That Didn’t Take Long: Insurance Industry Breaks Promise to President Obama

Posted by Jason Rosenbaum, The Seminal at 8:55 AM on May 16, 2009.

Just four days after standing next to President Obama and declaring their commitment to control health care costs to the tune of $2 trillion over 10 years, the insurance industry, drug and medical device makers, and hospital groups are backing off their promise:

Hospitals and insurance companies said Thursday that President Obama had substantially overstated their promise earlier this week to reduce the growth of health spending.

Mr. Obama invited health industry leaders to the White House on Monday to trumpet their cost-control commitments. But three days later, confusion swirled in Washington as the companies’ trade associations raced to tamp down angst among members around the country.

…

Health care leaders who attended the meeting have a different interpretation. They say they agreed to slow health spending in a more gradual way and did not pledge specific year-by-year cuts.

“There’s been a lot of misunderstanding that has caused a lot of consternation among our members,” said Richard J. Umbdenstock, the president of the American Hospital Association. “I’ve spent the better part of the last three days trying to deal with it.”

First, these groups are showing their true, dishonest colors. AHIP, the main insurance industry lobby group, sent out this press release from their fake grassroots campaign after the announcement:

By reducing the rate of growth in health care spending by 1.5% each year, the nation can achieve a savings of $2 trillion over the next decade. This effort will have a direct effect on the budgets of individuals and families and will also go a long way in ensuring that every American have access to affordable, high-quality health care. Stay tuned for more information on this important initiative in the weeks and months ahead.

Sounds like they made a commitment, right? Well, that commitment is now pretty soft (emphasis on the softness added):

He and other health care executives said they had agreed to squeeze health spending so the annual rate of growth would eventually be 1.5 percentage points lower.

…

One of the lobbyists, Karen M. Ignagni, president of America’s Health Insurance Plans, said the savings would “ramp up” gradually as the growth of health spending slowed.

David H. Nexon, senior executive vice president of the Advanced Medical Technology Association, a trade group for makers of medical devices, said “there was no specific understanding” of when the lower growth rate would be achieved.

“It’s a target over a 10-year period,” Mr. Nexon said.

So we’ve gone from commitments to eventualities, targets, and non-specific understandings.

This just proves what the American people have known all along: You can’t trust the insurance industry with health care reform.

Why have these commitments gone soft? It’s about profits. Every dollar of health care “waste” in the system, every dollar that goes somewhere other than to your health, that’s a dollar more in the pockets of a rich hospital administrator or insurance industry CEO. For health care costs to come down, somebody’s profits have to come down as well.

Now, in a good reform plan, every player in the system would be squeezed a little bit to help alleviate the crushing cost on the patient. Doctors, hospitals, and other providers would charge a bit less for care and be paid based on quality, not quantity. Drug and medical device makers would be forced to sell their products at a discount in volume. And the insurance industry would trim overhead and profits to keep costs in line. Then, employers and government would pitch in to cover all individuals. It would be a system of shared responsibility.

Clearly, the insurance industry, hospitals, and drug makers aren’t interested in shared responsibility. They don’t want to be squeezed a bit. The want to protect their profits so much that they show their two-faced nature: Standing next to the President of the United States, promising responsibility, and then backpeddling as fast as they can four days later.

That’s why we need to make them do it. Voluntary agreements are not enough. We need regulation and we need real cost control, and that means a public health insurance option that will force these awful companies to earn their keep through stiff competition, something they’ve avoided for far too long.

They’re liars. They’re cheats. They’re greedy. They’re untrustworthy. They cannot be trusted to come up with a health care reform plan that works for you and me. We must make them do it.

Tagged as: insurance, barack obama, health care reform