UnitedHealth shares ideas for saving $540 billion

  • Article by: KEVIN DIAZ , Star Tribune
  • Updated: May 27, 2009 - 9:44 PM

The Minnesota-based insurer's proposals come as the health care industry aims to pare $2 trillion in costs over 10 years.

WASHINGTON - The federal government could save $540 billion in health care costs over the next decade through an assortment of "real- world" recommendations proposed Wednesday by Minnetonka-based UnitedHealth Group Inc.

The savings prescriptions from UnitedHealth's new Center for Health Reform and Modernization represent the company's first foray into the discussion of President Obama's proposed health care overhaul.

"We are issuing [the recommendations] as a constructive contribution to the debate on how national health reform can proceed," said Simon Stevens, UnitedHealth executive vice president and former national health policy director in Britain. He's now the point man on health policy for the Minnesota insurance giant.

The savings proposal comes as the health care industry promises to cut $2 trillion in costs over 10 years, an effort that would help Obama reach his goal of extending coverage to some 50 million uninsured Americans.

Some critics see the industry effort as a way to head off the administration's plans for a new government insurance program that would compete with private insurers to cover middle-income Americans. Single-payer advocates, who crashed Stevens' briefing for Washington reporters, also see the private initiative as a diversion from their goal of a universal, government-funded insurance plan.

"Unfortunately, it would put your company out of business," said Russell Mokhiber, an activist with Single Payer Action who confronted Stevens Wednesday in UnitedHealth's Washington office.

Replied Stevens: "Our view is that there should be universal coverage, and that's why we've supported a range of changes to the U.S. health care system, to get that universal health care coverage for everybody."

Stevens argued that the savings proposed by UnitedHealth could go much of the way toward offsetting the cost of the administration's proposed health care expansion, which has been estimated to be as much as $1.5 trillion over the decade.

Savings questioned

UnitedHealth's report, being shared with congressional and administration officials, focuses on shedding administrative costs, coordinating care, and creating new efficiency and quality incentives for doctors and hospitals.

"The way in which we are helping unleash these savings is not by attempting to squeeze the reimbursements of hospitals or the pay of doctors," Stevens said. "This is about improving the appropriateness of care that is delivered across the health care system."

More than half of the potential savings identified in the report would come from reducing hospital visits by the elderly by providing more attentive care through nurse practitioners, follow-up visits, improving patient education, and preventive care.

Anticipating that some would see their measures as rationing, UnitedHealth officials have tried to make the case that much of the current health care system remains fragmented and unorganized, and could benefit by cutting back on unnecessary care.

As the nation's top Medicare health plan and one of the industry's leading insurers, covering more than 70 million people, UnitedHealth racked up more than $4.4 million in federal lobbying expenses last year, according to the Center for Responsive Politics.

But it is unclear how much weight its report will have on Capitol Hill, where lawmakers are looking for quantifiable savings that some say cannot be substantiated in the UnitedHealth documents.

"It's positive, it's constructive, it makes sense, but there's nothing that's really measurable or verifiable up front," said Robert Laszewski, a former insurance executive turned consultant. Laszewski, a longtime industry analyst, said many of the company's proposals are based on practices that have already been put in place by UnitedHealth or its competitors.

Meanwhile, health care costs continue to increase at an overall industry average of 6 to 8 percent. If UnitedHealth's practices are saving money, Laszewski said, "their customers would like to see some of the savings."

Stevens said some of UnitedHealth's large national employer groups have seen lower health care cost increases. There would be more cost savings, he said, if some of the company's techniques were standardized in laws and regulations.

"What we know is there is a huge variation in cost and quality across the health care system," he said. "These are some of the practical techniques that help us get a grip on that."

Kevin Diaz • 202-408-2753

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