At a White House meeting Monday, President Barack Obama praised health industry groups for coming forward with the offer to cut costs. The president appeared with an array of industry figures, including union representatives, and called it the occasion "historic."
"I will not rest until the dream of health care reform is achieved in the United States of America," the president said, according to wire services.
Executives from the American Hospital Association, the American Medical Association and the Service Employees International Union, among others, planned to offer an annual reduction of 1.5 percent, or over $2 trillion in spending cuts over 10 years.. Early details of the proposal, which will be outlined in a letter to the president, were released to news organizations on Sunday.
Industry figures also pledged that they would voluntarily slow their rate increases over the next 10 years.
President Obama met with doctors, drug makers, and insurance companies at the White House event to talk about moving forward on legislation that would revamp the health care system. On Sunday, a White House official told news agencies that achieving the proposed "savings are crucially dependent on getting health care reform done this year."
In their letter, the industry leaders said a lot of money could be saved by focusing on greater obesity prevention, streamlining insurance forms, and switching from paper to electronic medical records, as well as other changes in administrative efficiency.
To provide coverage to the 46 million Americans who don't currently have health insurance, experts estimate it would cost at least $1 trillion. Some insurance companies and drug makers support the idea of universal health care because it could pave to way for them to add millions of new customers. The White House estimates that after 5 years of industry savings, health-care bills for a family of four would be about $2,500 lower a year.
However, possible government plans to create a "public" insurance plan as part of a health care overhaul has alarmed private insurers who say they simply could not compete on a level playing field and would lose too many customers to the government.
Providers are hoping that their voluntary reductions will mean they won't later have to submit to pricing constraints dictated by Congress or a federal board. There is, however, no legal way to ensure that the groups will keep their pledge, and only imprecise ways of measuring whether or not they are actually keeping their offer, the Washington Post reported.
Health care currently makes up about 16 percent of the economy, with industry spending currently expected to grow 6.2 percent a year if changes are not made.
The costs of health care reform have emerged as the most serious obstacle to the Obama administration's plan thus far. The estimated federal costs range from $1.2 trillion to $1.5 trillion over 10 years, and so far the president has only spelled out how to get about half of that.