Obama Praises Industry Offer to Contain Health Costs

President Barack Obama on Monday portrayed the health care industry's promise to cut $2 trillion in costs over 10 years as "a watershed event" in the long search for a solution to the millions of uninsured.

Whether that is true won't be readily known as debate begins in Congress over sweeping health care legislation. What is known now is that the move puts the industry groups involved firmly inside the process of expanding coverage, with the hope they can steer the final product toward something that doesn't restrict their profitability.

President Barack Obama
President Barack Obama

"I will not rest until the dream of health care reform is achieved in the United States of America," Obama declared in the White House's State Dining Room as he announced the voluntary offer made to the White House Monday by a consortium of hospitals, insurance companies, drug makers and doctors.

They told Obama they would slow rate increases by 1.5 percentage points a year by improving coordination, focusing on efficiency and embracing better technology and regulatory reform.

Government economists say the shaved costs would create breathing room to help provide health insurance to an estimated 50 million Americans who now do not have it.

It's a substantial change from the time in the early 1990s when President Bill Clinton took on health care reform, only to see industry leaders fight back hard, ultimately killing the White House proposal before it could gain any traction.

Still, even Obama acknowledged that the step announced Monday would be meaningful into the future only if it is not a singular event, but part of a larger and successful effort toward universal health care coverage for Americans. He said the country "can, will and must" accomplish this goal by the end of the year.

"There's so much more to do," he said. "We can't continue down the same dangerous road we've been traveling for so many years," Obama said. "Reform is not a luxury that can be postponed, but a necessity that cannot wait."

He indirectly criticized some of the groups at his side for killing the effort last time.

"All too often, efforts at reform have fallen victim to special interest lobbying aimed at keeping things the way they are, to political point-scoring that sees health care not as a moral issue or an economic issue, but as a wedge issue, and to a failure on all sides to come together on behalf of the American people," the president said.

The push comes as the White House raised its forecast for the U.S. budget deficit for this year by $89 billion to $1.84 trillion. The higher estimate may add to challenges Obama faces in getting congressional approval for his agenda.

Obama invited several large trade groups, including the American Medical Association, America's Health Insurance Plans and the American Hospital Association, to discuss wringing savings from the health system.

The cost savings would be achieved through steps such as streamlining paperwork and changing the way hospitals deliver and bill for services to patients.

Obama aides said that with costs expected to rise dramatically as the U.S population ages, the slower growth rate would save $2 trillion over 10 years.

"We cannot continue down the same dangerous road we've been traveling for so many years, with costs that are out of control, because reform is not a luxury that can be postponed, but a necessity that cannot wait," Obama will say, according to excerpts provided to reporters.

"That is why these groups are voluntarily coming together to make an unprecedented commitment.

"Over the next ten years, from 2010 to 2019, they are pledging to cut the growth rate of national health care spending by 1.5 percentage points each year—an amount that's equal to over $2 trillion," Obama's advance text said.

Millions of Uninsured

Health and Human Services Secretary Kathleen Sebelius established an office of health reform at her agency Monday, mirroring an office already set up within the White House.

A statement said the new office would "advance legislation and take immediate actions to cut costs, assure quality and affordable health care for all Americans, and guarantee Americans can choose their doctor and their health plan."


Revamping the healthcare system and expanding coverage for an estimated 46 million uninsured Americans is a top domestic priority for Obama. He is pushing the Democratic-led Congress to pass a measure by year's end.

The industry and lawmakers broadly agree that the health system needs to be improved but big differences remain on how.

Obama's proposal would establish a new government health insurance plan to compete with private insurers. The administration says that would help cut costs by introducing competition and covering the uninsured.

Republicans and insurers oppose a government plan, arguing that it would undermine the private healthcare market.

Improving efficiency is one of the least controversial aspects of the Obama plan. The government would see savings if the efficiencies lower costs in the huge Medicare system, an existing program for older Americans.

The United States has one of the world's most expensive healthcare systems, despite the high number of uninsured. Studies show it lags other developed nations on indicators of healthcare quality, including life expectancy and infant mortality.

Employment/Jobs Slideshows From CNBC.com

The effort to paint healthcare reform as a money-saving initiative comes as critics label his hefty domestic agenda fiscally irresponsible. But Obama counters that high budget deficits are a legacy of President George W. Bush, a Republican.

Some ideas to be highlighted at Monday's White House event would require legislation. Lawmakers are already considering basing payments to doctors and hospitals on the quality of care given, not just the number of procedures and treatments.

Health-policy experts say big savings could be achieved by cutting down on unnecessary treatments.