Senators Urge Obama to Set Target for Health Care Cost Savings
Washington, DC – As the Obama Administration continues working to implement the Affordable Care Act, U.S. Senators Sheldon Whitehouse (D-R.I.), Charles E. Schumer (D-NY), Chris Murphy (D-CT), and Tammy Baldwin (D-WI) today led a letter calling on President Obama to set a specific cost-savings target to help focus federal efforts and to give the general public a clearer sense of the savings potential.
The Senators write, “With so many voices in Washington calling for cuts to Medicare and Medicaid, cost savings through delivery system reforms are key to preserving and strengthening these programs without hurting the middle class. Without a specific target declared by the executive branch of government, advocates for such a strategy are left at sea in this debate.”
In addition to Whitehouse, Schumer, Murphy, and Baldwin, the letter was also signed by Senators Barbara Mikulski (D-MD), Dianne Feinstein (D-CA), Tim Johnson (D-SD), Mary Landrieu (D-LA), Debbie Stabenow (D-MI), Maria Cantwell (D-WA), Amy Klobuchar (D-MN), Sherrod Brown (D-OH), Jeanne Shaheen (D-NH), Mark Warner (D-VA), Mark Begich (D-AK), Richard Blumenthal (D-CT), Tim Kaine (D-VA), Angus King (I-ME), and Elizabeth Warren (D-MA).
The letter notes that a variety of studies have estimated that it is possible to save anywhere from $700 billion to $1 trillion per year in our health care system, without negatively affecting the quality of care. Since the federal government is responsible for 40 percent of our total health care spending through expenses in Medicare, Medicaid, and other programs, pursuing these savings could reduce our deficit by hundreds of billions of dollars over the next decade even if we only achieve a portion of what is possible – strengthening Medicare’s fiscal solvency without cutting benefits.
In addition to today’s letter, several Senators also gave a series of coordinated Senate floor speeches Tuesday night, which you can watch here.
Delivery system reforms – such as expanding the use of electronic medical records and taking steps to reduce medical errors – are the key to achieving these savings while also improving care for patients. Unfortunately, these potential savings cannot be “scored” by the Congressional Budget Office (CBO) because, as CBO Director Doug Elmendorf has explained, “Many of the specific changes that might ultimately prove most important cannot be foreseen today and could be developed only over time through experimentation and learning.”
As the Senators note in today’s letter, setting a cost-savings target could help address this problem. “We believe setting a cost-savings target would give us a number at least to talk about, if not ‘score,’” they write.
The full text of the letter is below.
August 1, 2013
Deputy Assistant to the President for Health Policy
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20050
Dear Ms. Lambrew:
We write to urge the Administration to identify and announce a cost-savings target for health care delivery system reform provisions that reduce federal health spending. Recently, several Members met to discuss ongoing projects and interests related to delivery system reform, and coordinate caucus efforts on these issues. There is agreement that leadership from President Obama in setting a cost-savings target would encourage rapid and purposeful implementation of delivery system reform and in doing so, expedite the path toward a more sustainable health care system.
Economists across the political spectrum agree that significant savings can be achieved in our health care system without negatively affecting the quality of care. The President’s Council of Economic Advisors estimated that over $700 billion a year can be saved without compromising health outcomes; the Institute of Medicine has put this number at $750 billion; the New England Healthcare Institute reported that it is $850 billion annually; and the Lewin Group and former Bush Treasury Secretary Paul O’Neill have estimated the annual savings at $1 trillion.
Whatever the exact savings number, a clear and specific presidential target will focus federal efforts in an accountable manner that calls to “bend the health care cost curve” will not. With so many voices in Washington calling for cuts to Medicare and Medicaid, cost savings through delivery system reforms are key to preserving and strengthening these programs without hurting the middle class. Without a specific target declared by the executive branch of government, advocates for such a strategy are left at sea in this debate.
An added challenge to proponents of delivery system reform is the difficulty in pinpointing “scorable” savings related to delivery system reform. We believe setting a cost-savings target would give us a number at least to talk about, if not “score.” As you know, these reforms are shifting our health care system toward new payment and care delivery models that prioritize value, quality, and patient-centered care. This type of systemic and cultural change is difficult, but it is the path to long-term and sustainable savings in our health care system.
Thank you for your consideration of this request. We look forward to future conversations about setting a cost-savings target, and are ready to work with the Administration on this effort.
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