Health groups offer $2 trillion in cost savings

WASHINGTON — President Barack Obama's plan to provide medical insurance for all Americans took a big step toward becoming reality Sunday after leaders of the health-care industry offered $2 trillion in spending reductions over 10 years to help pay for the program.

Hospitals, insurance companies, drug makers and doctors planned to tell Obama today they'll voluntarily slow their rate increases in coming years in a move that government economists say would create breathing room to help provide health insurance to an estimated 50 million Americans who now go without it.

With this move, Obama picks up key private-sector allies that fought former President Bill Clinton's effort to overhaul health care. Although the offer from the industry groups doesn't resolve thorny details of a new health-care system, it does offer the prospect of freeing a large chunk of money to help pay for coverage. And it puts the private-sector groups in a good position to influence the bill Congress is writing.

Six major groups plan to deliver a letter to Obama and pledge to cut the growth rate for health care by 1.5 percentage points each year, senior administration officials said Sunday. They spoke on the condition of anonymity in order to sketch the offer before full details are revealed at a White House event scheduled for today.

Obama has offered an outline for overhauling the health-care system, and he wants Congress to work out the details and pass legislation this year. His plan would build on the current system in which employers, government and individuals share responsibility for paying the cost and care is delivered privately. The government would play a stronger role by subsidizing coverage for many more people and spelling out stronger consumer protections.

"We cannot continue down the same dangerous road we've been traveling for so many years, with costs that are out of control, because reform is not a luxury that can be postponed, but a necessity that cannot wait," Obama said in prepared remarks the White House released Sunday. "That is why these groups are voluntarily coming together to make an unprecedented commitment."

It's unclear whether the proposed savings will prove decisive in pushing a health-care overhaul through Congress. And, critically, the promised savings in private health-care costs would accrue to society as a whole, not just the federal government. That's a crucial distinction because specific federal savings are needed to help pay for the cost of expanding coverage.

Indeed, costs have emerged as the most serious obstacle to Obama's plan. The estimated federal costs range from $1.2 trillion to $1.5 trillion over 10 years, and so far Obama has only spelled out how to get about half of that.