Being Critical of Daschle’s Critical

Like legions of other health care policy wonks when I discovered that former U.S. Sen. Tom Daschle was going to be Obama’s point guy on health care, I sent off for a copy of his book Critical. It’s a fast and easy read, but in its examination of the problem it doesn’t add much to superior books on what’s wrong with health care.

First, the former Senate Majority Leader promotes himself as a scholar of failed attempts at health reform past, and of course a witness to the most recent attempt. He’s been here, and seen this done wrong.


But the actual coverage solution Daschle proposes is to essentially expand the insurance program that covers federal government workers (something called the Federal Employee Health Benefits Program) with some improvements made by states like Massachusetts and to impose a pay (the government) or play (by providing insurance) option on employers. Daschle would also expand Medicaid and the current insurance for poor children – and then add an individual mandate with subsidies to those who can’t afford to buy-in to FEBHP.

This package is tied together, sort of, by a Federal Health Board.

Daschle lucky that he didn’t call this board Fannie Med, but he’s a victim of poor timing as he links his health board’s success to the accomplishments of the Federal Reserve at a time when that “success” is looking, shall we say, shaky.

The main role of the Federal Health Board would be as a cost-effectiveness review organization with teeth since that Medicare, Medicaid and the (newly expanded) federal employees benefit plan would all be bound to follow its guidelines. So essentially he’s advocating the creation of a national health insurance benefits package with federal supervision on rates and practices.

Critics on the loony right (old reliable Sally Pipes there in the Wall Street Journal) will call this rationing. More thinking critics will call it the slow emanation of a messy single payer system. That’s essentially what it’ll turn out to be as the private plans toss the worse (and most expensive) health risks into the federally supported pool and employers steadily get priced out of providing health benefits. Daschle, would be happiest with a U.K.-style single payer with a trade up option, but dismisses that course as unrealistic for the U.S. He also dismisses as unrealistic moderate attempts by Sen. Ron Wyden attempts to decouple health care insurance from employment and create a truer “market” based on social insurance (which is closer to the Dutch model).

So the problem with Daschle’s proposals as outlined in Critical come down to two things.

One; most of the uninsured are working poor and their employers are small employers who are all for health reform until they figure out that it means they have to pay for it. My guess is that only a puny Massachusetts-type “pay” fine ($200 or so) will be little enough to get them to willingly back a public and compulsory plan for their employees. At that point more of those small employers who offer coverage will ditch it too, meaning that the public subsidy to insure the working poor will have to be much greater than Daschle thinks. And that’s leaving aside the administrative nightmares.

Second, the Federal Health Board will be fought tooth and nail by the health care industry.

To rationally rationalize the health care system, we need to make cardiologists in Miami behave like cardiologists in Minnesota with a consequent impact on the incomes of doctors, hospitals and stent and speedboat salesman in high cost areas. If Daschle’s Federal Health Board has teeth, that’s what it’ll do, and the American Medical Association, American Hospital Association, the Advanced Medical Technology Association, and PhRMA, the pharmacuticals lobby alll know it.

So my guess is that the Federal Health Board, if it gets established, will get defanged immediately and a mish-mash “expand what we got now” system will cover a few more people at a lot more cost (as has been the Massachusetts experience). That’s OK because suddenly we’re rich (or at least suddenly the government is pretending it is!). But like a lot of recent wealth, this is transitory. Once President Obama’s stimulus plans fade away, we’ll be back where we are with too few really sick people able to get insurance for a variety of reasons creating a burden on those who can pay – ever increasing – premiums for the decreasing coverage they do get.

Daschle’s book and the picks Obama has made to run health care in the White House suggest that modest incrementalism like that outlined in Critical is all we’re going to get from this administration. I’ve always been a believer that only a big bang reform will be able to solve the core problems of our system (primarily the incredible costs lumped on some of those unlucky enough to be very sick). How this gets done without a clear social insurance system that everyone pays into according to ability, and in which there’s no real distinction between choice of services due to the individual’s ability to pay, I don’t know. And I’m afraid neither does Daschle.

Copyright (c) 2007, SteelWill, Inc. All Rights Reserved. Spot On is a trademark of SteelWill, Inc.


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