Some worry healthcare reform won’t cut costs

Although still publicly beating the drums for President Obama’s healthcare overhaul, representatives of some of the biggest players are beginning to express concern behind the scenes that it won’t do enough about the major problem: runaway medical costs.

And, some say, the ballyhooed deals the White House recently struck with hospitals and drug makers to keep them at the negotiating table could make the problem worse.

From the left, labor leaders are scheduled to have a closed-door meeting with Obama today to push for more aggressive action to hold down costs.

“We are certainly for expansion of coverage. We think every American ought to have health insurance,” said Terry O’Sullivan, president of the Laborers’ International Union of North America, one of the most influential unions. “But if that doesn’t come with making sure there is real prevention, if we’re not talking about really controlling healthcare costs, this is going to be a train wreck.”

At the other end of the political spectrum, business groups are pressing the administration and its congressional allies to attack the cost issue more directly by changing the way hospitals, doctors and other providers are paid.

“Going into health reform, there was a lot of talk from the president on down that controlling costs had to be on a par with expanding coverage,” said Steve Wojcik, vice president for public policy at the National Business Group on Health. “The priority on controlling costs seems to have fallen by the wayside.”

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The biggest worry

Polls consistently show that Americans’ biggest healthcare worry is escalating medical bills and insurance premiums. Obama has repeatedly promised that his campaign to overhaul the system will bring relief.

But the debate in Washington has been dominated by how to raise hundreds of billions of dollars -- by tax increases, if necessary -- to ensure that almost everyone has medical insurance. That emphasis is stoking fears that a historic opportunity to reform the system may be missed.

The skyrocketing cost of healthcare is a large reason that so many major interest groups rallied behind the president’s effort.

Between 1999 and 2008, the average family with employer-provided health insurance saw its annual premium jump from about $1,500 to more than $3,300, according to data gathered by the nonprofit Kaiser Family Foundation and the Health Research & Educational Trust.

“Our No. 1 issue is to try to cap the rising cost of healthcare,” said Joe Hunt, head of the International Assn. of Bridge, Structural, Ornamental and Reinforcing Iron Workers. “Every time we get a raise for our members, it goes into the health insurance.”

For businesses, the rising costs have also been devastating, with the employer contribution to an average family premium more than doubling in the same period -- from nearly $4,250 a year to more than $9,300.

Sensitive to public anxiety, Obama rarely begins a discussion about healthcare without insisting that healthcare spending must be controlled, a message he repeated last week even while out of the country.

On Capitol Hill, senior Democrats have pledged to tackle the problem, which has sent the nation’s annual healthcare tab beyond $2.5 trillion and threatens to bankrupt Medicare in eight years.

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Promises of action

Mammoth legislation being debated in the House and Senate includes incentives to better coordinate care among hospitals and doctors, to cut costly hospital readmissions, and to evaluate what kinds of care yield the best results. There is also new money for prevention, which many experts say saves money in the long term.

But many of the proposals in the two healthcare bills released by Democrats are limited to pilot programs and research initiatives. (A third bill by the Senate Finance Committee is still being developed.)

House leaders envision new centers to analyze medical data. The Senate health panel has outlined plans for a “national strategy to improve healthcare quality.” But these institutions would have no authority to force changes.

Both bills would create a government insurance program that senior Democrats say could pressure providers to lower costs. What is missing, critics contend, are bolder initiatives in the existing Medicare and Medicaid programs to reward doctors and hospitals that become more efficient -- and cut federal payments to those that do not.

“There are enormous opportunities to save money,” said Ken Thorpe, an Emory University healthcare economist who has been advising Democratic lawmakers on the legislation. “What has been proposed is much too tepid.”

Even the recent agreement between hospitals and the administration to cut federal payments to hospitals by $155 billion over the next decade does little to change the way providers are paid, said Mark McClellan, who headed the Centers for Medicare & Medicaid Services under the Bush administration.

Nearly all these projected savings would come from cuts in federal reimbursements, which critics fear could prompt hospitals to simply charge private insurers more.

“We need to make it increasingly uncomfortable to deliver care that is inefficient,” said McClellan, who is helping to lead a bipartisan effort including former Senate majority leaders to push for reform.

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Political pressure

Part of the reason such measures are not being proposed is political. Pressing doctors to accept guidelines on the most beneficial and cost-effective way to treat patients, for instance, instead of leaving such decisions to individual doctors, could alienate the American Medical Assn.

And the president and his congressional allies are trying to maintain the support of a broad array of groups. But unless Democrats can show more commitment to reducing costs, the consensus that has sustained the Obama administration’s effort may begin to crack.

“Cost is where the middle ground is,” said Mark Blum, who helped lead liberal healthcare campaigns in Vermont and West Virginia and now directs America’s Agenda, a partnership between labor unions and businesses.

“There is a sense that we need to refocus,” Blum said.

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noam.levey@latimes.com