The $2 trillion savings plan

On May 11, leaders of organizations representing physicians, hospitals, insurers, drug manufacturers and other key health care stakeholders met with President Obama to announce a joint effort to enable health system reform.

They committed to do their part to help the administration achieve its goal of decreasing by 1.5% the annual health care spending growth rate -- with a goal of saving the system $2 trillion or more over the next decade. Government actuaries estimate that growth in national health expenditures -- private and public spending -- would average 6.2% per year over the next 10 years without any changes.

The meeting marked an unprecedented coming together of the groups that represent so much of how American health care is delivered, and that have the private-sector ability to make that ambitious savings goal a reality.

In a letter to the president, the American Medical Association, America's Health Insurance Plans, the American Hospital Assn., and the other organizations outlined what they see as the proper approaches to achieve and sustain reduced cost growth. The fundamentals driving those changes should be ones that improve the population's health; continuously enhance quality; encourage advancement of medical treatments, approaches and science; streamline administration; and promote efficient care delivery based on evidence and best practices.

With those goals in mind, the organizations proposed strategies such as encouraging coordinated care in the private and public sectors, and addressing cost drivers through common-sense improvements in health information technology, care delivery models, work-force deployment and development, and regulatory reforms.

This joint statement was a high-profile action at a contentious time, and in short order, it drew the predictable sniping.

It was dismissed as political, as a defensive move -- especially by health plans -- to forestall a public insurance option, and as lacking detail. Yet in 650 words -- slightly longer than this editorial -- the organizations were able to sketch out savings based on the future of a better, not just a more battered, health system. The groups are developing consensus proposals to accomplish the savings and will offer more specific cost-savings recommendations in the weeks ahead.

Even before those specifics are produced, the AMA is on record saying that empowering doctors to implement strategies to improve care and avoid unnecessary services is far more effective than across-the-board payment cuts to physicians and others.

It is important to note that, to quote a phrase used by the organizations (and one we're bound to hear more of), "bending the cost curve" is intended to reduce the rate of health spending growth -- not total spending levels -- and not by the traditional and shortsighted gambit of blunt cost-cutting. The groups are confident that none of their members, including physicians, would need to take major pay cuts to achieve the savings goal.

Moreover, the AMA and other organizations made it clear that they would continue to promote their own reform policy goals and pursue their other key priorities. For example, the AMA is still strongly advocating that Congress and the Obama administration repeal the flawed Medicare payment formula that threatens steep physician payment cuts starting next year.

The AMA-convened Physician Consortium for Performance Improvement continues to develop clinical measures to promote high-quality care, and this year it is working to address concerns about overutilization of services. Meanwhile, the AMA reiterated that defensive medicine remains a major factor in rising costs, and medical liability reforms are needed to help physicians give the best care without ordering additional services to guard against potential lawsuits.

All in all, what the stakeholders are proposing is big -- as befits a $2 trillion goal -- and yet even this is a prelude to more comprehensive health system reform. What Obama has made clear is that large-scale savings are essential to obtain that reform. The AMA and the organizations have put on the table a plan that makes that essential step possible.