What's happened to the promised health savings?

On May 11 2009, President Barack Obama stood in the State Dining Room of the White House in Washington speaking about healthcare. Standing by his side as he spoke of healthcare, were Cedars-Sinai Health System President Thomas Priselac; Merck CEO Richard Clark; Kaiser Permanente CEO George Halvorson; Obama; American Medical Association President J. James Rohack; SEIU Healthcare chair Dennis Rivera; and Edwards Lifesciences CEO Michael Mussallem.

This was a key moment as standing by Obama's side were leaders of insurance, hospital and other medical industries. Between them they promised steps to save $2 trillion over the next decade, yet where are these savings?

The White House event had great 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 time round.

"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.

Despite the unity being shown back in May, there are few signs of that $2 trillion saving. 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.

It means that even if the savings were realized, much of it 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.

Healthcare executives say that their effort to produce the savings is real and ongoing. They say that they are continuing 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 have cited a 28-page letter, which they sent Obama in June, following up on their May announcement, that described steps they were advocating.

In this letter, drug makers proposed improvements in assuring patients follow doctors' orders on taking prescriptions. Also, 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, has 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, say there are no assurances the proposals will become reality, that the plans lack detail. This means that they 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, have said that 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 the value of 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.

So what has happened to the savings that were announced? Although industry groups say they're a work in progress, many health analysts say they're largely speculative.

21/09/2009

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