Video: Obama: Health costs 'out of control'

updated 5/11/2009 3:29:44 PM ET 2009-05-11T19:29:44

President Barack Obama on Monday welcomed the health care industry's promise to cut $2 trillion in costs over 10 years and vowed to keep working tirelessly to find a solution to the problem of uninsured Americans.

Hospitals, insurance companies, drug makers and doctors told Obama in a letter that they will voluntarily slow their rate increases in coming years in a move that government economists say would create breathing room to help provide health insurance to an estimated 50 million Americans who now go without it.

Although the offer from the industry groups doesn't resolve thorny details of a new health care system, it does offer the prospect of freeing a large chunk of money to help pay for coverage. And it puts the private-sector groups in a good position to influence the bill Congress is writing.

Breaking new ground
The move by the health care industry marks a substantial change from the time in the early 1990s when President Bill Clinton took on health care reform, only to see industry leaders fight back hard, ultimately killing the White House proposal before it could gain any traction.

"I will not rest until the dream of health care reform is achieved in the United States of America," Obama declared in the White House's State Dining Room as he announced the voluntary offer.

Unlike other industrialized countries, the United States does not have a national health care system that covers all citizens, and health care reform is one of Obama's top priorities. The president has insisted the reforms will happen even as the government pursues massive spending to stimulate the economy.

Obama has offered an outline for overhauling the health care system, and he wants Congress to work out the details and pass legislation this year.

Obama's plan would build on the current system in which employers, government and individuals share responsibility for paying the cost and care is delivered privately. But he wants to change the rules so the sick can't be denied insurance. And he wants to provide taxpayer subsidies to help low-wage workers and even some in the middle class afford their premiums.

As the economy has gotten worse and unemployment continues to rise, the matter has gained urgency as more people who used to get insurance from their employers find themselves without coverage.

Freeing money for coverage
Obama acknowledged that the step announced Monday by industry leaders would be meaningful into the future only if it is not a singular event, but part of a larger and successful effort toward universal health care coverage for Americans. He said the country "can, will and must" accomplish this goal by the end of the year.

"There's so much more to do," he said.

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"We can't continue down the same dangerous road we've been traveling for so many years," Obama said. "Reform is not a luxury that can be postponed, but a necessity that cannot wait."

Health industry leaders told Obama they would slow rate increases by 1.5 percentage points a year by improving coordination, focusing on efficiency and embracing better technology and regulatory reform.

By joining Obama, providers are acknowledging at least some responsibility for a bloated and dysfunctional system that economists say is unaffordable.

The groups don't just have the national interest in mind. Industry is worried that Congress will create a government health plan to compete with private insurers. Such a plan would quickly become the biggest in the country and could use its power to set lower payment rates, driving costs down on the backs of medical providers.

Costs have emerged as the most serious obstacle to Obama's plan. The estimated federal costs range from $1.2 trillion to $1.5 trillion over 10 years, and so far Obama has only spelled out how to get about half of that.

Obama's budget proposal includes a down payment that may cover less than half the bill.

"No matter how great this might sound, the reality is the administration still does not know how to pay for its massive health care plan," said Antonia Ferrier, press secretary for House Republican Leader John Boehner of Ohio.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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