A New Stage Is Set for Health Care Reform

It's long, but there's a great article from by Bill Leonard on SHRM's website that explicates some of Senator Daschle's key points from his new book, "Critical: What We Can Do About the Health-Care Crisis." Scroll down to the section Fundamental Shift for the meat of the article. . .

Here's the transcript:

A New Stage Is Set for Health Care Reform
By Bill Leonard

What kind of health care system will President Obama and congressional Democrats pursue?

While both promise to bring new thinking and ideas to the debate, indications are that the administration wants to find ways to “strengthen” the current employer-based system rather than work to phase out that connection, which forms the basis of the health care system most Americans have known for generations. And while the idea of a federal health board has been floated by former Senator Tom Daschle, Obama’s nominee for secretary of Health and Human Services, that could be a tough sell given the specter of big government that doomed a health care reform package during the Clinton administration.

In a new book, Daschle envisions a panel similar to the Federal Reserve Board that would create a single standard of health care for the nation and exert influence on prices and health care costs for health care providers and insurance vendors.

Obama and his transition team have praised Daschle for bringing new ideas to the debate, but they haven’t completely endorsed the federal health board idea, sources say. The incoming administration’s approach has been measured and moderate.

Another potentially dramatic shift in national health care policy being discussed could resemble the “pay or play” systems passed in states such as Massachusetts and Vermont, where employers offer health benefits to their workers or pay a tax to fund a state-run insurance pool that provides low-cost health benefits to the uninsured.

While some other states, including California, have considered similar proposals, the push to move the ideas has stalled as the economy has faltered. The recession’s impact could be good news for employers with locations in multiple states who fear such laws and should apply more pressure at the federal level to seek a nationwide solution rather than a patchwork of reform initiatives enacted at the state level.

And “pay or play” proposals at the national level could set off a firestorm. During the presidential campaign, Republican nominee John McCain hammered Obama for supporting expensive employer mandates and a “socialist” philosophy to government.

No Quick Fixes
While reform of the U.S. health care system was one of the hottest issues of the 2008 campaign and has been the topic of discussion in dozens of articles, press briefings and business group summits, the actual debate and forging of a reform package by Congress will take time.

“As the U.S. economy continues to deteriorate, Congress will be compelled to take up any economic stimulus and recovery package before addressing a comprehensive health care reform package,” said Jeffrey C. Bauer, Ph.D., a partner in the management consulting practice of ACS Healthcare Solutions in Dearborn, Mich. “So business leaders and HR executives shouldn’t be holding their breaths waiting for an immediate or quick fix from the federal government.”

Still, health care reform promises to be a hot topic throughout 2009 and possibly for the next two to three years, as the Obama administration settles into office. Obama has held consistently to the message that health care reform should be considered an essential element of the nation’s economic recovery.

“Some may ask how, at this moment of economic challenge, we can afford to invest in reforming our health care system? Well, I ask a different question—I ask how we can afford not to?” Obama said during a recent news briefing.

Some observers say that Obama’s choice of Daschle for Health and Human Services gives a clear signal that the president-elect wants to move the health care reform debate forward. In addition to nominating Daschle to the cabinet post, Obama named the former Senate majority leader director of a new White House office on health care reform.

According to the Obama transition web site, the new office will “coordinate efforts within the administration, the Congress and throughout the country to pass health care reform.” Daschle’s primary role will be to lead the administration’s reform initiative on Capitol Hill and work with congressional leaders to build consensus and forge a reform package that can pass both houses of Congress.

“Tom Daschle understands the legislative process very well and as a former Senate majority leader he knows how to get bills passed,” said Lisa Horn, manager of health care for the Society for Human Resource Management’s government affairs department. “For these reasons, it’s pretty clear that Obama picked him to lead the reform effort.”

Avoiding Past Mistakes
Obama and his advisers are well aware of the pitfalls of taking on a massive reform initiative and are determined not to repeat the mistakes of the past two presidents, who attempted major reform efforts during their terms, only to see them fail.

Obama’s team has taken several key steps to ensure that his health care reform plan won’t meet the same fate as Clinton’s failed attempt to reform health care in 1993. The Clinton White House created a health care policy team with more 500 members who spent months secretly developing a 1,342-page proposal with minimal input from Congress. Lack of support from congressional leaders helped to doom Clinton’s proposal, and Daschle, who was elected to the Senate from South Dakota in 1986, is well aware of that failure and has been taking steps to prevent a similar legislative debacle.

After being nominated by Obama, Daschle began organizing a nationwide grassroots campaign through a series of local and community health care reform meetings. The Obama transition teams asked for volunteers throughout the country to organize health care community discussions. Throughout December 2008, more than 8,500 of these discussions or what many called “health care parties” were held.

Daschle attended several of the meetings, while the Obama transition team asked the thousands of discussion leaders to submit reports via the Internet. The effort is similar to the campaign efforts of Obama, who used the Internet to bolster support and receive a record amount of campaign donations. According to Obama’s transition team, more than 10,000 comments on health reform were submitted to the team’s web site (www.change.gov) during December.

A Fundamental Shift
The health care discussions and online grassroots effort marks a fundamental shift in the way the Obama administration will approach the health care reform debate, said Jeffrey Bauer.

“The Obama team is looking to include everyone in the debate and spread this debate beyond the confines of Capitol Hill,” Bauer said. “While it’s a good idea to build your support from the ground up, which the Clintons failed to do in 1993, it also means that there are going to be a lot of stakeholders in this process, and it will be a massive and daunting undertaking.”

After losing his bid for re-election in 2004, Daschle became a special policy adviser in the legislative and public policy group for the law firm of Alston & Bird. The law firm’s public policy group offers lobbying services and has several high profile health care clients including CVS Caremark, the National Association for Home Care and Hospice, Abbott Laboratories and HealthSouth.

Daschle said repeatedly that he was not a lobbyist and, as a former Senate majority leader, he was prohibited from registering as a lobbyist with Congress. He still remained active in working for health care reform in Washington and presented his vision for the reform effort in the book Critical: What We Can Do About the Health-Care Crisis (St. Martin’s Press, 2008).

In the book, Daschle proposes the idea of creating a Federal Health Care Board, which would be modeled on the financial system’s Federal Reserve Board and would offer a public framework in which the health care system can operate more effectively and efficiently and insulated from political pressures—yet remain accountable to Congress.

Daschle argues that the board would create a single standard of health care for the nation and exert influence on prices and health care costs for health care providers and insurance vendors.

“One of the key barriers to health care reform has been the notion that too much power and oversight could be given to the government,” said Bauer. “A federal health care board would raise those fears and would most likely face some stiff opposition.”

Bauer added that the federal board also would raise questions about the efficiency of the system and could create problems as the board attempted to keep up with the rapidly changing field of health care.

“Technology, research and new health procedures are rapidly changing the way doctors treat patients,” Bauer said. “I don’t know if it would be possible for a federal health board or government entity to keep pace with those changes. It should raise some serious questions about how efficient and effective the board could be, I believe.”

The Key Players
Some congressional leaders believe they have been presented an opportunity to shape the health care reform debate. Sen. Max Baucus, D-Mont., and Sen. Edward Kennedy, D-Mass., should be the key players in the U.S. Senate, and Reps. Pete Stark, D-Calif., George Miller, D-Calif., and House Majority Leader Rep. Steny Hoyer, D-Mass., will play prominent roles in the House.

Baucus, who chairs the influential Senate Finance Committee, took the lead in the health care debate in Congress when in late November 2008 he released an outline for reform. His 98-page “Call to Action” lays groundwork for the debate but doesn’t dwell on details.

Many of the ideas provided in the Baucus outline resemble proposals supported by Obama and Daschle, but Baucus does not endorse the idea of a federal health board. He supports the idea of a national health exchange that would offer lower-cost health benefits to uninsured Americans, and Obama made a similar proposal during his presidential campaign.

Baucus has stated that his plan is just a framework to begin the debate, and he is working to create bipartisan support for his reform efforts. He has already met with leaders from the Finance and Senate Health, Education, Labor and Pensions (HELP) Committee, including Kennedy, its chairman, and Sen. Charles Grassley, R-Iowa, ranking minority member of the Finance Committee, and Sen. Mike Enzi, R-Wyo, ranking minority member of the HELP Committee

Baucus stated during a recent speech at the Brookings Institution in Washington, D.C., that the reform effort must remain bipartisan to succeed.

“We want to make health reform a total bipartisan effort, and we’re working hard to make that a reality,” he said.

Baucus also told the audience, “We are working with the CBO [Congressional Budget Office] to get the numbers and cost estimates now,” he said. “Before we even begin to work out specific details on a comprehensive health reform bill, we need to have a good idea what it will cost.”

Health Information Technology
A comprehensive reform package will take time to develop, Baucus concedes. And as Congress turns its attention to a massive economic stimulus package and the confirmation of dozens of Obama administration appointees, many sources believe the earliest that a reform bill might pass would be late 2009 or sometime in 2010.

However some health care changes could be passed quickly once Obama takes office. The Obama transition team and leaders in Congress are working on a massive economic stimulus package that could include at least $40 billion in health care spending over two years.

Some of the money would go to help prop up faltering state Medicaid programs, and at least $25 billion could be made available for electronic medical records. Other proposals to promote a nationwide health information network have faltered in Congress before. The Senate HELP Committee did approve the Wired for Health Quality Act (S. 1693) in August 2008, but the bill never made it to the Senate floor for a full vote.

The chief stumbling block to passage of a health IT proposal has been the cost, sources say. Independent studies from Harvard, Rand Corp. and the Commonwealth Fund have estimated that establishing a nationwide health care information system could cost between $75 billion and $100 billion over the 10 years it will take hospitals and health providers to develop and implement a viable system.

The payback, however, could be huge. Researchers with the Rand Corp. estimated that an electronic health information system could save up to $77 billion per year by reducing hospital stays, eliminating duplicate and unnecessary tests and cutting drug prescription costs.

“This will cut waste and eliminate red tape,” Obama said in news conference announcing the proposal. “It just won’t save billions of dollars and thousands of jobs—it will save lives by reducing the deadly but preventable medical errors that pervade our health care system.”

Bauer, who has studied and written about health care economics for more than 20 years, agrees with Obama’s assessment.

“Improving the nation’s health care information system could be one of the most immediate and effective steps that the Congress could make to reducing health care costs,” he said.

He added that the health reform efforts on Capitol Hill present an opportunity to employers and their human resource staffs to get involved and make a difference.

“As the debate moves forward, I believe HR professionals need to seize the opportunity to work with their health insurance vendors and plan administrators and explore ways to cut costs and create health benefit plans that work for their organizations,” Bauer said.

Bill Leonard is senior writer for SHRM Online.

Related Articles:
Health Care Costs, Reform Are Top Small Business Concerns, Compensation and Benefits News, December 2008
McCain, Obama Offer Contrasting Health Care Platforms, HR News, Oct. 15, 2008
Poll Finds Wages and Health Care Are Top Issues for U.S. Workers, HR News, April 22, 2008
States Respond to Rising Health Care Costs, Workplace Law Library, Aug. 9, 2007
Employer Obligations Under Mass. Health Care Reform Law Come Due, Workplace Law Library, June 18, 2007.

-JS