Industry Proposal Falls Short of Pledges on Cost Savings

In a recent meeting with President Obama, groups representing doctors, hospitals, insurance companies, pharmaceutical companies, and unions pledged to reduce health care spending by $2 trillion over 10 years.  Cost savings projected in their June 1, 2009 letter to the President range from $1 trillion to $1.7 trillion, falling short of their stated cost-cutting goal, and it is unclear from the document if the projected savings are on top of (net of) the cost to implement the proposed changes. Senator Grassley, ranking Republican on the Senate Finance Committee, has expressed skepticism that the industries’ proposal will actually result in $2 trillion in savings.  Their industry letter notes that some of the proposals could be done today under current law (and some are), but that others depend on public policy changes through health reform.  Unfortunately, the proposal contains few specifics on how federal policy reform could provide incentives and enforce accountability among insurers and health care providers for reforms and actual cost savings.