The Health Care Letter

So there’s been some buzz about this letter signed by various health care industry luminaries (PhRMA, AdvaMed, AHIP, AHA, AMA, and SEIU) agreeing that health savings of $2 trillion can be realized, and that said signers are on board for helping the Administration achieve this goal. Reactions have run the gamut: supportive, enthused, cautious, and “at least they agree savings are possible without compromising patient care.” One other reaction has been that it’s aimed at forcing the CBO to score health reform legislation in such a manner that cost savings associated with preventative measures,  administrative efficiencies, etc. are included in the total cost of the bill. My view is a little different.

Since the principles agreed upon are pretty vague at this point, it’s difficult to tell what exactly this coalition has come out supporting. Here’s Robert Pear’s summary:

Signers of the letter said that large amounts could be saved by aggressive efforts to prevent obesity, coordinate care, manage chronic illnesses and curtail unnecessary tests and procedures; by standardizing insurance claim forms; and by increasing the use of information technology, like electronic medical records.

You’ll notice there is no mention of a public plan, comparative effectiveness, community rating, or a whole host of other proposals that really rankle a lot of industry groups. Since I really haven’t seen any prior evidence that trade groups will willingly come forth and support proposals that will directly shave their bottom line, my guess is these groups will use this letter to argue that we can gain significant health savings (which just so happen to match Obama’s campaign promise) without implementing any of the more contentious cost saving mechanisms. I think ultimately this letter will prove useful to reform advocates, but I’d be careful about expecting too much without seeing detailed agreements on specific proposals.


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