President Barack Obama’s plan to provide medical insurance for all Americans took a big step toward becoming reality Sunday after leaders of the health care industry offered $2 trillion in spending reductions over 10 years to help pay for the program.
Hospitals, insurance companies, drug makers and doctors planned to tell Obama on Monday they’ll voluntarily slow their rate increases in coming years in a move that government economists say would create breathing room to help provide health insurance to an estimated 50 million Americans who now go without it.
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With this move, Obama picks up key private-sector allies that fought former President Bill Clinton’s effort to overhaul health care. Although the offer from the industry groups doesn’t resolve thorny details of a new health care system, it does offer the prospect of freeing a large chunk of money to help pay for coverage. And it puts the private-sector groups in a good position to influence the bill Congress is writing.
Major groups are pledging to cut the growth rate for health care by a small percentage each year, said an Associated Press source, who spoke on the condition of anonymity in order not to upstage the White House announcement Monday.
Obama has offered an outline for overhauling the health care system, and he wants Congress to work out the details and pass legislation this year. His plan would build on the current system in which employers, government and individuals share responsibility for paying the cost and care is delivered privately. The government would play a stronger role by subsidizing coverage for many more people and spelling out stronger consumer protections.
The industry groups are trying to get on the administration bandwagon for expanded coverage now in the hope they can steer Congress away from legislation that would restrict their profitability in future years.
Insurers, for example, want to avoid the creation of a government health plan that would directly compete with them to enroll middle-class workers and their families. Drug makers worry that in the future, new medications might have to pass a cost-benefit test before they can win approval. And hospitals and doctors are concerned the government could dictate what they get paid to care for any patient, not only the elderly and the poor.
Obama has courted industry and provider groups, inviting their representatives to the White House. There’s a sense among some of the groups that now may be the best time to act before public opinion, fueled by anger over costs, turns against them.
Indeed, costs have emerged as the most serious obstacle to Obama’s plan. The estimated federal costs range from $1.2 trillion to $1.5 trillion over 10 years, and so far Obama has only spelled out how to get about half of that.
Ron Pollack, director of Families USA, a liberal group that supports coverage for all, said the health insurance industry came up with a target of a 1.5-percentage-point reduction. Karen Ignagni, president of the insurers trade group, America’s Health Insurance Plans, took the idea to other major interest groups, said Pollack, who was familiar with the talks among the industry groups.
“If these cost savings are truly achievable, this may be the most significant development on the road to health care reform,” said Pollack. “It would cut costs for families and businesses and enable subsidies to be offered so everyone has access to quality, affordable health care.”
The groups include the American Medical Association, the American Hospital Association and the Service Employees International Union.
Obama’s plan envisions that people would be able to keep the coverage they now have. Those working for big companies probably would not see major changes.
But the self-employed and those working for small businesses would be able to get coverage through a new kind of insurance purchasing pool. Called an “exchange,” the pool would offer stable rates and predictable benefits. Plans in the exchange wouldn’t be able to deny coverage to those who are sick and would have to follow other new consumer protection rules.
Lawmakers in Congress are generally following Obama’s outline, but the Senate plan is likely to go further by requiring all Americans to carry health insurance, much as states now require motorists to carry auto coverage. Democrats hope to get legislation to the floor this summer.
