Industry reps offer $2 trillion in health savings

updated 5:07 p.m. ET May 10, 2009

WASHINGTON - Top representatives of the health care industry plan to offer $2 trillion in cost reductions over 10 years in a bid to help pass President Barack Obama's health overhaul, a source familiar with the negotiations said Sunday.

Industry officials representing health insurers, hospitals, doctors, drug makers and a major labor union plan to be at White House on Monday to present the offer.

Costs have emerged as the biggest obstacle to Obama's ambitious plan to provide health insurance for everybody. The upfront tab for the federal government from Obama's proposed expansion of health coverage will be due right away while the savings he expects from wringing waste and inefficiency from the health care system will take longer to show up.

A source outside the administration told The Associated Press that the savings would come from slowing projected cost increases by a small percentage each year for 10 years. The result over time would be an estimated $2 trillion in savings on health care costs. The source requested anonymity in order to speak before the public announcement.

Trying to strike a deal
In a rare move before the administration has unveiled all the details of its proposal, the industry groups are trying to strike a deal now with Obama officials to help get coverage for all Americans in the hopes they can stave off legislation that would restrict their profitability in future years. Obama has courted industry and provider groups; he invited representatives to a health care summit discussion at the White House. There is a sense among some of the groups that this may be the best opportunity to strike a deal before public opinion turns against them, fueled by anger over costs.

Insurers, for example, want to avoid creation of a government health plan that would directly compete with them to enroll middle-class workers and their families. Drug makers worry that in the future, new medications might have to pass a cost-benefit test before they can win approval. And hospitals and doctors are concerned the government could dictate what they get paid to care for any patient, not only the elderly and the poor.

It's unclear whether the proposed savings will prove decisive in pushing a health care overhaul through Congress this summer, as Democratic leaders have vowed to do. Covering the estimated 50 million uninsured Americans could cost from $1.2 trillion to $1.5 trillion over 10 years. To pay for that, lawmakers would have to identify specific savings in government programs like Medicare, or come up with new revenues.

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