News & Events

One Obama healthcare goal elusive (MS)

Few see chance of premium cuts in near future
By Lisa Wangsness, Globe Staff  |  May 21, 2009

WASHINGTON – In the final debate of the presidential campaign, while banks collapsed and layoffs mounted, Barack Obama turned to the camera to speak directly to the 56 million Americans watching at home. His healthcare plan, he said, would save families big money on insurance.

"We estimate we can cut the average family’s premium by about $2,500 per year," he said, repeating a promise he had made in the previous debate, and in stump speeches and television ads for the better part of a year.

As Congress prepares for a four-month sprint to pass a sweeping healthcare bill, though, it is hard to find anybody serious about health policy who believes premiums will actually drop anytime soon. Getting healthcare costs to grow at the pace of inflation, instead of two or more times that rate, would be "a tremendous stretch," said John Sheils, senior vice president of the Lewin Group, a health policy consulting firm.

Indeed, even the Senate Democrats writing the healthcare bill acknowledge that it could, initially, cost some families more in higher taxes to underwrite the cost of insuring the uninsured. Democrats in Congress are talking about things like taxes on sugary drinks and alcohol, and about taxing a portion of employee health benefits of those individuals with the biggest salaries and most generous health plans.
But the president has continued to repeat his promise to save $2,500 per family – particularly after, last week, drug, hospital, and insurance industry leaders promised the president they would voluntarily reduce the growth of their revenues by $2 trillion over the next decade.

"Coupled with comprehensive healthcare reform," Obama wrote to those leaders in a follow-up letter, "your efforts could save the Nation more than $2 trillion over the next 10 years and save hardworking families $2,500 in health care costs in the coming years."

The White House, for its part, says the president’s pledge has always been about slowing the growth of health costs, not actually reducing premiums. And in a country where healthcare is on track to consume 20 percent of total economic output by 2019, slowing that growth trend "would be a huge accomplishment in terms of freeing up resources for other priorities," a senior administration official told reporters last weekend.

It could mean savings for families, too, the official said. If the healthcare industry takes in $2 trillion less than projected over the next decade, the average family of four would indeed spend $2,500 less than it would have otherwise in five years.

But the industry’s offer also contained few specifics and no requirements, leaving critics unimpressed. Senator Chuck Grassley, Republican of Iowa, dismissed it as "fairy dust."
Robert Blendon, a professor of health policy and political analysis at the Harvard School of Public Health, said some of Obama’s supporters may be disappointed to learn the savings Obama has promised is off the cost of future growth.

Most people, Blendon said, consider savings "$2,000 off the sticker price of their car, 30 percent off at Macy’s today, a rebate on their auto insurance."

Indeed, tapering the rate of aggregate growth over the course of a decade was not exactly what one voter, Stephanie Webster-Sesay, a 55-year-old microbiologist and Obama supporter interviewed outside the grocery store in Woodbridge, Va., last week, said she had in mind when she heard Obama’s $2,500 promise during the campaign.

"No, no," she said as she finished loading groceries into the back of her car. "I was talking about some kind of immediate relief, or relief not that far down the road." She would like to see lower copayments for starters, she said.

There is, actually, a way Obama and Democratic leaders could chop premium costs very quickly: They could create a public insurance plan that would force doctors and hospitals to accept far less than they get now from private insurers. A Lewin Group study found that a public insurance plan that forces providers to accept Medicare rates could drive premiums down by about $2,500 a year for the average family, Sheils said.

But the will among Democrats in Congress to take such an extreme step appears low. It would mean engaging in a full-on war with doctors, hospitals and health insurers, who say such a plan would drive them out of business, after months of talk from the White House about working together. Republicans, and perhaps more importantly many Democrats, will not go there. The consensus at the moment seems to be to settle for slowing cost growth instead.

One reason health costs are so untamable is the proliferation of technology that promises to do a better job in detecting and treating disease. Every year, health consumers spend billions on new tests, drugs, and procedures that weren’t available the year before.

"It’s kind of hard to imagine we can have all these miracles of modern medicine and at the same time pay less for it," Sheils said.

There is also a staggering amount of waste and unnecessary disease, which is what Obama and congressional leaders are now targeting to try to save money. But making the nation’s vast and fragmented healthcare system more efficient, and its population healthier, is practically and politically challenging and will take years to accomplish.

Bill Carrick, a Democratic strategist from California, said he does not think Obama’s $2,500 promise is a political liability, because most Americans are cynical about healthcare and will not take Obama’s promise literally.

"Most voters out there, they’re going to say, ‘Well, he’s trying to do the right thing and reduce costs, he’s focused on what it means to the average family,’ " he said. "I don’t think they’re going to sit around with a calculator," he said, and determine whether Obama has made good on his word.