May 11th, 2009
03:39 PM ET

Financial Dispatch: $2 trillion in health care savings?

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/US/05/10/stamp.prices/art.post.office.gi.jpg caption="The Postal Service said the price increases were needed because of rising production costs."]

Andrew Torgan
CNN Financial News Producer

President Barack Obama says he has secured the commitment of several industry groups to do their part to rein in the growth in health care costs.

This pledge from the private sector could reduce the growth in health care spending by 1.5 percentage points a year, for a savings of $2 trillion over 10 years.

Overall, it could amount to a 20% reduction in the growth of health care spending. Six trade associations representing unions, hospitals, insurers and the drug industry have signed on to the commitment.

However, the savings depend in part on Congress passing health care reform this year.

GM may shuffle board

Another shakeup is reportedly in the works at General Motors.

The Wall Street Journal says the automaker has hired an executive search firm to help it find replacements for at least half of its 12 directors.

Since the government could end up with a controlling stake in a bankrupt or restructured GM, it’s expected to name some of the directors, as will the United Auto Workers Union. This move comes almost 2 months after the government ousted former GM CEO Rick Wagoner.

Separately, current GM CEO Fritz Henderson said today the automaker intends to keep its headquarters in Detroit, even though its U.S. operations are in far worse shape than some of its growing overseas units.

Henderson also repeated his earlier statements that he believes a bankruptcy filing is now “probable” as the company tries to reach agreements with creditors, the UAW and its dealership base to cut costs.

The company has been given until the end of the month by the Treasury Department to reach those agreements or file for bankruptcy.

Senate targets credit card rates and fees

Key negotiators in the Senate today reached a deal on legislation targeting credit card rates and fees.

The development could spur the bill to a Senate vote as early as this week, although the battle is far from over when it comes to reconciling the Senate’s bill with an earlier version that passed the House. President Obama said Saturday he'd like to have the bill on his desk by Memorial Day.

According to copies of the legislation distributed by lobbyists, the Senate's new bill is tougher than a similar bill passed in the House, and would, among other things, prevent those under 21 from getting a credit card unless they can prove they have an income stream to pay off debt or have their parent's signature. It would also ban gift card issuers from charging "dormancy fees" on cards redeemed too late.

USPS strives to survive

Finally, if the mail must go through, it's going to cost a little more. The United States Postal Service hiked the price of stamps today, as well as other delivery services.

But as the cash-strapped and debt-ridden agency fights for financial survival, it's considering much more drastic changes than adding 2-cents to the cost of a 42-cent stamp.

In testimony before the Postal Service's Board of Governors in January, Postmaster General John Potter said it "could become necessary to temporarily reduce mail delivery to only five days a week," from the current six-day service, which would effectively end Saturday delivery. The Postal Service estimates savings of $3.5 billion annually.

That’s significant, considering that in its most recent fiscal year ending Sept. 30, 2008, the Postal Service reported a loss of $2.8 billion. And in the six months since then, losses accelerated to $2.3 billion.

Filed under: 360° Radar • Andrew Torgan • auto bailout • Economy • Finance
soundoff (5 Responses)
  1. Art

    1.5% a year over 10 years? Thats nothing more than a cheap bandaid on a very serious wound. The health care industry is a business,period. We are being taken advantage of just like the oil companys are doing. It certainly a good step in the right direction but, small change when you look at the big picture. We need change, sooner than later and in more ways than one.

    May 12, 2009 at 5:44 am |
  2. jimmie e. miller

    Instead of giving billions to the banks to loan to folks like myself. Why doesnt the government make loans directly to the public instead?

    May 11, 2009 at 11:56 pm |
  3. William Courtland

    The Constitution give the government the right to provide for the welfare of the nation... but this requires the peoples directions via Federal Amendments!!!


    If it updated and designed a new system for mail routes: so provided the nation a national reaching system of Federal rail: which is paved to allow traffic to utilize the digital electric rail system and so become energy independant: GM a government owned company could then begin the manufacture of these public utility vehicles for personal rail service allowing the company to again be supported via senate interests and public funding as they regain faith to repurchase the company from the taxpayer via the interest from new Rail system automotive sales: the investment of investement company purchase seen as purchased bonds of savings of investment in the company itself as they partner and relate to the New United States Postal Service. The medical management system would then find place within the new United States Postal Digital Services: so be covered for the welfare of the nation and be equal to all citizens: yet not be justified personal health coverage but still providing for the emergency services divisions of expected for public health care via the income from the public use of the New United States Postal routes.

    May 11, 2009 at 11:09 pm |
  4. Annie Kate

    I hope the Senate also looks at the usurious interest rates credit card companies are charging folks now. Its almost impossible to pay off the card with interest rates as high as some I have hears of (40 plus percent). And another thing they should look at is the basis for companies to increase the finance charge they are charging you. The credit card companies are getting away with highway robbery with their high interest rates.

    May 11, 2009 at 8:11 pm |
  5. SLM

    No matter how much the post office raises the price of a stamp, it will never be enough. The post office needs to be revamped, they are totally ineffective. If they were a private entity, they would have been bankrupt a long time ago. Customer service and accuracy out of the post office are a joke.

    May 11, 2009 at 6:27 pm |