Health Care Leaders Say Obama Overstated Their Promise to Control Costs

Health Care Leaders Say Obama Overstated Their Promise to Control Costs

MAY 15, 2009

by Robert Pear, The New York Times

WASHINGTON - Hospitals and insurance companies said Thursday that President Obama had substantially overstated their promise earlier this week to reduce the growth of health spending.

Mr. Obama invited health industry leaders to the White House on Monday to trumpet their cost-control commitments. But three days later, confusion swirled in Washington as the companies' trade associations raced to tamp down angst among members around the country.

After meeting with six major health care organizations, Mr. Obama hailed their cost-cutting promise as historic.

"These groups are voluntarily coming together to make an unprecedented commitment," Mr. Obama said. "Over the next 10 years, from 2010 to 2019, they are pledging to cut the rate of growth of national health care spending by 1.5 percentage points each year - an amount that's equal to over $2 trillion."

Health care leaders who attended the meeting have a different interpretation. They say they agreed to slow health spending in a more gradual way and did not pledge specific year-by-year cuts.

"There's been a lot of misunderstanding that has caused a lot of consternation among our members," said Richard J. Umbdenstock, the president of the American Hospital Association. "I've spent the better part of the last three days trying to deal with it."

Nancy-Ann DeParle, director of the White House Office of Health Reform, said "the president misspoke" on Monday and again on Wednesday when he described the industry's commitment in similar terms. After providing that account, Ms. DeParle called back about an hour later on Thursday and said: "I don't think the president misspoke. His remarks correctly and accurately described the industry's commitment."

The Washington office of the American Hospital Association sent a bulletin to its state and local affiliates to "clarify several points" about the White House meeting.

In the bulletin, Richard J. Pollack, the executive vice president of the hospital association, said: "The A.H.A. did not commit to support the ‘Obama health plan' or budget. No such reform plan exists at this time."

Moreover, Mr. Pollack wrote, "The groups did not support reducing the rate of health spending by 1.5 percentage points annually."

He and other health care executives said they had agreed to squeeze health spending so the annual rate of growth would eventually be 1.5 percentage points lower.

Under existing law, the Department of Health and Human Services estimates that health spending will grow an average of 6.2 percent a year in the coming decade, to $4.4 trillion in 2018.

Two other lobbyists who attended the White House meeting confirmed Mr. Pollack's account.

One of the lobbyists, Karen M. Ignagni, president of America's Health Insurance Plans, said the savings would "ramp up" gradually as the growth of health spending slowed.

David H. Nexon, senior executive vice president of the Advanced Medical Technology Association, a trade group for makers of medical devices, said "there was no specific understanding" of when the lower growth rate would be achieved.

"It's a target over a 10-year period," Mr. Nexon said.

Democrats in Congress are looking for savings that could be certified by the Congressional Budget Office, the official scorekeeper, so the money could be used to pay for coverage of the uninsured.

But health care executives are leery of enforceable cost controls. Mr. Pollack assured hospital executives that the promised savings "are not subject to rigid ‘scoring' rules used by the Congressional Budget Office."

John A. Matessino, president of the Louisiana Hospital Association, said his members were already struggling because the state cut their Medicaid payments 3.5 percent in February and planned deeper cuts in the fiscal year that starts July 1.

"We are very concerned about what they are doing in Washington and the speed at which it's happening," Mr. Matessino said. "We have hospitals in Louisiana that have put major construction projects on hold until they see what happens in Washington over the next 6 or 12 months."

Daniel Sisto, president of the Healthcare Association of New York State, which represents hospitals and nursing homes, said, "There is a high level of anxiety about the overall goal of $2 trillion in savings, especially in a state like New York, which has had severe cost constraints for three decades."

House Democrats on Thursday circulated the outline of a bill that would require all Americans to carry health insurance and would subsidize premiums for many people with incomes up to four times the poverty level ($88,200 for a family of four).

Under the proposal, employers would have to offer coverage to employees or help finance it by paying a percentage of their payroll. The Democrats are proposing creation of a "public health insurance plan," which would compete with private insurers.

The public plan would probably be run by the Health and Human Services Department, according to the outline.

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Click here to view the letter House Republicans sent to health industry leaders.