to come to the table to fix it." Danner also discussed how his organization, an opponent of health care reform under former President Clinton's administration, has altered its position on an overhaul and is now an advocate for change. Danner said that the U.S. health care system is "fundamentally broken," adding, "The status quo is no longer sustainable." Danner also said that his group opposes a mandate that requires employers to offer health coverage to their employees, but conceded that the group might accept a mandate that exempts small businesses (Dickson, Washington Times, 5/15).