White House Announcement of Health Care Pact Questioned

Published July 1, 2009

The White House and its allies cheered when President Barack Obama announced six health care groups had pledged to reduce the growth of health spending by 1.5 percentage points a year for the next 10 years. The president called it a “watershed event,” saying the plan could save as much as $2 trillion over a decade.

But when the organizations’ members heard about the May 11 announcement, the story became far less simple.

“There’s been a lot of misunderstanding that has caused … consternation among our members,” said Richard J. Umbdenstock, president of the American Hospital Association.

‘Confusion and Political Spin’

“There has been a tremendous amount of confusion and frankly a lot of political spin,” Umbdenstock said on a conference call with the 230-member organization three days after the announcement.

Richard J. Pollack, executive vice president of the hospital association, said, “The AHA did not commit to support the ‘Obama health plan’ or budget. No such reform plan exists at this time.”

Moreover, Pollack said, “The groups did not support reducing the rate of health spending by 1.5 percentage points annually.”

Other health care leaders who attended the meeting said they agreed to slow health spending in a more gradual way and did not pledge specific year-by-year cuts.

Comedy of Errors

Karen M. Ignagni, president of America’s Health Insurance Plans, told reporters the savings would “ramp up” gradually as the growth of health spending slowed. David H. Nexon, senior executive vice president of the Advanced Medical Technology Association, said “there was no specific understanding” of when the lower growth rate would be achieved.

Even the president’s own health care czar got caught in the fray. According to The New York Times, “Nancy-Ann DeParle, director of the White House Office of Health Reform, said ‘the president misspoke’ on Monday and again on Wednesday when he described the industry’s commitment in similar terms.”


“After providing that account, DeParle called back about an hour later on Thursday and said: ‘I don’t think the president misspoke. His remarks correctly and accurately described the industry’s commitment,'” the Times reported.

Outrage from Members

This was bound to happen. The lobbyists and Washington representatives who wanted to make sure they had a seat at the table have been getting ahead of their members. Their phone and email lines must have been absolutely burning up. This is one table many other member organizations are now relieved they were not around.

Those at the 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.

They all signed a letter that said, “As restructuring takes hold and the population’s health improves over the coming decade, 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—saving $2 trillion or more.”

Lacking in Details

Is that ambiguous? You tell me. The tools the groups said they would be using were straight out of the president’s playbook: administrative simplification, coordinated care, evidence-based medicine, use of health information technology, etc. The Congressional Budget Office and most policy experts say these will save little, if any, money.

No one at the White House event or in a subsequent briefing with reporters by HHS Secretary Kathleen Sebelius was able to offer details.

The meeting actually was a watershed of sorts: It is quite clear the health care terrain shifted from a focus on universal coverage to getting health care costs under control.

The White House is obsessed with finding the money to pay for its health care reform plan. It is estimated to cost upwards of $1.5 trillion to $1.7 trillion over 10 years. At least half of the $634 billion the president has identified has gone up in smoke. Reducing the incentive for charitable deductions and home ownership, as he had proposed, is particularly unpopular in the current economic climate, so the White House is desperately looking for more money to fill the gap.

They are still looking.

Grace-Marie Turner ([email protected]) is president of the Galen Institute.