Where’s the Beef?

Published in National Review Online: The Corner, May 11, 2009

President Obama says that today’s commitment by six health-sector groups to help contain health costs shows he is on track to achieve his (highly elusive) goal of saving “the average American family $2,500.”

The group’s pledge to reduce the growth in health spending by 1.5% is interesting because it puts the focus more on costs than on achieving universal access to health insurance.

But the announcement offers little that’s new in terms of policy ideas or options to achieve either objective.

The players at the table during today’s White House meeting included the heads of five major health-industry associations representing doctors, hospitals, health insurers, medical device makers, and pharmaceutical companies — plus one labor union.

But in their letter to the president, the tools they said they would be using aren’t new, and the Congressional Budget Office has said they will save little if any money: administrative simplification, coordinated care, evidence-based medicine, and use of health-information technology, etc.

So, where’s the beef? No one at the White House event or in a subsequent briefing with reporters by Sec. Kathleen Sebelius was able to offer details.

In addition to the difficulty of showing cost savings from these measures, it’s not at all clear how these groups will be able to work together to achieve the goal of a 1.5% reduction in the rate of health spending increases over the next ten years.  

Bloggers already are asking why tens of thousands of companies and hundreds of thousands of providers in the health sector wouldn’t already be doing that.

In fact, the private sector is doing a great deal to get health costs under control — such as Wal-Mart’s $4 prescription drug program, access to lower-cost care through MinuteClinics and TelaDoc, and innovative health-benefit design by thousands of companies that are working to get health-insurance costs under control.

But until now, no politician was trying to take credit for these innovations.

A more tangible and believable solution was announced last week by General Electric, saying that it will “spend $3 billion over the next six years on healthcare innovation that will help deliver better care to more people at lower cost” and will commit “$2 billion of financing and $1 billion in related GE technology and content to drive healthcare information technology and health in rural and underserved areas.”

Further, it said that by 2015, it will reach quantifiable measures of reducing by 15 percent (not 1.5 percent) the cost of procedures using GE technologies, will increase by 15 percent (not 1.5 percent) people’s access to these technologies, and improve quality and efficiency by 15 percent (you get the picture).

That is quantifiable and believable.

And what contribution, dare we ask, is the Service Employees International Union, also at today’s meeting, going to make to do its part in reducing health costs?  Negotiating for fewer benefits or lower wages for its members, do you think?

The White House event was a great photo opportunity and may have made a lot of people happy that they had a seat at the table.

Perhaps the best outcome of today’s P.R. show will be if politicians start to take credit for what the private sector is doing and give it new tools to employ competition and market forces to lower costs, broaden access, and increase efficiency in the health sector.

— Grace-Marie Turner is president of the Galen Institute.

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Published in National Review Online: The Corner, May 11, 2009

President Obama says that today’s commitment by six health-sector groups to help contain health costs shows he is on track to achieve his (highly elusive) goal of saving “the average American family $2,500.”

The group’s pledge to reduce the growth in health spending by 1.5% is interesting because it puts the focus more on costs than on achieving universal access to health insurance.

But the announcement offers little that’s new in terms of policy ideas or options to achieve either objective.

The players at the table during today’s White House meeting included the heads of five major health-industry associations representing doctors, hospitals, health insurers, medical device makers, and pharmaceutical companies — plus one labor union.

But in their letter to the president, the tools they said they would be using aren’t new, and the Congressional Budget Office has said they will save little if any money: administrative simplification, coordinated care, evidence-based medicine, and use of health-information technology, etc.

So, where’s the beef? No one at the White House event or in a subsequent briefing with reporters by Sec. Kathleen Sebelius was able to offer details.

In addition to the difficulty of showing cost savings from these measures, it’s not at all clear how these groups will be able to work together to achieve the goal of a 1.5% reduction in the rate of health spending increases over the next ten years.  

Bloggers already are asking why tens of thousands of companies and hundreds of thousands of providers in the health sector wouldn’t already be doing that.

In fact, the private sector is doing a great deal to get health costs under control — such as Wal-Mart’s $4 prescription drug program, access to lower-cost care through MinuteClinics and TelaDoc, and innovative health-benefit design by thousands of companies that are working to get health-insurance costs under control.

But until now, no politician was trying to take credit for these innovations.

A more tangible and believable solution was announced last week by General Electric, saying that it will “spend $3 billion over the next six years on healthcare innovation that will help deliver better care to more people at lower cost” and will commit “$2 billion of financing and $1 billion in related GE technology and content to drive healthcare information technology and health in rural and underserved areas.”

Further, it said that by 2015, it will reach quantifiable measures of reducing by 15 percent (not 1.5 percent) the cost of procedures using GE technologies, will increase by 15 percent (not 1.5 percent) people’s access to these technologies, and improve quality and efficiency by 15 percent (you get the picture).

That is quantifiable and believable.

And what contribution, dare we ask, is the Service Employees International Union, also at today’s meeting, going to make to do its part in reducing health costs?  Negotiating for fewer benefits or lower wages for its members, do you think?

The White House event was a great photo opportunity and may have made a lot of people happy that they had a seat at the table.

Perhaps the best outcome of today’s P.R. show will be if politicians start to take credit for what the private sector is doing and give it new tools to employ competition and market forces to lower costs, broaden access, and increase efficiency in the health sector.

— Grace-Marie Turner is president of the Galen Institute.

SHARE THIS ARTICLE

About the author