Obama praises health industry's vow to cut costs

[May 12, 2009]  WASHINGTON (AP) -- Barack Obama praised the health care industry's promise to cut $2 trillion in costs over 10 years Monday, taking a sharply different course than President Bill Clinton did 16 years ago in an opening bid to overhaul the U.S. health system.

Drawing skepticism from lawmakers, Obama summoned representatives of the insurance industry, doctors, hospitals, pharmaceutical companies and labor groups to the White House for what he called "a watershed event in the long and elusive quest for health care reform."

It was a gathering of strange bedfellows. More than a decade ago, then-President Bill Clinton and his wife, now-Secretary of State Hillary Rodham Clinton, designed a health care plan in secret, fought industry leaders over it and lost -- setting back the Democratic Party's cause for years.

If Obama succeeds in lowering costs and increasing access to health care, the meeting will be remembered as pivotal. If not, it will be just another Washington photo-op.

Indeed, the industry's proposal was short on specifics. And it appeared to do little to change minds in Congress as lawmakers attempt to write legislation to implement Obama's goal of extending health care to some 50 million uninsured Americans.

Within moments of Obama's appearance with the industry leaders, lawmakers praised the effort but suggested it didn't go to the heart of the health care debate.

Several lawmakers made clear that the industry proposal would do nothing to stave off the outcome that health insurers and others are trying to avoid -- a new government insurance plan that would be available to middle-income Americans. Health insurers say such a plan would drive them out of business.

Sen. Ron Wyden, D-Ore., cautiously welcomed the industry's offer while saying, "I am not about to take the fox's word that the hen house is safe." He said the industry's promises need to be given the weight of law.

The industry groups said they would slow the growth of health care costs by 1.5 percent a year by coordinating care, reducing administrative costs and focusing on quality, efficiency and standardization. Health care costs would still grow faster than the economy as a whole, but not as fast as they otherwise would.

The specifics, industry officials said, would come later.

Obama has spoken often of the exorbitant costs in the nation's health care system, but slowing the rate price increases doesn't translate directly to paying the estimated $1.5 trillion cost of covering the uninsured. Money saved by the private sector doesn't flow directly to the federal treasury.

The top Republican on the Senate Finance Committee, Chuck Grassley of Iowa, called the announcement a "move in the right direction," but said it would be more significant if the Congressional Budget Office, Washington's arbiter of what costs or saves money for the government, determined it saved money.

"When the White House and the industry put concrete proposals on paper and get a score from the Congressional Budget Office, then we'll know if the suggestions really achieve that kind of savings, and it'll be big news," Grassley said. "For health care budgeting purposes, CBO's word is the only one that counts."

Karen Ignagni, president of America's Health Insurance Plans, contended that the voluntary cost-containment effort would help lawmakers who are aiming to craft health overhaul legislation by August.

"They need help from the stakeholder community on cost containment and what you're hearing from all of us is we intend to help and that I think is the story today," Ignagni said.

The groups who signed onto Monday's effort were the American Medical Association, America's Health Insurance Plans, the Pharmaceutical Research and Manufacturers of America, the Service Employees International Union, the American Hospital Association and the Advanced Medical Technology Association.

Officials said they could bring costs down even while continuing to stay profitable -- noting that if health care legislation passes they'd be able to tap into a huge pool of currently uninsured people.

[Associated Press; By ERICA WERNER]

Associated Press writers Henry C. Jackson and Ricardo Alonso-Zaldivar contributed to this report.

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