Are industry's promises to cut $2T smoke and mirrors?

Yesterday, several top interest groups in the healthcare world came together to announce that they were prepared to take steps to cut healthcare cost growth significantly over the next decade, saving about $2 trillion over existing cost projections.

Bear in mind that at best, they weren't proposing to stop healthcare cost growth by any means; after all, they wouldn't do anything that would eat into their profits significantly. Still, President Obama made a jubilant public statement yesterday, calling their announcement "a historic day, a watershed event."

A day later, however, critics are pointing out that a) the big players making the announcement could easily take back what they said later and b) that they'd been so vague that it's hard to tell whether they had a real plan in place or not. 

One critic, health policy and management professor Alan Sager of Boston University, went so far as to call the plan "an unrivaled set of abstractions and posturing." And a former director of the Congressional Budget Office, Robert Reischauer, argues that it would be pretty hard to generate the promised 1.5 percentage points of savings per year from the proposals as outlined.

While such cost-cutting may be possible, it's more likely to happen if the industry takes more aggressive steps than those outlined in its proposal. And that isn't likely, cynics say. Princeton University health economist Uwe Reinhardt, who was central to the health reform effort 15 years ago, predicts that when specific cost-control proposals come up in Congress, these groups "[will be] right at the witness table arguing against it."

To learn more about this debate:
- read this piece in The Washington Post

Related Article:
Healthcare players offer plan to cut costs by $2 trillion