How they'll save $2 trillion on health care

Industry groups promise to work with President Obama to cut costs, but consumer groups raise questions.

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By Parija B. Kavilanz, senior writer

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NEW YORK ( -- Advocating preventive care and streamlining administrative costs are among the steps being promised by the health care industry to help cut $2 trillion in health care expenses over the next decade.

A number of leading industry trade groups -- including those representing insurers, doctors, health care workers and drugmakers -- made that pledge to President Obama on Monday.

"What's brought us all together today is a recognition that we can't continue down the same dangerous road we've been traveling for so many years, that [health care] costs are out of control, and that reform is not a luxury that can be postponed, but a necessity that cannot wait," Obama said at a White House event with representatives of the trade groups.

"The groups who are here today represent different constituencies with different sets of interests," Obama said. "They've not always seen eye to eye with each other or with our government on what needs to be done to reform health care in this country. In fact, some of these groups were among the strongest critics of past plans for comprehensive reform."

But at least one consumer advocate said he was disappointed by the lack of details from the industry groups laying out exactly how they plan to contain rising health care expenses for consumers.

"To me it seems that the industry is saying they will cut health care costs by rationing care," said Greg Scandlen, founder of Consumers for Health Care Choices. "That could mean they will pay only for services that have proven to be effective."

"I think people can ration their own care and not spend on procedures that aren't worthwhile," Scandlen said. "Consumers don't need a government committee or insurers to make that decision for them."

But Paul Ginsburg, president of the Center for Studying Health System Change, took a more moderate view.

"Although I am troubled by the vagueness of the efforts, it is still very positive that these groups that are most affected are recognizing the importance of efforts to contain [health care] costs," Ginsburg said.

While consumers have legitimate concerns about what they won't get through any cost containment efforts, Ginsburg maintained that "consumers have to get on board."

"We have lots of wasteful expenditures in the system," Ginsburg said. "If we don't reduce it, it will increase chances of rationing,"

Industry effort: Among the industry groups, the Service Employees International Union (SEIU), which represents 110,000 nurses and 40,000 doctors, pledged to cut excess administrative costs.

"Cutting health care costs means improving the quality of care patients receive, putting money back into families' pockets and keeping businesses open on Main Street," SEIU health care chairman Dennis Rivera said in a statement.

"SEIU and its members are committed to creating a new American healthcare system by increasing efficiency of care without sacrificing quality of care, and creating a system of wellness, where we now have a system of illness," Rivera added. "We may not always agree, and haven't in the past, but we know that this is the moment and now is the time to fundamentally change the way we take care of American families and workers."

The pharmaceutical industry maintained that proper use of medicines can be one of the most effective ways to achieve better health outcomes and reduce costs.

The Pharmaceutical Research and Manufacturers of America (PhRMA) said in a statement Monday that non-adherence to prescribed medicines has been estimated to cost $100 billion to $300 billion annually, including costs from avoidable hospitalizations and nursing home admissions.

Addressing this issue is part of a quality-focused way to lower healthcare cost growth, the trade group said.

"The coalition also recognizes the importance of encouraging medical innovation as a key element in both improving patient health and reducing the growth of overall health costs," PhRMA president and CEO Billy Tauzin, said in a statement.

Doctors, device makers: For its part, the American Medical Association (AMA), said it has initiated a program to improve "medication reconciliation."

"Patients with multiple conditions often see several physicians," J. James Rohack, AMA president-elect, said in a statement Monday. "Every physician that comes in contact with a patient needs to be aware of all the drugs the patient takes to avoid drug interactions and eliminate unnecessary prescriptions."

"All Americans can help in the effort to keep health-care costs down," Rohack said. "The combination of large-scale national initiatives and efforts by individual patients to engage in prevention and wellness efforts is key to reducing spiraling health costs, preventing chronic disease and keeping America healthy."

The Advanced Medical Technology Association (AdvaMed), an industry association representing medical device manufacturers and medical software suppliers said it was "developing the specifics of how to best achieve the ambitious goals set today."

"Achieving these goals will not be easy, but we are committed to working with the other organizations represented in this group and with the Administration and Congress to better manage rising health care costs while enhancing health care quality," AdvaMed president and CEO Stephen Ubl, said in a statement.

Other groups participating in the initiative include America's Health Insurance Plans and the New York Hospital Association. To top of page

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