When Tom Daschle, President-elect Barack Obama’s designate for Secretary of Health and Human Services, published a book earlier this year titled Critical: What We Can Do about the Healthcare Crisis, I saw the favorable reviews and made a mental note to buy and read it. After Obama’s announced choice of Daschle for HHS secretary, this became more salient. It is well worth reading carefully, as it provides some important clues to the likely course of health reform under Obama’s administration.

Any book on health policy by a Democrat needs at least three key ingredients:

1) A collection of personal-interest horror stories about well-meaning citizens who’ve been damaged by our health system (a significant editing challenge since there are, legitimately, millions of these stories).

2) A mention of the widely discredited Himmelstein and Woolhandler fictoid about 31% of U.S. health costs being “administration” (see the McKinsey Global Institute’s 2007 “Accounting for the Cost of Healthcare in the United States” for a more rigorous analysis).

3) A mention of the World Health Organization (WHO) study about how we rank 37th in the world in “health care” despite spending trillions more than any other country (dispatched efficiently earlier this year by Cato’s Glenn Whitman).

You’ll find all three obligatory ingredients in Daschle’s book. What is surprising and refreshing, however, is his thoughtful analysis of Congress’s epic struggle with health reform, particularly the failure to enact it during the Clinton presidency, when Daschle was a senior member of the Senate Democratic majority. Almost 25% of the book is a superb congressional history of health reform going back to 1914. Daschle has done his homework.

Daschle acknowledges that disunity within his own party played a crucial role in sinking health reform under Bill Clinton, who had Democratic majorities in both houses. He also blistered Clinton and his advisers for wasting critical time dissipating public support for reform, as well as for handing down an absurdly complex and bureaucratic bill that provided “a target the size of Philadelphia” for opponents.

If you accept his critique of the Clinton failure as a clue to Daschle’s approach, the key elements of Obama’s strategy are likely to be: speed, simplicity, and alignment with congressional health policymakers. Thus, we should expect a couple of hundred page bill drafted collaboratively with congressional policymakers. Daschle will certainly not voluntarily produce anything remotely resembling the 1,346-page behemoth Health Security Act so many of us used as a doorstop.

Rather than blaming the Executive Branch alone for the failure to accomplish health reform, however, the book pivots around the most breathtakingly candid declaration of collective incapacity I’ve ever heard from a former member of Congress. Daschle actually says: “Professional expertise and trustworthiness — these are qualities that Congress lacks when it comes to healthcare.”

The Federal Health Board: A Proposal Designed To Depoliticize Benefits Decisions

The centerpiece of Daschle’s argument is that Congress and the administration should be insulated from the politically unmanageable process of determining health benefits and payment strategy under health reform by a Federal Reserve-like entity called the Federal Health Board.

This Board would be filled with presidential appointees (Senate confirmed) with ten-year terms designed to overlap presidencies. Daschle would ask the Health Board to:

1) create an evidence-based benefit package consistent across federal agencies but also offered by employers;

2) design a Medicare-like public health benefit for those under age 65 to be offered in conjunction with private health plans in a multiple-choice format similar to the Federal Employees Health Benefits (FEHB) program;

3) design and manage an evidence-based coverage policy for drugs and procedures that factors in both health and cost impacts;

4) suggest research priorities for the National Institutes of Health (NIH);

5) analyze federal health data to determine clinical effectiveness;

6) promote transparency of costs and quality in the provider system; and

7) recommend changes that would “rationalize” the nation’s health care infrastructure.

The Federal Health Board is designed to insulate Daschle’s former colleagues from pressures that many in Congress find both uncomfortable and distasteful: micromanaging health programs for powerful contributors or constituents: “We’ll be able to wrest power from Congress and the White House only when political leaders realize they are incapable of making the technical decisions on benefits that are so crucial in any healthcare system.”

Daschle’s focus on managing the benefit makes him the first major national political figure to acknowledge publicly the crucial connection between the politics of the mandated benefit and the affordability of universal coverage. If you wish to mandate that either employers or individuals purchase health coverage, you must, at some point, declare what services they are to be legally required to purchase. It’s not something you can talk candidly about during a political campaign, because the incentive is to pander to every pressure group and not exclude anything or anyone from coverage.

By focusing on “depoliticizing” benefit and coverage decisions, Daschle has targeted the two areas that, if left to nature, would render federal health reform unaffordable. In a fiscal climate as challenging as that facing the next Congress, this is a prescient concern. Technology coverage and payment policy is, if anything, even more contentious and subject to continuous political micromanagement.

Many health policy experts believe that a more research-based approach to coverage and payment might help rein in medical technology spending, a major driver of health cost inflation. Gail Wilensky, Uwe Reinhardt, and others have long advocated creating a Center for Comparative Effectiveness, modeled on the National Institute for Health and Clinical Excellence (NICE) in England, to bring available scientific evidence to bear on making coverage and payment recommendations for medical technology. Apparently, Daschle’s vision is that the Federal Health Board would perform this function.

Daschle’s Approach Could Help Pass Health Reform In A Poor Economy

Tactically, adopting Daschle’s approach could enable Obama to pass health reform quickly without putting a stake in the ground on the precise cost of his program — a plus in a rapidly deteriorating fiscal climate. With a congressionally defined benefit, CBO scoring and concerns from fiscally conservative Congresspeople like the Democratic “Blue Dogs” could quickly sink the process.

Under Daschle’s approach, the key decisions about precise benefits, as well as the politically dangerous issue of what individuals would have to pay out of pocket for mandated benefits, could be punted to the Federal Health Board, which could take at least eighteen months to get organized and report to Congress on how to structure the benefit. This would conveniently buy Obama time for the economy to recover, time to find funding for needed federal subsidies to small businesses and the unemployed uninsured, as well as time for business to strengthen enough to afford an employer mandate.

Some in the health policy world have criticized the Health Board idea as an attempt to “take the politics out of politics.” The appointment process, of course, is inherently political. And the $2.5 trillion health care “industry” could hardly be expected to be indifferent to who was appointed and how the ground rules for technology evaluation and payment policy are set up, let alone what gets covered by any mandated private benefits or public programs.

Further, Medicare and Medicaid remain crucially integrated into the federal fiscal picture, making it inevitable that Congress considers aggregate funding levels as part of its budget reconciliation process. The politics do not disappear under Daschle’s proposal; rather, they are held at arm’s length, submerged in a technocratic process and subject to economic tests. It is also the case that the “evidence” behind evidence-based benefit design and technology coverage decisions is both fragmentary and in a state of evolution. Medical technology development is a learning process — one that certainly could be less expensive than it is now without damaging patients. It is challenging, even with the best of intentions, to subject emerging technologies with limited use and cost data to this process; it is the early use and perhaps overuse of the technologies themselves that help define the boundaries of what is appropriate. (See the excellent discussion of the limitations of technology evaluation in the current issue of Health Affairs by Steven Pearson and colleagues reviewing the challenge of CT colonography.)

To set the evidence bar too high too early could further damage an already laboring medical technology industry in the U.S. and drive both research and development overseas. Marked increases in funding for evaluation research would be required to catch up and fill the yawning evidence gap. However, pharmaceutical companies and medical technology firms, which are profoundly threatened by an American version of NICE, are going to have their work cut out for themselves in arguing that we shouldn’t have a more rigorous process than we have now.

However, the acid test for Daschle will be his ability to sell his idea of restraining Congress’s fine hand to his former congressional colleagues. It is difficult to imagine Henry Waxman, who has formidable expertise on health issues and has in the past relished shaping minute elements of federal health policy, surrendering some of the considerable powers of his newly attained Chairmanship of Energy and Commerce to a body of economists and health policy experts. Similarly, it is difficult to imagine Charles Rangel, an embattled but savvy legislative craftsman as Chair of Ways and Means, setting aside some of his committee’s considerable power over the federal health benefit.

Whether Waxman and Rangel and their counterparts in the Senate will ultimately find it in their interest to surrender some of their power to shape private and public health benefits and coverage remains to be seen. Their new executive branch partner in health reform has certainly paid his dues, and he knows what the world looks like from their point of view. It could make a crucial difference in whether, as many of us hope, health reform actually happens this time.

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