Healthcare Groups Propose Plan to White House to Hold Cost Increases to $2 Trillion in the Next Decade

Janice Simmons, for HealthLeaders Media , May 11, 2009

Several major healthcare groups are expected to pledge today to the White House that they will work to reduce cost increases by 1.5% in each year of the next decade—an amount totalling about $2 trillion.

The move by the groups—including the American Hospital Association, the American Medical Association, America's Health Insurance Plans, the Service Employees International Union, the Pharmaceutical Research and Manufacturers of America, the California Hospital Association, and the Greater New York Hospital Association—appears to signal that provider groups are willing to participate in healthcare reform efforts.

Opposition by many key provider groups during the first Clinton administration in the 1990s essentially had stalled any movement in overhauling the healthcare system.

The pledge, in the form of a signed letter that is to be released later today, is not aimed at slicing healthcare spending overall. Instead, it appears to examine curbing the current rate of growth.

The United States now spends more than $2 trillion annually on healthcare—or about 16% of gross domestic product. With healthcare costs currently projected to grow about 7% annually, a decrease of 1.5 percentage points could save an average family about $2,500 a year five years from now, compared with other costs at the higher growth rate, administration officials predicted this past weekend.

The health providers, in their letter, said the reductions would come through simplifying administrative costs, making hospitals more efficient, reducing hospitalizations, managing chronic illnesses more productively, and expanding healthcare information technology.

Also today, the Senate Finance Committee is expected to release its recommendations on expanding healthcare coverage, which include discussions of a public insurance plan. The panel held a three-hour roundtable on the topic May 5. On Tuesday, members of that committee will hold their third and final roundtable on how to pay for the healthcare plan.

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at

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