Daschle Will Lead Health Care Overhaul

WASHINGTON (By Robert Pear, NYT) December 12, 2008 — Calling an overhaul of the health care system a basic element of his administration’s economic recovery programs, President-elect Barack Obama on Thursday presented former Senator Tom Daschle as his choice to become secretary of health and human services and to lead efforts to secure “affordable, accessible health care for every single American.”

At a news conference in Chicago, Mr. Obama said that Mr. Daschle, a former Senate majority leader from South Dakota, would also be director of a new White House Office of Health Reform. In that position, he said, Mr. Daschle will be the “lead architect” of proposals to expand coverage and rein in health costs.

Jeanne M. Lambrew, a former aide to President Bill Clinton, will be deputy director of the new office.

Mr. Obama, noting that more than 45 million people have no health insurance, said, “The runaway cost of health care is punishing families and businesses across the country.”

A major health care initiative “has to be intimately woven into our overall economic recovery plan,” Mr. Obama said, adding: “It’s not something that we can put off because we are in an emergency. This is part of the emergency.”

Mr. Daschle echoed that sense of urgency. “Our growing costs are unsustainable,” he said, “and the plight of the uninsured is unconscionable.”

With a larger majority in Congress, Democrats are increasingly optimistic that they can realize their dream of affordable health care for all next year.

Mr. Daschle brings a kind of moral passion to the campaign for universal coverage. Health care, he says, is rationed on “the worst possible criteria: one’s ability to pay or one’s health condition.”

As the former Senate majority leader, Mr. Daschle is well versed in the intricacies of health policy and Senate procedure. But two of his ideas could reignite the kind of ideological warfare that sidetracked such proposals in the past.

At the heart of the health care system, Mr. Daschle wants to establish a Federal Health Board, an independent entity like the Federal Reserve. The board would make coverage decisions for federal health programs. It would, he says, “reduce or deny payment for new drugs and procedures that aren’t as effective as current ones.”

Mr. Daschle predicts that such decisions will “rankle powerful interest groups, such as drug manufacturers.” Critics say the board would be picking winners and losers among makers of drugs and medical devices.

David H. Nexon, senior executive vice president of the Advanced Medical Technology Association, a trade group for makers of medical devices like Medtronic and Boston Scientific, said that research comparing the effectiveness of different treatments could help doctors and patients make better decisions.

But, Mr. Nexon said, “the medical device industry, life science companies and patient groups would have a real problem with a centralized decision-making operation that denied people access to safe, effective treatments or imposed a cost-effectiveness standard on therapies that would be covered by Medicare or other forms of insurance.”

Setting forth his ideas in a recent book (“Critical,” St. Martin’s Press), Mr. Daschle writes that “doctors and patients might resent any encroachment on their ability to choose certain treatments, even if they are expensive or ineffective compared to the alternatives.”

Members of the board would be chosen by the president, subject to Senate confirmation, but would be largely “insulated from political pressure,” Mr. Daschle said.

The board could have a “spillover effect” in the private sector, he said. Private insurers already follow many of Medicare’s coverage decisions. Mr. Daschle said Congress could go further and link tax breaks for private insurance to compliance with the board’s recommendations — a step that would give the government far more influence than it now has.

In a blurb praising the book, Mr. Obama said the idea of a Federal Health Board “holds great promise” for bridging ideological divisions and “giving this nation the health care it deserves.”

Another volatile question is whether the government should offer its own health insurance plan, to compete with private plans as Mr. Obama and Mr. Daschle have proposed.

Democrats said that private insurers would hold down costs and improve care if they had to compete with a public plan.

But Republicans said a government plan would have unfair advantages and could drive private insurers from the market.

Charles N. Kahn III, president of the Federation of American Hospitals, a trade group, said, “The prospects for health care reform are as good as they’ve been in decades.”

Hospital executives worry that their institutions would be underpaid by the new public plan, just as they say they are currently underpaid by Medicaid and Medicare. Many doctors decline to take Medicaid patients, saying payments are too low.

Democrats say they have learned lessons from the health care wars of the past, but that may not be enough.

R. Alexander Vachon III, a health policy consultant for several Wall Street firms, said: “The probability that Congress will pass a major expansion of health insurance coverage next year is less than 40 percent. There’s lots of enthusiasm, but Democrats have been trying to do this for 74 years and have not succeeded.”

Mr. Daschle, who turned 61 this week, was narrowly elected to the House from South Dakota at age 30, and he ousted an incumbent Republican senator eight years later. He served in the Senate for 18 years, including 10 as Democratic leader, before he was defeated in 2004 by a Republican who said Mr. Daschle had forsaken his state and had become a creature of Washington.

Since then, Mr. Daschle has worked as an adviser at a Washington law-and-lobbying firm, pursued his interest in health policy, stayed active in Democratic politics and kept an office at a liberal research and policy institute, the Center for American Progress. He was an early and influential supporter of Mr. Obama.

In Congress, the results of his health care work were mixed. In 2002, he failed in his effort to secure prescription drug coverage for Medicare beneficiaries, a goal achieved by Republicans and some Democrats in 2003.

Members of the Finance Committee had been working for more than a year on a bipartisan bill. But in the summer of 2002, Mr. Daschle bypassed the committee — headed then, as now, by Senator Max Baucus, Democrat of Montana — and went to the floor with a different proposal that envisioned a larger role for the federal government in delivering the Medicare drug benefit.

“We could have reached a consensus in the Finance Committee if we had been given a chance,” said Senator Orrin G. Hatch, Republican of Utah. “It just wasn’t the bill that the Democratic leadership wanted.”

Mr. Daschle said at the time that committee members had chosen not to act. “I didn’t tell them not to act,” he said.

In deflecting demands for radical change, Republicans often boast that the United States has the world’s finest health care system. Mr. Daschle wants to deflate those claims.

“We have to break the myth that this is the best health care system in the world,” Mr. Daschle said. He describes the American health care system as “islands of excellence in a sea of mediocrity.”

Crystallizing public support for the goal of universal coverage would be the easy part of Mr. Daschle’s new job.

Bringing the health care industry along would, by his own account, be more difficult. In his book, Mr. Daschle portrays the industry as a collection of “special interests,” and he predicts they will wage “all-out war to defeat reform.”

A theme of all Mr. Daschle’s proposals is that Americans must get better value for the huge sums they spend on health care, more than $2 trillion a year.

Mr. Daschle, like Mr. Obama, wants to cut Medicare payments to health maintenance organizations and other private insurance plans that serve nearly one-fourth of all Medicare beneficiaries. These private plans are overpaid and threaten the solvency of Medicare, he said.

Insurers promise to fight such cuts, which they say would hurt beneficiaries.

Mr. Daschle also excoriates insurance companies for “underwriting strategies that exclude or charge the highest rates to people who need the coverage the most” — people with conditions like diabetes, heart disease and cancer.

Insurers recently offered to accept all applicants, regardless of any pre-existing medical conditions, if the government required everyone to have coverage.