A coalition of health industry stakeholders, including some that scuttled Hillary Care in 1993, have offered to help save $2 trillion from projected increases in health spending over the next decade, according to White House officials.

The group includes the American Medical Association, the American Hospital Association, the Pharmaceutical Research and Manufacturers of America, America’s Health Insurance Plans, and the Service Employees International Union.

“We are developing consensus proposals to reduce the rate of increase in future health and insurance costs through changes made in all sectors of the system,” the stakeholders wrote in a letter to the Big O that was obtained by the Washington Post.

“We are committed to taking action in private-public partnership to create a more stable and sustainable health care system.”

The groups want to meet with Obama before offering specifics.

Obama administration officials praised the offer as one that should enhance momentum for health care reform. Their goal is to have a bill passed by the end of this summer.

“As restructuring takes hold and the population’s health improves over the coming decade, we will do our part to achieve your administration’s goal of decreasing by 1.5 percentage points the annual health care spending growth rate,” the groups wrote.

Projections are that after just 5 years, the proposal would save a family of four $2,500 per year in health-care costs. Within a decade, the savings would “virtually eliminate” the nation’s budget deficit.

Of course this is all happy talk until the groups specify how they will achieve their cost reduction targets and how the required behavior will be monitored and enforced.

That is not going to be a walk in the park.

Still, it’s a good day for the health reform movement. Poll after poll after all has shown that while Americans care deeply about the number of uninsured citizens, their top complaint by far is the rising cost of care.

Hillarycare was already on the ropes in ’93 when Big Insurance landed a haymaker in the form of Harry and Louise, a TV commercial series featuring 2 everyday Americans scared sleepless that health reform meant government meddling and bloated bureaucracy. 

Now, the Big O claims we can’t tame deficits without a health care do-over and HHS nominee Kathleen Sebelius adds that 40% of recent home foreclosures are related to financial stress caused by uninsured health expenses, so it would be vexing indeed if Big insurance scuppered reform yet again.

At first it seemed to be on board, floating constructive proposals and even manning up for the Big O’s morning teas.

But recently, things have turned frosty.

Big Insurance has warned it will oppose any plan involving a government-sponsored insurer that competes against the privates, a cornerstone of several reform proposals, including those of Speaker Nancy Pelosi and Sebelius herself.

And don’t look now but Big Insurance may secure providers as allies on the matter.

Mayo Clinic boss Denis Cortese is on record for example, with concerns that a public insurer would underpay providers, as Medicare has done to Mayo, according to Cortese, to the tune of $840 million in the last year alone.

Meanwhile, Harvard health economist Regina Herzlinger has pointed out that the apparent cost advantages of a government run program are in part an artifact of accounting trickery.

The Feds don’t have to set aside funds to meet future obligations like Big Insurance does, she told the Economist. “The government does not have the $36 trillion needed to finance the services it has promised to those who pay for Medicare.”

Three years ago when Merck introduced Gardasil, the anti-HPV vaccine for the prevention of cervical cancer and genital warts in girls, the buzz focused on whether it might encourage girls to have sex.

Now, the vaccine maker wants to market the jab for boys and the tweets are all about vaccine safety and cost-effectiveness.

That seems fair.

Human papillomavirus causes cervical cancer, which strikes 10,000 and kills 3,700 US females per year. In males, HPV causes 7,500 cancers per year, involving primarily the penis and anus, and kills about 1,000. 

Gregory Zimet, a Indiana University professor of pediatrics marveled the hypocrisy. “I wonder if it was the reverse, and there was a vaccine for women that helped prevent prostate cancer in men, this would be as much of an issue.”

After the FDA green-lighted Gardasil in 2006 for girls aged 9 and up, medical groups recommended they should take the spike by age 12, or before they became sexually active.

At the time Merck tried to persuade states to add Gardasil to the list of vaccines required for children to attend school. It dumped that strategy after being scorched by critics who thought the decision should be left with parents.

Merck’s field tests of Gardasil in men show that it is safe in the short term, and that it prevents HPV infection, genital warts and precancerous growths.

Gardasil vaccination costs about $500 for the 3 shots and the related office visits.

Since just about nobody likes the Big O’s plan to pay for health care by taxing the rich, lawmakers are floating the idea of taxing employee health benefits instead.

The current loophole reduces taxable earnings by $9,000 per year for those with family coverage, so probably not too many people are going to like the new idea, either.

Other than the flotilla of economists and tax experts that is, who have pointed out for years that the current exemption encourages people to sign up for Cadillac plans which shield exposure to true health care costs and thus contribute to cost escalation.

Recently, a bipartisan group of Senators got behind the idea of taxing health benefits.

The group includes Oregon Democrat Ron Wyden who said “it’s important to show Americans that you’re making savings in the enormous sums now being spent on health care before you go and ask them for billions of dollars more.” 

The Big O has a political problem with the idea of taxing health benefits, in that he lambasted Top Gun during the presidential campaign for making the very same idea central to his health proposals.

It’s a tax increase, scoffed Obama at the time.

Adding to the irony is that 2 years ago a Democratic-controlled Congress zapped the idea after George W. Bush put it in his budget request.

Nevertheless, the Big O is signaling he can swallow a health benefits tax if he has to for the greater good.

Why just last week White House budget director Peter Orszag said that taxing workers’ health benefits “most firmly should remain on the table,” according to the Washington Post.

When Arlen Spector held up Senate Democrats for $10 billion in NIH bonus funding as a quid pro quo for his yes vote on the Big O’s economic Hail Mary, people thought it was the slickest heist since Butch and Sundance held up the Union Pacific in 1899.

But now it’s time to assure all those greenbacks get spent in ways that stimulate economic growth, like right now.

So last week the NIH’s acting director practically begged university administrators to refrain from applying for dough except for beaker ready projects.

“It would be the height of embarrassment,” Raynard Kington told the New York Times, “if we give these grants and find out that institutions are not spending them to hire people and make purchases and advance the science the way they’re designed to do.”

“Piece of cake!” was the resounding response from the administrators who’d been struggling with flat funding for years.

And the scientists couldn’t hide their glee.

“This is a miracle, I think,” said AJ Stewart Smith, Princeton’s dean for research. “It is redressing this terrible problem where the success rate for excellent proposals was very low,” he explained.

Maybe so, but all the money has to be spent in 2 years. NIH grant proposals typically run 4 or 5.

Assuming they can be rejiggered, grant proposals that NIH review committees have already deemed worthy, just not fundable with the pre-windfall budget will be first in line for dollars.

The agency also plans to beef up payments to projects in progress.

Clinical researchers may not get much because their trials generally take longer than 2 years to complete.

And Kington is about to distribute more NIH dollars than any director in history. Not bad for an acting director.

So Raynard, you’re not tempted to fund any pet projects or researchers, right?

“We’re not going to sell our soul for $10 billion,” he told the Times. That “would cost much more” he deadpanned.

That was quite a coup Arlen Spector pulled off a few weeks back, huh?

The Republican Senator from Pennsylvania cast one of only 3 GOP votes in the Senate for the Big O’s economic Hail Mary, and the pound of flesh he extracted in return was a cool $10 billion for the NIH.

A survivor of 2 cancer scares, open-heart surgery and a bogus diagnosis of Lou Gehrig’s disease, Spector has been an NIH backer forever. But this move alone deserves a lifetime achievement award from the folks in Bethesda.

Before Spector put his foot down, Senate versions of the American Recovery and Reinvestment Act had set aside $29 billion for the NIH, but Spector almost singlehandedly bumped the number to $39 billion before saying “aye.”

Of that total, $2 billion will support building and equipment projects at the Bethesda campus and medical centers around the country.

Nearly all the rest will be used to fund up to 15,000 short term grant proposals.

That would expand the current NIH grant portfolio by 33%, although the deal is use it or lose it in 2 years because after that it’s back to business as usual, budget-wise.

Republican leaders in the House argued the NIH was already flush with cash and that such a windfall would support less worthy projects while creating few jobs.

To which the NIH counters that currently, it’s able to fund only 40% of grant proposals it deems meritorious and thousands of beaker-ready studies are on the docket.

Importantly, typical grants cover projects lasting longer than 2 years, so project plans are going to have to be altered to meet the requirements of the stimulus package.

Pat White, the Association of American Universities’ VP for federal relations hailed Spector’s work as among the most important accomplishment on behalf of the NIH in years.

“He turned his support of NIH into the fulcrum of the entire stimulus negotiations,” White told the New York Times.

It was no coincidence that 3 days after the Big O’s coronation, the FDA approved the nation’s first stem cell trial. Bush had been throttling the regulatory agency until the day he left town.

Meanwhile, in that euphoric first week the new president practically developed writer’s cramp signing executive orders that closed Guantanamo, banned torture, made government less secretive and restored funding to certain groups supporting abortion.

Everybody expected the Big O would add one more, an order lifting the Bush ban on Federal funding for stem cell research.

The NIH even started drafting guidelines for reviewing stem cell grant proposals to save time once the floodgates opened.

But it didn’t happen, and it still hasn’t happened.

“We were surprised and disappointed it wasn’t in there,” Amy Comstock told the Washington Post. Comstock who is with the Coalition for the Advancement of Medical Research added, “we’re wondering why it’s taking so long.”

Then top lieutenant David Axelrod weaseled to Fox News Sunday that the Big O was “considering” an executive order. Uh-oh!

The man didn’t go and lose a game of HORSE to Rick Warren now, did he?

No, reassured Reid Cherlin.

In an email to the Post, the White House spokesman said “the president has made it clear that increasing stem cell research is a priority for his administration…he’ll be acting soon to reverse restrictions on this critical science.”

“If I were a smart scientist, I would be writing a grant right now,” said Story Landis, head of NIH’s task force on stem cells, who added that a chunk of the NIH’s stimulus money would look real nice in a package directed at his troops.

Medicare Advantage providers like Humana, Cigna and UnitedHealthGroup have been receiving payouts that are 14% higher than what the government pays for other Medicare beneficiaries, and throughout his campaign the Big O said his administration was going to stop that.

It’s now become apparent that the Big O’s follow-through on campaign promises is just as pristine as that on his sweet lefty J.

In fact when Obama proposed a $634 billion down payment on universal health coverage last week, he accounted for $177 billion of the total by removing funds that had been designated in previous budgets to pay for those Medicare Advantage programs.

The private insurer’s fees had heretofore been established using secret sauce, but now the Big O’s proposing they’ll have to bid competitively beginning in 2012 for the contracts.

It’s the mother of all Heimlich maneuvers for Big Insurance, which knew something bad was gonna’ happen but expected a smaller hit and a slower phase-in.

Several companies threatened that the moves will force them to pull out of certain markets altogether, but that sounds a bit hollow since Advantage plans have been their only source of growth now that employer plan membership numbers are dropping like a stone.

So for the moment they’ve held fire. “We will be a constructive participant in efforts to reform all parts of Medicare,” a simmering Robert Zirkelbach told the Wall Street Journal.

Then the spokesperson for Big Insurance hinted at a possible counterattack strategy. “This proposal asks seniors to pay a disproportionate share of the cost of health-care reform,” Zirkelbach said.

Enrollment in Medicare Advantage plans grew 14% last year. Seniors were attracted by low premiums and plentiful benefits compared with relatively spartan government plans.

Nearly 25% of all Medicare beneficiaries are enrolled in these plans.

Humana stock dropped nearly 20% on the day the story broke. Aetna slid 11% and Cigna lost 9%.

California Democrat Pete Stark has tried to expand health care coverage throughout his 36 year career, but now that the moon is in the Seventh House and Jupiter has aligned with Mars, some worry the congressman’s abrasive style might, ironically, complicate efforts to reform the industry.

As chairman of the House Ways and Means Committee’s health panel, Stark will have a seat at the table when the matter comes up which should be about 8 seconds after the Big O gets sworn in.

But the man is just not the conciliatory type. Last week for example, Stark dismissed the idea of negotiating with Big Insurance on the matter of healthcare reform.

“I think their intention is to see the Democrats fail, regardless of what it does for health care in this country,” the 77 year old told the Wall Street Journal.

That was just a warm-up for his touchy-feely description of Big Insurance which he called “the General Motors of medical care delivery.”

Doink!

Stark supports by the way, the Big O’s plan to retain employer-based insurance while organizing a new competitive government entity through which individuals and small businesses can purchase coverage.

Stark also wants Tom Daschle, the Big O’s soon-to be-confirmed secretary of HHS to negotiate prescription drug prices through Medicare and the new public program.

“This idea that we just pay anything pharmaceutical companies are going to charge is ludicrous,” Stark says in describing the current Medicare plan.

That remark was sure to pin back the Dobermans’ ears over at Big Pharma, and before long Ken Johnson,  senior VP at Pharmaceutical Research and Manufacturers of America popped up with a surface-to-air missile of his own.

“We remain opposed to restrictive policies that reduce access of medicines to patients in need and undermine the program’s success,” he told the Journal.

These parries don’t even make it to Stark’s “greatest hits” though. There was the time for example he called former Connecticut Republican Nancy Johnson “a whore for the insurance industry.”

And who can forget the time he addressed Colorado Republican Scott McInnis as “you little fruitcake.”

Stark’s coup de grace though had to be during hearings to override Bush’s veto of SCHIP legislation last year, when he said our government wouldn’t fund children’s health while it was sending young people “to Iraq to get their heads blown off for the president’s amusement.”

Stark later apologized for that one.

Tom Daschle’s confirmation as Secretary of HHS is not in doubt so he used yesterday’s hearings to reinforce the need for massive health care reform beginning now.

“As we face a harsh and deep recession, the problem of the uninsured is likely to grow,” he said. And the uninsured “can’t get sick without total economic destruction.”

Daschle’s encounter on the hill was generally friendly. No one asked how he’ll beef up community health centers, support primary care providers, speed approval of generic drugs, and improve medical information systems.

Those details can wait for another day, but it’s now apparent that the honeymoon phase is over when it comes to the Big O’s plans for a new federal entitlement plan that would compete with private insurers.

Daschle told Congress “a government-run insurance program modeled after Medicare” would provide alternatives to private coverage for all consumers, including the uninsured.

The public plan might even be able to provide better benefits and service at a lower cost than UnitedHealth, WellPoint, Aetna and the rest, and at a minimum the competition should motivate private insurers to control costs more effectively.

Well! This does not sit well with Big Insurance, some employers and some Republicans. After all, a new entitlement program like that might have advantages in the market that are so profound–it could drive private insurers right out of business.

Yep, that’s pretty much it guys!

Jacob Hacker, a political science professor at UC Berkeley believes the new option is necessary if the Big O’s plans to save money and cover everyone are to succeed.

“Public insurance has a better track record than private insurance when it comes to reining in costs while preserving access to care,” Hacker told the New York Times.

Big Insurance knows it’s playing winner take all and that public opinion isn’t on its side. No one can predict how an animal reacts when it’s backed into a corner.