Health Care Industry Unveils Cost-Cutting Plan The health care industry stepped forward Monday with big cost savings to help President Obama pass an overhaul plan. The pledge came at a White House meeting of groups representing health insurers, hospitals, doctors, drug-makers and a major labor union.
NPR logo

Health Care Industry Unveils Cost-Cutting Plan

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Health Care Industry Unveils Cost-Cutting Plan

Health Care Industry Unveils Cost-Cutting Plan

Health Care Industry Unveils Cost-Cutting Plan

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

The health care industry stepped forward Monday with big cost savings to help President Obama pass an overhaul plan. The pledge came at a White House meeting of groups representing health insurers, hospitals, doctors, drug-makers and a major labor union.


And for more on this story, we now turn to NPR health policy correspondent Julie Rovner. Julie, as Nancy Anne DeParle just mentioned, Congress is already at work on health care legislation, so why this announcement at this particular time?

JULIE ROVNER: Well, you know, one of the biggest reasons that we as a nation spend too much on health care is what economists call misaligned incentives. What that means is that too many people in the health care system have a financial incentive to spend more than might be strictly medically necessary. So the idea in remaking the system is to have what we call aligned incentives, where you get better health care for less money. Well, today's announcement by the president and his group is a case of aligned incentives, I think.

NORRIS: And so how are the incentives aligned in this case?

ROVNER: Well, it turns out that tomorrow there are two events that are related to health costs that both these groups that made this offer and the administration would like to get ahead of. On Capitol Hill, the Senate Finance Committee is going to have its last big hearing before it begins actually writing its health care bill. And this one is going to look, not coincidentally, at how to pay for the changes that it wants to make. And these groups who are generally considered the biggest culprits in the health care spending problem, wanted to be able to say that they've made suggestions for how to save some money.

Meanwhile, the administration is going to release its annual report on Medicare's finances. And it is expected to show that the part of Medicare that funds hospital care is going to go broke within just the next few years. So I think this was an effort by both the industry groups and the administration to get a jump on two potentially negative health cost stories. I think that's why we saw it today.

NORRIS: So the groups want to make some suggestions on how to save money. How big are the sacrifices that these groups are willing to make to cut costs here? Are we talking about real reduction?

ROVNER: Not really, and I think that's important. Frankly, this is the easy stuff. Mostly what these groups are agreeing to do is the kind of changes that both candidate Obama and candidate McCain were talking about last year on the campaign trail. These are things like computerizing medical records, changing the way health care is billed and paid for, providing only care that's been proved to work - that sort of thing.

It's all pretty fuzzy and, frankly, not all that hard to agree to in this form. And it's basically the price of admission for these groups for being at the table when some of the really hard decisions start to get made.

NORRIS: So what about the hard decisions? What will it take to save the $2 billion?

ROVNER: Well, the Congressional Budget Office, as I mentioned at the beginning, said that you really have to change financial incentives for doctors and hospitals, change the way they go out and actually practice medicine. That sort of thing is going to be much more difficult. Those are the decisions that Congress is going to have to make in legislation. What these groups have been talking about - the types of things that we've seen here have been shown not necessarily to save as much money as they've been talking about.

NORRIS: What would really save money? I mean, the big changes, the seismic changes that I think the administration is really hoping for.

ROVNER: Well, those are things that Peter Orszag, the budget director, likes to talk about - about bending the curve, about making those things change. And, again, you don't have to change a lot over a long period of time. As you go out in terms of years, they can make big differences. But certainly you're going to have to change the way doctors and hospitals get paid.

Some people are going to have to take less and that's not really what these groups are talking about here. These groups are talking about straightening out the system, doing efficiencies that clearly are going to make the health system better and run better and work better.

It's not going to be the big money, though. The big money is going to be redistribution and that's where the fights are going to happen. And we will start to see that in the next few weeks as Congress starts to write this legislation.

NORRIS: Now, Julie, you've been covering this issue for a very long time. And when people talk about health care in this town sometimes they just roll their eyes. What's different? What's changed since the Clintons rolled out their massive health care reform plan?

ROVNER: Well, certainly these groups being at the table is a big deal. In that sense, these are groups that were the main opponent of the Clinton reform plan. And they are now basically suing for peace, if you will. For whatever reason they are doing this and, yes, they're not making these huge massive, you know, sacrifices yet, but the fact is that they're there. They're with the president. And they're saying we want to move forward in this process. That's a big change.

NORRIS: Thank you, Julie.

ROVNER: You're welcome.

NORRIS: That's NPR's health policy correspondent Julie Rovner.

Copyright © 2009 NPR. All rights reserved. Visit our website terms of use and permissions pages at for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Obama: Health Industry Plan Could Save Trillions

President Obama met with health care groups Monday and praised them for agreeing on a plan they calculate would cut increases in projected health care costs by $2 trillion over the next decade, saying it was part of a broader effort to provide quality, affordable health care to every American.

Obama said after the morning meeting that the coalition — which included union members, insurance companies, doctors, hospitals and pharmaceutical companies — had voluntarily committed to cutting the growth rate of national health care spending by 1.5 percent each year from 2010 through 2019.

Under the health industry's plan, a family of four could save $2,500 a year within five years, the president said.

The savings would come from standardizing and simplifying all sectors of the health care system; implementing measures to reduce overuse and underuse of health care; investing in effective treatment and prevention; and reducing costs by developing technology and regulatory reforms, according to a letter signed by six coalition representatives.

"We, as stakeholder representatives, are committed to doing our part to make reform a reality in order to make the system more affordable and effective for patients and purchasers," the letter read. It also stated that health care legislation should focus on initiatives aimed at promoting good health by eliminating obesity.

Since his days on the campaign trail, the president has promised to push for affordable health care for Americans, often citing his mother's battle with insurance companies over payment of her mounting bills for treatment of ovarian cancer.

Obama noted Monday that 46 million Americans don't even have health insurance, and half of all personal bankruptcies stem from costly medical expenses. He also noted that many Americans forgo care because they can't afford it.

"We cannot continue down the same dangerous road we've been traveling for so many years with costs that are out of control, because reform is not a luxury that can be postponed, but a necessity that cannot wait," Obama said.

The coalition's efforts were intended to complement lawmakers' efforts to write comprehensive legislation that would decrease health care costs for families, businesses and the government. The Democratic-led Congress hopes to pass health care measures by the end of the year.

Obama is leaving the details to lawmakers, but he has pledged that health care legislation would do three key things: decrease health care costs, give Americans the freedom to choose a new doctor or health care plan, and ensure all Americans have quality, affordable health care.

In the meantime, the president said his administration would do its part to bring down costs by curbing waste, fraud and abuse in the Medicare and Medicaid programs; bringing down prescription drug prices; and preventing unnecessary readmissions to hospitals.

Obama said steps have already been taken to increase coverage by extending quality health care to millions of children of working families who lack coverage and providing a COBRA subsidy for 7 million Americans who have lost their jobs during the economic downturn.

Although the health care groups have often been at odds, Monday's White House meeting reflects a growing awareness that changes to the health care system are coming — and that stakeholders should get onboard or risk being left out of the solutions.

"That is why these groups are voluntarily coming together to make an unprecedented commitment," Obama said.