The United States Senate will soon render its advice and consent
to the nomination of former Senator Tom Daschle (D-SD) as the new
secretary of the United States Department of Health and Human
Media reports have already indicated that Daschle, if confirmed,
would be the new Administration's "health care czar" and would play
a key role in the reform of the nation's health care system,
potentially affecting the financing and delivery of care for every
Among the broad policy initiatives endorsed by both Daschle and
President-elect Obama are the creation of a new public plan to
compete with private health insurance in a new national pool, the
creation of a new federal agency with broad authority to determine
the value and effectiveness of medical treatments and procedures.
These are key pillars of a major expansion of federal regulatory
authority over health care financing and delivery. In giving its
advice and consent, Senators should explore these initiatives and
determine how they would be implemented and how they would affect
the 300 million Americans that they represent.
In making their own evaluations, Senators should note that
Daschle has provided some valuable insights into his own views on
these matters with the recent publication of his book Critical:
What We Can Do About the Health-Care Crisis. It is an excellent
resource for the Senate and the public. Based on that volume,
consider some preliminary questions.
Question #1: The Future of the
On page 199 of your book, in discussing the powers of your
proposed Federal Health Board, you write, "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. Some insurers might object to new rules that
restrict their coverage decisions." Could you elaborate on your
belief that the reform of America's health care system must deny to
doctors the right to prescribe, or the right of patients to choose,
medical treatments or procedures that they deem best for their
particular medical condition even if an appointed government panel
deems them to be too "expensive"?
Answer: The right answer is that a key goal of health
care reform should be to restore the traditional doctor-patient
relationship. Ideally, doctors and patients should be able to
contract freely with each other in a system governed by personal
choice and provider and plan competition. While widespread
availability of sound clinical information should be available to
doctors and patients alike from a variety of professional sources,
in no case should the federal government, through its regulatory
power, monopolize such information or interfere with medical
Daschle's proposal is incompatible with the traditional
Hippocratic Oath, the 2,500-year-old body of ethical rules that
provide the foundation of the traditional doctor-patient
relationship. The tacit assumption of the Daschle
proposal is that a special class of government officials should
standardize medical treatment for very diverse patients who have
the same medical condition. Such a direct repudiation of the
professional independence and integrity of the medical profession
and the traditional doctor-patient relationship is rare among
American public officials.
Daschle's proposal is also incompatible with Americans' personal
liberty. American citizens should be free to spend their own money
on medical treatments and procedures they wish to secure, offered
in a health plan or by a physician of their choice, regardless of
whether or not political appointees believe that these treatments
are too expensive. Moreover, health insurers should be able to
innovate in the coverage of medical services without waiting for
permission from a special class of political appointees.
Question #2: Recourse for Patients Denied Care
On page 200 of your book, once again discussing the powers of
your proposed Federal Health Board and its appointees, you write,
"When the Federal Reserve Board sets interest rates, it affects
people's money. But when the Federal Health Board makes coverage
decisions, it will affect people's lives." Then, on page 201,
discussing the power of the board members, you add, "They will be
political appointees, chosen by the president and confirmed by the
Senate. The board will derive its authority from Congress, and
Congress can dismantle it whenever it wants. Congress will have the
power to overturn a board decision or remove a board member for
good cause, although I hope it will use this power sparingly, if
ever." If an individual patient were denied a medical treatment,
procedure or drug as a result of a decision of the board, what
would be their recourse short of an act of Congress? Would there be
an appeals process, like Medicare, or access to the federal courts,
Answer: The right answer is that Congress should not even
contemplate such a vast concentration of government power, as
Daschle proposes, over the lives of ordinary Americans.
Daschle makes it clear that the board would be making some
difficult decisions. He also makes it clear (on page 199) that it
would enable Members of Congress to escape direct responsibility
for tough decisions affecting Americans, even though they vote the
taxpayers money to pay the "insulated" political appointees to make
them: "I suspect that most members of Congress would be glad to be
rid of their responsibility for controversial health policy
decisions. If the Federal Health Board fulfills its mission, it
will have to reduce or deny payment for new drugs and procedures
that aren't as effective as the current ones."
Obviously, Congress can alter or destroy what it creates. The
issue is what are the practical options for doctors and patients
who believe that a decision of the board hurts them or in some way
damages their health. It would appear that Congress would have to
create some sort of appeals process for doctors and patients,
similar to today's Medicare appeals process for claims for services
denied, which can take literally months. For ordinary Americans,
this would not be a pleasant prospect. Perhaps Daschle would have a
Another key issue, of course, is whether the board would enjoy
sovereign immunity from litigation by injured patients or their
doctors. For all practical purposes, it is not clear. Congress may
decide to provide an avenue of suit against the board in a court of
law. So medical issues would become matters for lawyers and judges,
not congressional deliberation. Based on Daschle's own description,
the board would instead appear to function like a "Supreme Court of
Health." It is worth noting that in the prototype of this proposal,
the "National Health Board" elemental to the ill-fated Clinton
health plan of 1993, all the board decisions relating to the
imposition of "caps" on health insurance premiums for reasons of
"cost control" were to be exempt from either administrative or
Question #3: Creating a Public Plan
On page 171 of your book, you write, "The Federal Health Board
would also work with Medicare to develop a public insurance option
for the (national) pool, designing it to compete with the private
health insurance plans on the FEHBP menu." Based on the robust
findings in the professional literature, the creation or expansion
of public health programs invariably "crowds out" private health
insurance coverage, particularly as employers drop health coverage
and enroll their employees in government programs. In your policy
role as an Administration official, how would you guarantee
President Obama's promise to Americans that if they are enrolled in
private health plans, nothing would change for them?
Answer: It would be an astonishing feat for the Obama
Administration to expand public coverage without displacing or
destroying existing private coverage. Aside from the "crowd-out"
phenomenon, such a promise could not be kept if the Administration
were to adopt anything like Daschle's proposed Federal Health Board
and then expand its jurisdiction to private coverage imposing tax
penalties on noncompliant health plans, as Daschle has suggested in
his book. In other words, a lot would have to
Much depends on the unknown details, such as the payment rates
adopted by the public plan, the scope of eligibility for enrollment
in such a plan, or the tax rates imposed on employers elemental to
the employer mandate endorsed by the President-elect. The Lewin
Group concluded that the number of Americans that would be
transitioned out of private health insurance coverage would range
from anywhere between 10.4 million and 118.5 million Americans.
Question #4: The British Experience
On page 127 of your book, you write, "In other countries,
national health boards have helped to ensure quality and rein in
costs in the face of these challenges. In Great Britain, for
example, the National Institute for Health and Clinical Excellence
(NICE), which is part of the National Health Service (NHS), is the
single entity responsible for providing guidance on the use of new
and existing drugs, treatments, and procedures." If that British
agency determines that a treatment is cost effective, it must then
be available within the NHS, but it also denies reimbursement for
treatments, making them practically unavailable for patients.
Based on your assessment of the record of NICE, would you like
to see similar results for doctors and patients in the United
Answer. The right answer is that Americans should never
have to endure anything remotely like the centralized, bureaucratic
health care decision-making process that characterizes the British
National Health Service.
Increasingly, the British media is reporting on the consequences
of the role of NICE, and those results are nasty. For example, The
Telegraph of London reports that NICE denied access to Velcade,
a new drug for the treatment of cancer. Jacky Pickles, a 44-year-old
mother with the disease, made a direct plea to Britain's health
secretary for coverage of the medication. Ms. Pickles, working in
the British system as a midwife for 25 years, said, "I am going to
give them the last years of my life. I've got to go to work in a
Health Service that won't support me when I most need it. I have
given my life to the NHS, but it is a system that won't give me
something I need to save my life." Britain's health secretary
would not intervene to help Ms. Pickles, and NICE officials refused
to comment, noting that while the drug for cancer treatment is
"clinically effective" compared to chemotherapy, they deemed it not
to be "cost effective." If members of the incoming Administration
and the Congress really want such a system, they should thoroughly
brief ordinary Americans what it would entail.
Question #5: Tax Policy
Senator Max Baucus (D-MT), chairman of the Senate Finance
Committee, has said that Congress should re-examine the federal tax
treatment of health insurance, noting that there is a strong,
bipartisan consensus among economists and policymakers that the
existing tax policy governing health insurance is both unfair and
economically efficient. Do you believe that this growing
consensus is sound and that persons who do not or cannot get health
insurance at work should be penalized by the tax code if they buy
it on their own?
Answer. The consensus among economists and policymakers
is sound, ranging from the views of the late Nobel Laureate Milton
Friedman of the University of Chicago to Professor Uwe Reinhardt of
Princeton University. There are a variety of ways to accomplish the
change, ranging from a total replacement of the existing tax
exclusion to more incremental steps, such as a cap on the current
tax exclusion on the value of the health benefits provided at the
place of work. Baucus has suggested an incremental step
of capping the existing employment based tax breaks as a means of
financing help for uninsured persons. More ambitiously, Senators
Ron Wyden (D-OR) and Robert Bennett (R-UT) have co-sponsored
legislation that would repeal the existing tax policy and replace
it with a refundable health tax credit (which would function like a
voucher for low income persons), guaranteeing every American access
to affordable health insurance coverage. Jason Furman of the
Brookings Institution, who recently served as an economic adviser
to President-elect Barack Obama, has also proposed replacing the
current system with a universal, progressive health care tax
credit, making it refundable to guarantee direct financial
assistance help to low income persons.
Health care reform entails reform of the health insurance
markets. But there can be no reform of the health insurance markets
without a reform of the federal tax treatment of health
Reform the Right Way
There is little debate over the need to improve America's health
care system, and many of the specific goals of the participants in
this national debate are widely shared. Where there is sharp
disagreement is over the means to achieve those goals. Those means
should not deny Americans the ability to maintain private health
insurance that they want; the benefits, medical treatments, and
procedures that they want; or the relationship with the physician
that they value. Meanwhile, government officials should not be in
the business of driving out private health insurance while
pretending to champion individual choice and market
Robert E. Moffit, Ph.D.,
is Director of the Center for Health Policy Studies at The Heritage
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,
Greg D'Angelo and Paul Winfree, "The
Obama Health Care Plan: A Closer Look at Cost and Coverage,"
Heritage Foundation WebMemo No. 2114, October 24, 2008, at
Stuart M. Butler, Ph.D., and Nina
Owcharenko, "Ensuring Access to Affordable Health Insurance: A Memo
to President-elect Obama," Heritage Foundation Special
Report No. 27, December 2, 2008, athttp://www.heritage.org/Research/HealthCare/sr27.cfm.
Jeet Guram and Robert E. Moffit,
Ph.D., "The Concept of a Federal Health Board: Learning from
Britain's Experience" at Heritage Foundation WebMemo No.
2154, December 4, 2008, http://www.heritage.org/Research/HealthCare/wm2154.cfm.
Robert E. Moffit, Ph.D., "How a
Federal Health Board Will Cancel Private Coverage and Care,"
Heritage Foundation WebMemo No. 2155, December 4, 2008, at
Robert E. Moffit, Ph.D., "How a
Public Health Plan Will Erode Private Care," at Heritage Foundation
No. 2224, December 22, 2008, http://www.heritage.org/Research/HealthCare/bg2224.cfm
Daschle, with Scott S. Greenberger and Jeanne M. Lambrew,
Critical: What We Can Do About the Health-Care Crisis (New
York: Thomas Dunne Books, 2008).
the text of the Hippocratic Oath and a discussion of its relevance
to modern medical treatments, see Robert E. Moffit, Jennifer A.
Marshall, and Grace V. Smith, "Patients Freedom of Conscience: The
Case for Values-Driven Health Plans," Heritage Foundation
Backgrounder No. 1933, May 12, 2006, pp. 8-11, at www.heritage.org/research/healthcare/bg1933.cfm.
Daschle, Critical, p. 199.
Health Security Act, Title V, Section 5232. For a more detailed
discussion of the enormous powers of Clinton's proposed " National
Health Board," 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.
an excellent summary of some of the key findings, particularly the
pioneering work of Jonathan Gruber of MIT, see Andrew M. Grossman
and Greg D'Angelo, " SCHIP and Crowd Out: How Public Program
Expansion Reduces Private Coverage," Heritage Foundation
Webmemo, No. 1518, June 21, 2007, at www.heritage.org/research/healthcare/wm1518.cfm
Daschle, Critical, p. 179.
a summary of the most recent findings on this subject by the Lewin
Group, see "Opening a Buy-In to a Public Plan: Implications for
Premiums, Coverage and Provider Reimbursement," presentation to
Republican staff of the Senate Finance Committee, December 5, 2008,
ns/OpeningBuyInPublicPlan.pdf (December 18,2008).
a recent summary of some of the more notable examples, see Jeet
Guram and Robert E. Moffit, Ph.D., "The Concept of a Federal Health
Board: Learning from Britain's Experience," Heritage Foundation
WebMemo No. 2154, December 4, 2008, at www.heritage.org/research/healthcare/wm2154.cfm.
For a brief overview of the issue, see Jason Roffenbender,
'Employer-Based Health Insurance: Why Congress Should Cap Tax
Benefits Consistently," Heritage Foundation Backgrounder No.
2214, December 5, 2008, at www.heritage.org/research/healthcare/bg2214.cfm.
The Healthy Americans Act (S. 334). The Wyden-Bennett bill would
abolish the existing tax exclusion in favor of a new system of
income-based subsidies for low-income persons and a new tax
deduction for middle and upper income persons.
See Jason Furman, "Health Reform Through Tax Reform: A Primer,"
Health Affairs , Vol. 27, No. 3, (May/June 2008), pp.