US health industry boosts Obama's dream of free care

Barack Obama's ambitious plan to introduce free health coverage will today get a $2trillion pledge from America's medical industry.

Leading players in American health care will offer to make up the sum in insurance cost reductions over the next 10 years.

Industry officials representing insurers, drug companies, hospitals and health unions will present the offer during a meeting with Mr Obama at the White House today.

The health care system in the US - where a family of four pays an average of more than £300 a month for basic care - is a key target for reform. As many as 50million have no cover, while rising insurance costs have meant millions are reliant on Medicaid, the free government service to over-sixties and low-income families.

Mr Obama said: "We cannot continue down the same dangerous road we've been travelling for so many years, with costs that are out of control, because reform is not a luxury that can be postponed, but a necessity that cannot wait. That is why these groups are voluntarily coming together to make an unprecedented commitment."

The health industry's move is being seen as a pre-emptive strike to stave off legislation that could seriously hamper profits. Industry sources have expressed worries that Mr Obama would introduce government-provided health care.

White House aides indicated in talks with health chiefs that Mr Obama would introduce legislation to curb industry earning power, leaving many doctors fearing salary cuts.

With the public mood likely to be against health insurers, they decided any alternative would be acceptable.

John Rother, policy director of health insurer AARP, said: "While serious questions remain about the details, AARP believes the agreement of providers to slow the skyrocketing cost of health care is critical for the health reform we are all working towards."

The $2trillion in savings being proposed would come from slowing projected cost increases by a small percentage each year for a decade.