Industry Groups Craft Trillion-Dollar Savings Plan

NewsTrends

President Obama wants to curb the annual healthcare spending rate. AdvaMed and five other groups say they have some answers that may save more than $1 trillion.

In May, the president announced an alliance with health industry organizations to help him reach his goal of reducing the annual healthcare spending growth rate by 1.5 percentage points. The groups promised to present some big ideas for cutting costs.
“We are at a pivotal moment in the health reform effort,” said AdvaMed president Stephen J. Ubl after the partnership was announced. “The meeting that occurred and the cross-industry consensus it represents are an important step toward making comprehensive health reform a reality.”
By June, the consensus group had outlined ways to save up to $1.7 trillion over the next decade—a figure that is close to the president's goal of $2 trillion. In a follow-up letter to President Obama, the group highlighted four areas in which the ballooning cost of healthcare may be contained:
•Use healthcare tools more efficiently and provide clinicians and caregivers with tools to improve quality and safety.•Create methods to reduce costs and benefit all stakeholders in the healthcare system.•Streamline the claims processing system to reduce time and resources spent on paperwork.•Better manage chronic disease, which accounts for 75% of overall healthcare spending.
The other organizations working with AdvaMed on this project are the American Medical Association, America's Health Insurance Plans, Pharmaceutical Research and Manufacturers of America, American Hospital Association, and Service Employees International Union. That these disparate organizations are coming together is a good start, says Martyn Howgill, executive director of the Institute for Health Technology Studies (InHealth).
“The current system reflects the prevailing balance of self-interest amongst all the parties. To change the balance will require agreement, cooperation, and consensus among groups that perhaps in the past have not necessarily worked together,” Howgill says.
In the reform proposal, AdvaMed also supports a “substantially expanded” comparative effectiveness system. A criticism of the current model is that it only looks at clinical outcomes as the basis of effectiveness.
“[Medical interventions] produce great value for people who may live longer, get back to work sooner, or avoid some disability down the road,” Howgill says. “I don't know that there are plans to measure these values.”
He also stresses that the key relationship is between the physician and the patient, and that each of those relationships is different. “Whatever we do should not attempt to regulate or interfere with the individual physician's judgment and the patient's judgment,” Howgill says.
The consensus group's plan was met with some doubt on Capitol Hill. “I'm skeptical that these proposals will add up to anywhere near $2 trillion,” Senator Chuck Grassley (R–IA) told the Associated Press. “In the legislative process, proposals rise or fall based on what the Congressional Budget Office says about them, and the same will be true here.”
It remains to be seen whether the executive branch shares Grassley's skepticism. The White House is currently reviewing the group's proposals.
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