David Cutler explains the burgeoning friendship between Obama and insurance companies.

Question: Will private industry and government be able to collaborate on a healthcare solution?

David Cutler: Two examples where they have: one is the insurance companies have come together and said ‘you know what, we’ll get rid of the practice of under-writing people and denying them coverage when they are sick of not renewing and all of that, if you can make sure that everybody really will buy insurance.’ And second—so that was one example—and second, they came to the president along with other insurance groups in early May and said ‘you know what, we believe through a variety of reforms we can save two trillion dollars over the next decade.” About six hundred billion dollars in the public sector to be used for health care reform. With just huge, huge steps that they’ve taken—maybe they didn’t go far enough, whatever—but huge, huge steps that they’ve taken.

Why is that? I think partly, the insurance companies know that the system can’t go on much longer. Again, going on where we are without change is just not a real viable option. The system is falling apart. Our solution to cost control now, is you throw two million people into the uninsured ranks every year. That just cannot go on.

And the question that all insurance groups that have to face is, do you want to be part of the solution or do you want to be perceived as part of the problem? And every interest group has had to ask themselves that.  The President has been very, very open about saying to every group, ‘If you want to be part of the solution, I want to work with you.’  Congress has been very open about saying to the interest groups, ‘If you want to be part of the solution, we will work with you.’

So, the President on the one hand, says ‘Look, I am not going to tolerate a healthcare system where the people get denied coverage because they’re sick.”  And on the other hand, he says, to the insurance companies, ‘if you are willing to work with me and talk to me, then I am willing to work with you.’  And he says that openly and very sincerely.  And I think is what these groups are saying.  They know in their hearts, they know as a business model that they can’t continue and they have a President and a political process that is saying “Come to the table now and let’s all figure out how we can get this done.”  And that’s, I think, the dynamic that has taken hold. 

Recorded on: July 06, 2009