Sectors of the entire healthcare industry, including health insurers, are pledging to work to shave $2 trillion or more over 10 years in the cost of healthcare as part of an effort to stave off the so-called public option that is being floated as one element in health care reform.

The proposal was made last week in a letter sent to President Obama by 6 healthcare-related trade groups.

While the president called it a “watershed event,” a key player in the Senate on healthcare reform reacted more cautiously.

In a statement, Sen. Chuck Grassley, R-Iowa, said, “There’s no doubt saving $2 trillion in health care costs would be a move in the right direction.”

But, he said, when the White House and the industry put concrete proposals on paper and get a score from the Congressional Budget Office, “then we’ll know if the suggestions really achieve that kind of savings, and it’ll be big news. For health care budgeting purposes, CBO’s word is the only one that counts.”

In another part of the effort to stave off the public option, the National Association of Insurance and Financial Advisors said it is adding lobbying on healthcare and employment benefit issues to its agenda. Previously, the trade group’s Association of Health Insurance Advisors unit dealt with that issue in working with policymakers.

This will include working with officials of America’s Health Insurance Plans, the major insurance company trade group, in an effort to “positively influence the health care reform debate that is already under way,” NAIFA officials said.

Robelynn H. Abadie, president of AHIA, explained that AHIA and AHIP “have a longstanding relationship and do share the belief that a public plan option should not be part of health care reform.”

She added, “There is a need for a public private partnership to address access and affordability,” but that the government’s role should be to fully fund and close the gaps between eligibility and enrollment of existing public programs.

“Government programs serve as a safety net for lower income families and to date, there are a significant number of individuals eligible for public programs but not enrolled in them,” she said.

“Together, we fully represent the insurance industry and are able to activate large grassroots initiatives. It is our belief that we are best positioned with a unified effort rather than a segmented population,” Abadie said.

As for the proposal to President Obama, made in a meeting with him on May 11, the industries said they would offer concrete proposals designed to reduce the projected rate of growth in healthcare costs by 20%.

The industry letter said that under current policies, the annual growth in national health expenditures is projected by government actuaries to average 6.2% through the next decade.

At that rate, the percent of gross domestic product spent on healthcare would increase from 17.6% this year to 20.3% in 2018, “higher than any other country in the world.”

“We are determined to work together to provide quality, affordable coverage and access for every American,” the letter said.

“It is critical, however, that health reform also enhance quality, improve the overall health of the population, and reduce cost growth,” the letter said.

“We believe that the proper approach to achieve and sustain reduced cost growth is one that will:

–Improve the nation’s health.

–Continuously improve quality.

–Encourage the advancement of medical treatments, approaches and science.

–Streamline administration.

–Encourage efficient care delivery based on evidence and best practice.

The letter was signed by officials of AHIP; the Pharmaceutical Research and Manufacturers of America; the American Hospital Administration; the American Medical Association; the Service Employees International Union; and the Advanced Medical Technology Association.

The letter was an attempt by the industries to forestall creation of a so-called “public option” as a means of competing with healthcare providers and incentivize them to cut healthcare costs.

This option, currently under discussion by the Obama administration and various committees in Congress, would involve Medicare and Medicaid offering coverage to those in the U.S. not covered by individual and group healthcare plans, including those provided through employers and unions.

Ira Loss, a healthcare analyst at Washington Analysis, said his group’s view is that through the letter the private healthcare industry “is saying that it wants an opportunity to have significant input on the healthcare reform initiative now underway.”

He explained that it is consistent with prior comments by the providers, “but does signal they hope to work with policymakers in good faith.”