Obama To Announce Major Health Care Overhaul Today

Watch the health care stocks today.

President Obama is set to address what is no doubt one of the most salient long-term issues facing the country, when he announces a grand, 10-year plan to reduce the rate of health care inflation. The President, who will make his remarks with various industry leaders would like to cut $1.5-$2 trillion over the next 10 years.

That sounds like a lot, but it’s not actually as big as it seems. It could be achieved by slowing the rate of growth by just 1.5% each year.

Unfortunately, even that sound pie-in-the-sky.


But there is no enforcement mechanism – other than the pressure that comes with making a commitment to the president in public – and the savings rely on Congress achieving Obama’s goal of a health overhaul this year, the officials said.

“These are sophisticated entities, and they would know better than to make a commitment that was not feasible,” a senior administration official said. “So I have every confidence that in doing this that they have analysed some of the specific steps they believe they could already take and other steps they would be more likely to take as part of overall health care reform to get a comfort level where this kind of reduction was achievable.”

The coalition includes the major interest groups with the potential to exert change on their respective industries: America’s Health Insurance Plans, the American Medical Association, the American Hospital Association, AdvaMed, Pharmaceutical Research and Manufacturers of America, and Service Employees International Union, which represents health care workers.

Dennis Rivera, chairman of SEIU Healthcare, spearheaded the effort in the last month or so, administration officials said, and they must continue to meet to draw up the full scope of potential savings.

Absent details, we can’t say this sounds particularly promising. “Pressure” is only going to get the industry so far. Cutting doesn’t need be about “enforcement mechanisms”, it should be about markets. You don’t need enforcement mechanism or pressure to see price cuts in the market for computers and technology year after year. It’s just the result of fierce market pressure.

But due to a whole lot of factors — high regulation, employer-based health insurance, to name a couple — competition is scant in the US healthcare system.

It’s also, frankly, a bad sign that the coalition includes so many entrenches players, from big phrama to the AMA and the unions. How can it be real and biting if all those interest and lobbying groups are on board? It can’t.

We’ll provide more details and coverage as the announcement is made.

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