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Yes, The Industry Is Backtracking. Don't Be Discouraged.

Jonathan Oberlander, one of the nation's leading experts on health care policy, is a professor at the University of North Carolina at Chapel Hill and author of The Political Life of Medicare. He is an occasional contributor to The Treatment.

That didn’t take long. The new voluntary effort by the health care industry to control costs lasted only three days before the industry retreated, saying that the Obama administration had misstated (and exaggerated) hospitals’ and other stakeholders’ promise to help cut spending.

Maybe there was miscommunication between the White House and industry representatives. Certainly, it appears that the leadership of organizations like the American Hospital Association had to make a public retreat after taking heat from members who weren’t happy about the pledged cuts.

It should come as no surprise that voluntary cost control doesn’t work. Why would we expect any industry, let alone the $2 trillion-plus health care sector, to willingly sacrifice significant income and profits? The cost control de-commitment is a reminder that restraining medical care spending in a serious way is a much harder political task than enacting universal access to health insurance.

Nonetheless, the setback should not obscure the big picture: momentum is building for health reform. Major hurdles remain, of course, but there is now a real chance that legislation substantially expanding access to health insurance can clear Congress this year. 

The Obama administration and Congressional Democrats deserve ample credit for pursuing a strategy and process that have significantly improved the odds of passing health reform. Yes, we got a reminder that cost control remains an uphill fight and will not happen unless Congress passes legislation that cuts spending. But that doesn’t change the fact that health reform in 2009 is off to a very promising start.

--Jonathan Oberlander