SPIN METER

$2 trillion in health savings? Where?

[September 21, 2009]  WASHINGTON (AP) -- It was a watershed moment in the health care struggle: Leaders of the insurance, hospital and other medical industries stood with President Barack Obama at the White House and promised steps to save $2 trillion over the next decade.

Whatever happened to those savings, announced with much fanfare well before Congress had written any of the costly health overhaul bills now in play? Industry groups say they're a work in progress. Many health analysts say they're largely speculative.

"We should have cashed the check in May," said Joe Antos, a health expert for the conservative American Enterprise Institute. "Those numbers never had any great significance then and there's little now."

The White House event on May 11 clearly had political significance. It was an early sign that the same interest groups that helped derail President Bill Clinton's drive to reshape the nation's health system in the early 1990s were willing to give it a go this year. That helped create momentum for Obama's effort.

"The value is it showed the interest groups were trying to be at the table this time," said Drew Altman, president of the Kaiser Family Foundation, a nonpartisan group that studies health issues.

The promised savings, however, are a different matter.

For starters, the $2 trillion in reduced costs for care, administrative work and other medical expenses were supposed to be savings for the entire economy, not just the government.

That means that even if the savings were realized, much of it -- no one knows exactly how much -- would not be available to help Congress pay for its health overhaul bills. Those measures have ranged from an $856 billion bill by the chairman of the Senate Finance Committee Chairman, Sen. Max Baucus, D-Mont., to House Democrats' $1.5 trillion version, both covering 10 years.

So far, the pharmaceutical and hospital industries have agreed to cuts that would total $235 billion in 10-year savings for the government. That's a fraction of both the cost of health legislation and the $2 trillion in promised reductions.

"Insurance companies, drug companies are going to have to be ponying up," Obama said Sunday on CBS-TV's "Face the Nation," without specifying any amounts.

Health care executives say their effort to produce the savings is real and ongoing. They say they continue to talk, within the industry and with government officials, about initiatives to produce the money. Some would require federal approval, while providers could adopt others on their own.

"We're committed to getting rid of unnecessary costs," Dr. J. James Rohack, president of the American Medical Association, said in an interview.

Industry officials also cite a 28-page letter they sent Obama in June, following up on their May announcement, that described steps they were advocating.

In it, drugmakers proposed improvements in assuring patients follow doctors' orders on taking prescriptions. Insurers wanted to streamline administrative work such as submitting claims, while the AMA said it has begun studying ways to reduce unneeded medical procedures.

The American Hospital Association said it was seeking ways to reduce hospital infections, while medical device manufacturers said they are looking for ways to reduce medical errors. Another participant -- the Service Employees International Union, representing hospital and other health care workers -- suggested savings through moving more patients from nursing facilities to their homes.

"We've been working with members of Congress to honor our commitment," said Karen Ignagni, president of America's Health Insurance Plans, the insurance industry trade group.

Analysts, though, say there are no assurances the proposals will become reality. The plans lack detail, could take years to perfect and implement, and in some cases could be resisted by practitioners inside and outside the medical profession who don't want to lose money, they say.

The AMA, for example, says money could be saved by forgoing unneeded procedures if doctors could be protected from malpractice lawsuits as long as they followed specified treatments. Trial lawyers are vehemently against limits on such suits, however, and it is unclear what Congress will do when these two well-funded lobbies clash.

Experts also cite the uncertainty of measuring how much money the proposals would save because it would be hard to calculate what medical spending would have been without them. In addition, it would be difficult to enforce the new rules. A medical company, for example, might lose income in one area but raise prices in another to earn the money back.

Robert Reischauer, a former head of the nonpartisan Congressional Budget Office and now president of the Urban Institute, put it this way: "There's no way they could make it a number you could write down on a deposit slip for a bank."

___

On the Net:

Kaiser Family Foundation: http://healthreform.kff.org/

American Medical Association:
http://www.ama-assn.org/

American Hospital Association: http://www.aha.org/

Service Employees International Union: http://www.seiu.org

America's Health Insurance Plans: http://www.ahip.org/

[Associated Press; By ALAN FRAM]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.