CEOs say health legislation could cut costs

/ Source: The Associated Press

The Democratic health care bills in Congress — if done right — have the potential to tame runaway medical inflation, a leading business group said Thursday in a report immediately hailed by President Barack Obama.

The Business Roundtable, which represents big company CEOs, said some of the changes being considered by Congress have the potential to reduce future health care cost increases, bringing medical inflation closer in line with overall economic growth. But the group also warned that other provisions in the bills could raise costs.

If current trends prevail, per-employee health care costs will triple by 2019, the report estimated. If the changes Congress is considering are carried out correctly, it could yield a savings of $3,000 per worker. A more aggressive approach — with hospitals and doctors paid for quality, not quantity — could save $5,000 per employee.

Obama greeted the analysis as welcome validation at a time when other business groups like the U.S. Chamber of Commerce and the National Federation of Independent Business have soured on the Democrats' health care bills and are mobilizing the opposition.

The report "underscores what experts and businesspeople have told us all along — comprehensive health insurance reform is one of the most important investments we can make in American competitiveness," the president said in a statement released by the White House.

But the head of the business group said the CEOs are not about to become a cheering section for the Democrats' approach on health care.

"It is not by any means an endorsement," said John Castellani, president of the organization. "In addition to the reforms that help reduce costs, there are also provisions being considered that have real and serious risks of increasing costs."

The Business Roundtable sees some features that it likes in the legislation, but opposes other parts of the Democratic bills. Instead of a seal of approval, the report was more like a nudge.

The group praised a series of proposals that would change how Medicare pays doctors and hospitals. One idea would tie part of a hospital's reimbursement to how well it measures up on national quality standards. Another calls for doctors to band together into "accountable care organizations" that coordinate the treatment of patients, particularly those with chronic illnesses. And, instead of paying doctors piecemeal for every service, another proposal would switch to "bundled" or lump sum payments.

The Roundtable also endorsed the creation of an independent commission to root out wasteful spending in Medicare.

Such changes, if also adopted by private employers and insurers, could have a dramatic effect on costs, the group said.

The report "is incredibly strong on how the legislation as written is likely to affect costs," said Christina Romer, chair of the White House Council of Economic Advisers.

But the CEOs also said parts of the legislation could defeat efforts to hold costs in line.

The report singled out the creation of a government insurance plan, a cherished goal for Democrats. Business groups fear the public plan would underpay hospitals and doctors, who'd then turn around and raise their fees for privately insured patients.

The executives also agreed with some insurance company complaints about the legislation. The Senate has scaled back penalties for people who try to avoid a new requirement to get health insurance. The report said that's a big problem, because it will encourage people to wait until they get sick to sign up for coverage.

Romer said lawmakers are working to address those concerns.