WASHINGTON -- Nearly four weeks after President Obama met with health-industry officials touting a "watershed" cost-cutting agreement, the goal of slowing the sharp rise in medical-care spending is elusive as ever.
Appearing with executives of six industry groups on May 11, Obama announced what he called a "historic" and "unprecedented commitment" by the medical-care industry to "cut the rate of growth of national healthcare spending by 1.5 percentage points each year" that would yield $2 trillion in savings over 10 years.
The story got front-page play and nightly news coverage across the country. However, after American Hospital Association president Richard Umbdenstock returned to his office, he was besieged by calls from AHA members opposing such large cuts in spending. Days later, during a conference call with 230 members, he told them that the 1.5-percent-a-year savings touted by Obama was a gross exaggeration.
The agreement with the White House to slow the growth in healthcare costs had been "spun way away from the original intent," Umbdenstock told his members, according to an account on the Politico Web site and other reports. "There has been a tremendous amount of confusion and frankly a lot of political spin," he said.
"It's been spun -- or misunderstood -- that these six parties would save all $2 trillion. Not true. We can't do this. We don't represent the whole supply side of the equation, and we can't do it without the American public being involved on the demand side of the equation," he said.
Instead of 1.5 percent a year in cost savings for the next 10 years, the groups had agreed to cut expenditures by up to 1.5 percentage points over 10 years, not by that much each year. That meant that the healthcare groups had agreed to a much smaller reduction in future healthcare costs that would add up to only a small fraction of the president's imagined $2 trillion savings.
Annual healthcare spending is estimated to grow by an average of 6.2 percent a year over the next 10 years to $4.4 trillion by 2018, according to the Department of Health and Human Services.
Needless to say, reports of AHA's revision of what Obama announced did not get the same front-page coverage as the original announcement. A few newspapers ran stories (on the inside), and several blogs wrote about it.
The White House seemed unsure how to handle the contradiction in Obama's original story and Umbdenstock's charge that the agreement had been exaggerated beyond its original intent.
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