Friday, May 15, 2009

Did the President Misspeak? Health Care Leaders Say Obama Misrepresented Their Promise to Reduce Costs

Earlier this week, President Obama announced with fanfare that health care industry leaders agreed to cut costs by $2 trillion over the next ten years. The cost-cutting measures would help make Obama's expensive health care plan sustainable.

I responded to the industry's promise with deep skepticism. Apparently, industry leaders are now skeptical as well. In fact, they deny even making such a promise.

According to the New York Times, industry leaders say that Obama "substantially overstated" their position on cost reductions. Rather than committing to specific reductions on an annual basis, industry leaders say they generally support squeezing costs to attain an overall reduction in the annual growth of health-related expenses. But they view the 10-year period that Obama described as a "target" rather than a firm commitment. They also resist the notion that they agreed to any concrete annual reductions in costs.

The White House has offered conflicting responses to the industry's recollection of the agreement:
Nancy-Ann DeParle, director of the White House Office of Health Reform, said “the president misspoke”. . . when he described the industry’s commitment . . . After providing that account, Ms. DeParle called back about an hour later . . . and said: “I don’t think the president misspoke. His remarks correctly and accurately described the industry’s commitment.”
The article also reports that many industry leaders are "leery" of mandated cost reductions. Perhaps this means they are leery of cost reductions altogether. Many analysts do not believe that a meaningful decline in health care expenses will occur unless the reform package includes specific policies, such as a reduction in medical reimbursements, that lower costs. I concur.

White House Budget Director Peter Orszag has published an op-ed in the Wall Street Journal that reiterates the President's statement that the health care industry has committed to the disputed promises.


Johanne said...

Communiccation in politics - something seems to be always lost in translation even if everyone's speaking the same language.

Darren Lenard Hutchinson said...

Johanne: write it down! Thanks for the post.

AllenS said...

Somebody has lost that hope and change feeling.

Nell said...

My initial understanding of the industry's commitment was that it would seek to reduce the annual INCREASE in health care costs, not that it would reduce those costs per se. Better than nothing, to be sure, but not exactly revolutionary, and more importantly, accomplishing little toward the goal of true universal health care.

Now it seems their commitment was even less than that, and like you Darren, I am not in the least surprised. Why would we ever expect the profit-motivated insurance industry to commit to reducing the return-on-investment to their shareholders?

Real Time Analytics