Industry groups reiterate commitment to reduce health spending growth

The six industry groups that pledged to reduce health care spending growth by $2 trillion over 10 years on Friday issued a statement reaffirming their commitment to work toward the goal, Roll Call reports (Murray, Roll Call, 5/15).

The industry groups in a letter sent to President Obama on May 10 wrote, "We will do our part to achieve your administration's goal of decreasing by 1.5 percentage points the annual health care spending growth rate. ... This represents more than a 20% reduction in the projected rate of growth."

The letter -- which was signed by the American Medical Association, the American Hospital Association, Pharmaceutical Research and Manufacturers of America, the Advanced Medical Technology Association, America's Health Insurance Plans and the Service Employees International Union -- did not elaborate on what specific measures the groups would take to achieve such reductions (Kaiser Daily Health Policy Report, 5/12). Obama in a May 11 public announcement of the groups' pledge said the coalition's goal was to cut the growth rate by 1.5 percentage points "each year," which would total $2 trillion over 10 years (Norman, CQ HealthBeat, 5/15).

However, industry leaders who attended the meeting with Obama said that they did not promise specific year-by-year savings, but instead agreed to a more incremental approach (Kaiser Daily Health Policy Report, 5/15). Richard Umbdenstock, president of AHA, said, "There's been a lot of misunderstanding that has caused a lot of consternation among our members." AHA sent its members a bulletin stating that "the groups did not support reducing the rate of health spending by 1.5 percentage points annually," and that the pledge was to eventually reduce the growth rate by 1.5 percentage points (CQ HealthBeat, 5/15).

In response to media reports that said they were backing away from their pledge, the groups on Friday in a joint statement reiterated their vow. They wrote, "Our organizations are currently engaged in an intensive process to develop proposals to reduce the rate of increase in future health care costs" (Young, The Hill, 5/15). The statement also said, "We are committed to working together to bend the health care cost curve" and "to doing our part to make reform sustainable and to make the system more affordable and effective for patients and purchasers" (Budoff Brown, Politico, 5/18). It continued that "to be successful, we must take action in public-private partnership. We look forward to offering cost-savings recommendations in the weeks ahead." The Obama administration has requested specifics on the coalition's cost-cutting plans by June 1.

White House Office of Management and Budget Director Peter Orszag on Friday in a blog post wrote that it is "understandable" that the groups need to "ramp up" to the 1.5 percentage point reduction in spending. According to Orszag, "The groups have committed to significant reductions in the growth rate, thereby recognizing that substantial efficiencies can be captured in the health system. Some ramp-up time also does not materially affect the long-term impact from reducing the growth rate, on either national health expenditures or the federal budget" (CQ HealthBeat, 5/15). Orszag's blog posting is available online.