ALTHOUGH the nation’s doctors, hospitals, insurers, and drug makers are promising to limit cost increases voluntarily, there isn’t enough meat in their proposal to back up a White House estimate that it could save $2 trillion over 10 years. Even so, the pledge announced Monday was encouraging, because it shows that the industry is worried by the prospect of government-mandated savings if costs continue to climb. President Obama is right that the cost of healthcare, now more than 16 percent of the economy, is simply unsustainable.
It is not sustainable for families, who see insurance premiums, copays, deductibles, coinsurance, and other out-of-pocket costs eating up too much of their income. It is not sustainable for employers, who feel burdened by increasing premiums – especially when they have to compete, as the automakers do, against foreign rivals with national health systems. And it is certainly not sustainable for government, which has no plan to handle the projected deficits of Medicare after baby boomers start making demands on it in two years.
But will the industry’s gauzy pledges of better coordination of care, more standardization of insurance claim forms, reduced administrative costs, and greater efficiency actually yield the promised savings?
Senator Charles Grassley of Iowa, ranking Republican on the Finance Committee, is skeptical; he wants the Congressional Budget Office to analyze any concrete proposals from the industry. Healthcare is so decentralized, and has been so impervious to cost reductions, that any promises of voluntary collective action need close scrutiny.
While the industry’s proposals are only outlines, its concerns about government intervention are plenty real. Doctors worry that the government will reduce Medicare reimbursements for specialists and increase them for primary care physicians to lure more students into that underserved field. Insurers fear Obama will fulfill his campaign promise to establish a low-overhead public health plan to compete against private insurers. The pharmaceutical industry dreads the possibility that Congress will give Medicare authority to bargain for prescription drugs directly, wielding enormous power to drive down prices.
Steps like these have real potential to reduce healthcare costs, which will be all the more necessary if Obama succeeds in expanding coverage to the 47 million uninsured. As Congress devises a reform plan to make healthcare sustainable, it should have the Congressional Budget Office weigh measures like these and any that the industry comes up with. Feel-good resolutions by the industry that have no enforcement mechanism are not good enough.