Americans may be in for some unpleasant changes. President-elect
Barack Obama, Senator Max Baucus (D-MT), and former Senator
Thomas Daschle (D-SD)--Obama's choice for secretary of the U.S.
Department of Health and Human Services (HHS)--have outlined
policy proposals that, if enacted, would negatively impact private
health care for millions of Americans. Private health plans and
medical practice might continue to formally exist, but many crucial
health care decisions would be made in Washington. All three
politicians have advocated the creation of a new public
agency--variously described as an institute, board, or
council--that would make key recommendations regarding the kinds of
medical technologies, treatments, drugs, and procedures that would
be officially deemed "effective." To the extent that these
recommendations were imposed as a condition for reimbursement, they
would constitute an unprecedented level of government regulation
and control over the delivery of health care.
Each of these three politicians have also proposed the creation
of a new government health plan--sometimes described as a plan like
Medicare, other times as a plan "like the FEHBP"--that would
"compete" directly with private health plans. The creation of a new
public plan would result in millions of Americans losing their
employment-based coverage coupled with a massive expansion of
government coverage and financial control.
The Federal Health Board
During the presidential campaign, Obama proposed the creation of
an institute that would judge the "comparative effectiveness" of
medical treatments, procedures, and therapies, as well as drugs,
devices, and technologies. Baucus has also called for the creation
of such an institute. More recently, Daschle outlined in much
greater detail a similar proposal for a congressionally created
Federal Health Board modeled on the Federal Reserve Board, with a
governing body of politically appointed experts but "insulated from
politics." Daschle's health board would exercise many powers
similar to the proposed National Health Board, a key feature of the
ill-fated Health Security Act of 1993.
The expertise of men and women from the health care sector of
the economy--regardless of their professional achievements in
medical science, biomedical research, technology, or clinical
experience--would, for all practical purposes, be subordinated to
the expertise of those appointed to the health board.
In Daschle's version of this new public agency, its "experts"
would "oversee the health care industry" and have the knowledge and
power to make "complicated medical decisions and the independence
to resist political pressures." Additionally, these government
experts would "help define evidence-based benefits and lower
overall spending by determining which medicines, treatments, and
procedures are most effective--and identifying those that do not
justify their high price tags." This means denying payment.
The health board would also:
- Set the rules for health insurers who would participate in a
national health insurance exchange and recommend benefits coverage,
including drugs and medical procedures backed by "solid
- "Rank" therapies and medical services based on their cost
- Suggest priorities for medical research; and
- "Align incentives with the provision of quality care," as
defined by the health board, through Medicare-style "pay for
performance" rules for doctors and other medical professionals who
comply with government practice guidelines.
Daschle is frank and forthright about the enormous power of his
proposed Federal Health Board. Such a body, he admits, would alter
the traditional doctor-patient relationship. "Doctors and patients
might resent any encroachment on their ability to choose certain
treatments," he says, "even if they are expensive or ineffective
compared to the alternatives." While the health board's
decisions, at least initially, would affect all Americans enrolled
in government health programs, their elected representatives would,
as a practical matter, have little to say about coverage for drugs
or medical procedures or health benefits. "I expect," he explains,
"that most members of Congress would be glad to be rid of their
responsibility for controversial health policy decisions." While
the health board decisions would initially affect enrollees in
government health programs, Senator Daschle says that Congress
"...could, for example, link the tax exclusion for health insurance
that complies with the health board's recommendation."
Noncompliance in the private sector, in other words, would result
in a severe tax penalty on employers and employees. For ordinary
Americans, there would be little point in complaining to their
congressman. Independent of Congress and the White House, as the
senator freely concedes, the power wielded by the health board "is
not small, and delegation over health policy decisions rightly
Government Health Plan.
A second key feature of the Obama-Daschle-Baucus health policy
agenda is the creation of a new government health plan. All three
politicians envision a new national plan that would compete with
approved private health plans in a national health insurance
exchange. In the Obama proposal, the new government plan would be
open to the uninsured and those ineligible for other government
coverage, have comprehensive benefits, and have only "fair"
premiums and "minimal" cost sharing. In the Baucus proposal,
the government plan would be "similar" to Medicare. In
the Daschle proposal, the Federal Health Board would work with
Medicare to develop a "public insurance option" for the national
Ostensibly, the government plan would compete directly with
private health plans. This is, of course, a dramatic break with the
FEHBP model, celebrated by President-elect Obama: The FEHBP has
no government health plan at all. In any case, a fair
competition is unlikely, if not impossible: The government
would not only be a participant in the competition but would also
be setting the rules for the competition. With the government plan,
taxpayers would presumably absorb all of the risks, losses, and
liabilities of such an enterprise, while private health plans would
absorb their own risks, losses, and liabilities. Consequently, from
the beginning, such a competition could not possibly be fair in any
When evaluating the "fairness" of any national health insurance
exchange, a key issue is whether the government's
rules--particularly for benefits, financing, and solvency--apply
equally to the government plan and the private plans that are
supposed to compete with it. If they do not, the proposed
"competition," presumably with the government plan having special
advantages, is a meaningless charade. If the rules are the same for
all plans, then logically there is no point to having a government
health plan at all. In any event, the right of an individual to
make a personal choice, based on their determination of what
package of benefits would be best for them, would simply be out of
the question in such an arrangement. This scenario would be even
more likely under the supervision of Daschle's proposed Federal
Despite official rhetoric to the contrary, genuine market
competition is not envisioned in any of these proposals.
Indisputably, the professional literature shows that the expansion
of government health coverage (Medicaid and SCHIP), a key element
of the Obama health plan, "crowds out" existing private health
options. The Lewin Group, a prominent econometrics
firm based in Virginia, estimated that the Obama health plan would
prompt big changes in the kind of coverage millions of Americans
would recieve, regardless of individual preference. While 21.6
million Americans would lose private health coverage, an estimated
48.3 million would be enrolled in government coverage, including
the new government health plan, as well as Medicaid and SCHIP.
Because employers would switch from private coverage to the new
government health plan, an estimated 18.6 million employees would
be enrolled in the new government plan, while an estimated 13.1
million individuals would enroll from the non-group market. In
other words, there is simply no truth to the idea that, for
individuals and families, nothing will change.
The Loss of Private Coverage
President-elect Obama promised change. But in health care, he
promised that change would ensure patient choice of doctor and care
without government interference. He also promised those who have
health insurance that their coverage would not change and those
without would get the same kind of insurance available to Members
of Congress in the FEHBP.
Two key policy proposals, especially if they are further refined
along the lines suggested by Daschle, would ensure that Obama could
not deliver on those promises. For millions of Americans, a
powerful Federal Health Board, plus the dynamics of a controlled
"market" dominated by a government health plan, would end their
existing private coverage and ensure unprecedented government
interference in the delivery of care.
Robert E. Moffit, Ph.D.,
is Director of the Center for Health Policy Studies at The Heritage
Obama for America, "Barack Obama and Joe Biden's Plan to Lower
Health Care Costs and Ensure Affordable, Accessible Health Coverage
for All," at http://www.barackobama.com/pdf/iss
ues/HealthCareFullPlan.pdf (December 4, 2008); Robert E.
Moffit, Ph.D., and Nina Owcharenko, "The Obama Health Care Plan:
More Power to Washington," Heritage Foundation Backgrounder
No. 2197, October 15, 2008, at www.heritage.org/research/healthcare/bg2197.cfm.
Daschle is described as the incoming Administration's "health care
czar." David M. Drucker, "Obama Taps Daschle for HHS," Roll
Call, November 19, 2008.
Senator Tom Daschle, Scott S. Greenberger and Jeanne M. Lambrew,
Critical: What We Can Do About The Health Care Crisis ( New
York: Thomas Dunne Books, 2008), p.xiii.
President Clinton's proposed National Health Board would have made
rules governing benefits, quality, and cost containment standards
and encouraged "reasonable pricing" of drugs. For a detailed
description of the Clinton Administration's proposed National
Health Board and its powers, see Robert E. Moffit, "A Guide to the
Clinton Health Plan," Heritage Foundation Talking Points,
November 19, 1993, at http://www.heritage.org/research/healthcare/tp00.cfm.
Daschle et al., Critical, p. 136.
Ibid., p. 199. The assumption seems to be that medical
treatment for very diverse patients with the same condition should
be standardized by government officials. Such a policy would, of
course, curtail the progress and promise of personalized
Moffit and Owcharenko, "The Obama Health Care Plan," p. 3.
Baucus, Call to Action, p. 18.
Daschle, Critical, p. 171.
For further discussion of this topic, see Robert E. Moffit Ph.D.,
"Government As Competitor: The Latest Prescription for Government
Control of Health Care," Heritage Foundation WebMemo No. 2024,
August 14, 2008, at www.heritage.org/research/healthcare/wm2024.cfm.
In the case of SCHIP, under the proposed congressional expansion in
2007 for every 100 newly eligible child enrolled in SCHIP in
families with incomes between 200 and 400 percent of poverty,
between 54 and 60 children would have lost private coverage. Paul
L. Winfree and Greg D'Angelo, " SCHIP and 'Crowd-Out': The High
Cost of Expanding Eligibility," Heritage Foundation WebMemo
No. 1627, September 20, 2007, at www.heritage.org/reserach/healthcare/wm1627.cfm.