Health Care

Today President Obama is going to have a press conference where he will announce that some pretty big names in the health insurance industry are promising to help with health care reform. Evidently these folks are saying they can help get up to $2 trillion dollars in savings in healthcare over the next decade. While several liberal and progressive voices have come out in measured support for the move Ezra Klein has a post up that I think gets at the heart of the pitfalls inherent in President Obama making a big deal out of this announcement.

Which gets to my skepticism: This is one of those moments when new words are being used to drown out ongoing actions. A major source of potential savings, at least in the administration's estimation, will come from comparative effectiveness review. But the pharmaceutical industry and the device industry -- both of which are represented here -- fought violently against CER when the Obama administration sought to include it in the stimulus. By the end, they had managed to win legislative language stating that comparative effectiveness studies wouldn't include cost-effectiveness and wouldn't be used to make coverage decisions. Another source of potential savings is the public plan, which can marry best practices with federal bargaining power to push down costs. The insurance industry has gone to war against this provision.

What we have, in other words, are promises of future cost containment that exist alongside concrete and continued opposition to the cost containment ideas that are actually on the table. And for good reason. A 1.5 percentage point decrease in health spending is a 1.5 percentage point decrease in medical industry profits. This commitment doesn't contain any examples of concessions that will reduce a participant's revenue streams. Conversely, every time legislators have proposed a reform that will actually cut industry profits -- and thus cut health spending -- the industry has howled in pain and anger. It's hard to sync that with promises to cut spending by $2 trillion over the next 10 years by implementing a set of unspecified reforms.

Indeed, the straight read of today's transaction is rather different. The White House gets messaging help. The health care industry secures, as Karen Tumulty says, "a seat at the negotiating table." The question is what they'll do with it.

The big test is not today. It's a month from now. In June, the Finance Committee will release the first version of its health reform bill. If the bill is what we expect -- something along the lines of Baucus's white paper, or Hillary Clinton's campaign proposal -- and these industry groups not only endorse it but explain how they will save money within its confines, that will be something to celebrate. If they use the credibility they've attained today to unleash a more vicious assault tomorrow -- if they grimly say that they proved their willingness to work with the administration but this legislation and its public plan and its insistence on evidence and its payment reforms sadly proves the administration's unwillingness to work with them -- then that will be a rather less cheery outcome.

All in all I can see how this is a positive development but just like Ezra Klein I am far from being impressed just yet.