Costs, health savings accounts - What the Pledge to Curb Health Costs Does (and Doesn't Mean)

Wall Street Journal Health Blog

By Jacob Goldstein

Several big health-care interest groups say they’re going to slow the rise in health costs over the next decade. Here are stories from this morning’s WSJ, Washington Post and New York Times.

Later today, several big players — including the American Medical Association, the Service Employees International Union, and the main trade groups from the drug, hospital, medical-device and health-insurance industries — are expected to meet with President Obama and pledge to slow the growth of health-care costs by 1.5 percentage points per year in each of the next 10 years.

The specifics seem pretty thin. The pledge includes perennial cost-control favorites such as “simplifying administrative costs, making hospitals more efficient, reducing hospitalizations, managing chronic illnesses more effectively and improving health-care information technology,” the WSJ says. All stuff that everybody agrees sounds good, but has been hard to put into practice.

What’s more, even if the health establishment slows the growth as promised, the cost of health care will continue to grow faster than the economy as a whole, rising to 18% of GDP by 2019, the WSJ says. (Health spending was 16.6% of GDP last year.)
Still, the fact that such a wide range of players with often conflicting interests (doctors and health insurers, for example) are speaking as a single group is pretty significant. It shows they all want to look like they’re on board with health reform, a top priority this year in Washington. That’s a big change from the last major health-reform push, in the early 1990s, which failed in part due to fierce industry opposition.

But keeping that broad-based support will become more difficult in the coming weeks and months, as the details of health-reform legislation emerge from Congress. Later today, in fact, the Senate Finance Committee is expected to release several possible options for a public insurance program that would compete with private insurers. That’s one of the most contentious elements of the health-reform plans, and one the insurance industry vigorously opposes.

Reece Comment

Three things are notably lacking and seldom mentioned in Obama administration proposals to reduce growth of health costs.

1) Low physician fees for Medicare and Medicaid patients care causing roughly 35% to 50% of doctors to reject new Medicare patients, just when 78 million Medicare recipients are about to come on line in 2011 and just when new Medicaid beneificiaries when unemployment is 8.9% and more are joining the Medicaid ranks.

2) New market-based innovations - $4 Wal-Mart prescriptions ( 1 of 2 Americans lives within 5 miles of a Walmart), 1000 to 2000 worksite clinics and retail clinics, and 3000 or so discounted care or cash-based practices not requiring 3rd premiums and accompanying overhead- are in or about to be operation and are lowering costs.


3) Health savings accounts within high deductible plans are the fastest growing segment of the health plan market and now have over 6 million members while traditional HMOs and PPOs are losing market share.

I discuss these and other developments in my upcoming book, Obama, Doctors, and Health Reform: A Doctor Accesses Odds for Obama Health Reform, scheduled for release in June.

Richard L. Reece. MD, 860-395-1501, rreece1500@aol.com