Health Reform Crisis: Groups Backtrack On Promised Cost Cuts

On Monday, President Obama hosted an event at the White House with five health care industry stakeholders and the SEIU announcing that the groups had reached an agreement to reduce the growth in health care costs by 1.5 percent a year for 10 years. The administration called it a watershed moment, and suggested it would save consumers upwards $2 trillion.

Now health industry lobbyists, including, specifically, the American Hospital Association, are saying that the administration has misled them and the country. AMA President Richard Umbdenstock said the groups had agreed to gradually ramp up to the 1.5 percentage-point target over 10 years – not to reduce spending by that much in each of the 10 years,” according to Politico.

That’s a huge difference.Here’s what they said in their letter:

As restructuring takes hold and the population’s health improves over the coming decade, we will do our part to achieve your Administration’s goal of decreasing by 1.5 percentage points the annual health care spending growth rate–saving $2 trillion or more.

Pretty clear cut. But so much for all that. SEIU didn’t have a specific comment, referring me instead to another letter the groups put out today (PDF) reaffirming their commitment to the earlier goal. But clearly (and unsurprisingly) there’s a great deal of dissent about it–enough, no doubt to complicate the groups’ efforts to meet their aspirational June 1 deadline to put forth specific and adequate cost cutting proposals.

Kevin Drum calls the whole thing a charade. Richard Kirsh, the national campaign director for Health Care for America Now says, basically, ‘we told you so.’

“Our reaction after the event was we need legislation because it’s easy to have good intentions,” Kirsch said, “and the real test will be whether they’ll agree to legislation.”

Basically, the American Hospital Association (and PhRMA and AHIP and all the other groups) represent a great number of people, many of whom raised hell when the details of the agreement were aired.

“There’s a danger in Washington,” Kirsch added, “of people here talking to themselves so much that they think they can get the rest of the country to follow.”

“The president has always been trying to have this open door policy,” Kirsch said. “He’s had it with Republicans in Congress he’s had it with industry. The Republicans slammed the door on him…and now I think you’re seeing the health care industry slam the door too.”

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