Health care industry stalwarts step up to the plate to help Obama save money (Yawn)

AHA, AMA, AHIP, SEIU, AdvaMed and PhARMA told Obama yesterday that over the next ten years they stand ready to "do our part to achieve your Administration's goal of decreasing by 1.5 percentage points the annual healthcare spending growth rate — saving $2 trillion or more."  The details include nostrums that appear in the President's budget proposal as well.

Setting aside for a moment the creative accounting built into that pledge, why don't they start by pledging to eliminate the $700 billion or so a year of waste in the system?  It is a commonplace that 1/3 of the costs incurred in the U.S. health care system are unnecessary.

Frankly, these groups are destined to decrease health care spending by even more, given today's Medicare Trustees' report (the doomsday clock gives the Hospital Trust Fund about 8 years) — so 1.5% a year is bupkes.

It also bears noting that a careful reading of the letter yields a pledge to "do our part" to achieve the federales' goal — not a pledge to reach the $2 trillion mark on their own. 

While they doth protest otherwise, these groups are likely eager to forestall the public plan option (see one exposition of what that could mean in an earlier HealthBlawg post) and perhaps believe that by being inside the big tent this time around, instead of throwing stones (to mix a metaphor) a la Harry and Louise ads in the HillaryCare era, they have a better shot at steering things their way.

As Paul Levy wondered in his post at Running a Hospital, are they trying to sell us the Brooklyn Bridge?

Update May 13, 2009:  Bob Laszewski sums up the issues with yesterday's fantasy health care reform exercise nicely.

Update May 18, 2009:  The alphabet soup of organizations standing behind Obama at the White House last week have now been distancing themselves from his message, which went a bit further than the groups' actual commitments (as noted above).  Not to be the bearer of wet blankets or anything, but the announcement now starts to look like a backfiring White House media event ginned up while not-ready-for-prime-time in order to deflect attacks on the unfinanceability of the Obama health reform plan.

This Great Leap Forward approach by industry is also exemplified by GE's healthymagination gobbledegook, rolled out last week with similar fanfare.  The proposal: all GE's health-related businesses will roll out product and service upgrades that will cut costs while increasing access and improving quality.  While a $6 billion commitment to health care, addressing cost, access and quality is generally a good thing, GE was a little short on details.  Also, monopolists and near-monopolists don't talk about lowering prices unless something is really wrong.  See doomsday clock, above.  (For more cynicism, see John Moore's take on GE as well.)

David Harlow
The Harlow Group LLC
Health Care Law and Consulting