Earlier this week, President Obama announced that American health providers had pledged to cut costs by 1.5% each of the next ten years as a means to stave off an economic crisis in the industry. Now Obama’s partners say that the President misstated their agreement, and that they pledged to eventually ramp up to a 1.5% annual savings rate over the next ten years:
The president of the American Hospital Association said Thursday that a deal with the White House to cut the growth in health care spending has been “spun way away from the original intent.”
President Barack Obama described the agreement this week with six major health care organizations as a “watershed event,” hailing what the White House said was their promise to reduce spending by 1.5 percentage points annually for a decade, which he said could save as much as $2 trillion over that span.
But in a conference call Thursday, President Richard Umbdenstock told 230 member organizations that the agreement had been misrepresented. The groups, he said, had agreed to gradually ramp up to the 1.5 percentage-point target over 10 years – not to reduce spending by that much in each of the 10 years.
“There has been a tremendous amount of confusion and frankly a lot of political spin,” Umbdenstock said on the call. “And I want to assure you that the American Hospital Association is at the table and a responsible part of this, but that we’ve been very clear on what we have committed to.”
The entire agreement had an air of unreality to it, anyway. What business doesn’t try to cut costs? Costs eat into profit, and shareholders demand efficiency. Even a 1.5% reduction in costs benefits businesses of all stripes, especially those with thin profit margins thanks to price-setting by the government and competitive pressures from insurance agreements.
The White House responded to this development by insisting that the groups remained “enthusiastic” about the agreement. Perhaps, but they’re apparently unclear as to what was agreed. They’re enthusiastically insisting that Obama misrepresented the pact. Either they did agree to what Obama stated, went back and looked at their books, and got a lot less enthusiastic — or Obama got it wrong and overpromised.
The more conspiratorial may believe that the overpromise was deliberate, setting up the AHA for failure so that Obama can impose his government-dictated system on the country while blaming the AHA. Before the campaign of intimidation against Chrysler senior creditors, I would have scoffed. Now, I’m not so sure.