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US health industry outlines cost saving plans

Published on 03/06/09 at 08:15am

The US healthcare industry has said how it contribute to President Obama's drive to cut healthcare costs, and help save $2 trillion across the sector over the next decade.

A group representing the pharma industry, doctors, private insurers and hospitals, has written a letter to the Whitehouse pledging its support to the President's plans.

It said: "We are committed to doing our part to make the system more affordable and effective for the nation," and working to "make reform a reality."

The US currently spends $2.2 trillion a year on medical care, which amounts to 16% of the overall economy, although nearly 50 million people have no medical insurance.

Obama made public health a key part of his election campaign and pledged to make quality and affordable care available to everyone in the US. He wants Congress to bring about a health industry overhaul by the end of the year.

The first response from industry stakeholders came a month ago in a promise to help make system-wide cost reductions, and cut spending increases by 1.5% a year until 2019.

Now the group has more detail on how it expects to achieve it:

• In the area of utilisation of care, the group has estimated savings of $150 - $180 billion. It said giving clinicians and providers the tools to ensure patients receive the right care at the right time in the right setting could fulfil this.

• On chronic care, it said they could save $350 - $850 billion, by identifying significant opportunities to better manage chronic disease, which accounts for 75% of overall health care spending. The group is also looking at more effective approaches to health promotion and disease prevention, with a special focus on obesity.

• On the cost of administration and doing business, it could make savings of $500 - $700 billion, by finding new approaches to cut the cost of services and streamlining the claims processing system to allow clinicians and other personnel to spend less time on paperwork.

The group is made up of the representative body for the US pharmaceutical research and biotech companies PhRMA, the American Medical Association, the Advanced Medical Technology Association, America's Health Insurance Plans, the American Hospital Association and the Service Employees International Union.

They said some of the proposed savings could be achieved under current law, but others will depend on "good public policy".

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