Healthcare Groups' Cost Reduction Efforts Won't Save Much Money

Janice Simmons, for HealthLeaders Media , June 17, 2009

Only a "subset" of the initiatives proposed by major healthcare groups—including the American Medical Association, the American Hospital Association, and America's Health Insurance Plans—could result in meaningful savings for Congressional Budget Office health reform cost estimates, CBO Director Douglas Elmendorf wrote yesterday in a letter.

In the CBO letter, sent in response to a query by House Ways and Means Committee ranking member Dave Camp (R-MI), it was noted that the industry leaders' attention to the goals and "agreement that significant savings can be obtained are no doubt welcome."

However, most of the proposals are for steps that do not require the federal government involvement or "are not specified at a level of detail that would enable the CBO to estimate budgetary saving," Elmendorf wrote.

In a proposal to the White House earlier this month, the groups estimated that upward of $1.8 trillion in healthcare costs could be saved over a 10-year period. However, Elmendorf said some of the initiatives would promote good medical practice—such as hand washing to prevent infections—but would occur to a large degree without federal intervention.

Several proposals, while "not specific enough for CBO to estimate their budgetary impact," are similar to approaches the CBO analyzed earlier. They include:

  • Reducing Medicare payments to hospitals with high admission rates (which CBO said could save $5 billion to $10 billion over the next 10 years).
  • Capping the amount of noneconomic and punitive damages awarded in malpractice claims (which could result in net federal savings of $5 billion in the next decade).

Sen. Charles Grassley (R-IA), the ranking minority member of the Senate Finance Committee, commented that "the headlines generated by the White House event a month ago don't get us much closer to affording health care reform today."

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

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