Daschle’s Health Plan Is Recipe for Bigger Government, Less Choice

Published March 1, 2009

By looking at President Barack Obama’s team of Tom Daschle as secretary of Health and Human Services and Melody Barnes as director of the White House Domestic Policy Council, we can predict both the strategy and substance of his administration’s coming efforts at health care reform.

The prognosis is not good for patients, physicians, or taxpayers.

If Daschle meant what he wrote in his book Critical: What We Can Do About the Health-Care Crisis, Americans can expect a quick, hard push to build more federal bureaucracy, impose price controls, restrict medicines and technology, boost taxes, mandate the purchase of health insurance, and expand government health care.

Expanded Government Control

In his book, Daschle proposes a National Health Board to regulate health care. This board would have vast powers in regulating the massive federal health care system—a system that includes Medicare, Medicaid, and other programs. Under Obama, it is likely this system will be expanded and new government insurance for the non-elderly and non-poor will be created.

Given the opportunity, Daschle would likely charge the board with determining which treatments and drugs are cost-effective and therefore permissible for patients covered by the government. And because the government is such a big player in the health care market (46 percent of health care spending comes from the government), the board would effectively set parameters for private insurers also.

It is nearly certain that the process of determining which drugs and treatments would be approved for use would be quickly politicized.

Overt Move Toward Rationing

Liberal experts, Daschle included, believe America needs to ration new technology and drugs. In his book Daschle complains about overuse of new technology and praises the United Kingdom’s National Institute for Health and Clinical Excellence (NICE), a rationing system that controls government costs by restricting access to lifesaving treatments and medicines.

NICE’s denial of care is legendary, from its disapproval of the arthritis drug Abatacept to rejection of the groundbreaking lung cancer drug Tarceva. These drugs are effective—it’s just that the bureaucrats don’t consider them cost-effective.

Americans will not put up with such limits, nor will our elected representatives.

Daschle himself proves this by punting the hard decisions about rationing to an unelected board. Yet his main proposals would not only expand subsidized programs to cover more people but also add the massively expensive benefit categories of mental health, which has a strong lobby behind it, and long-term care, which is important to middle-income Americans.

Cost-Shifting Myth

One of the great myths in health care is that the uninsured are responsible for driving up private premiums by shifting costs. Uncompensated care certainly shifts some costs to private payers. Yet these costs are actually quite manageable in the aggregate, akin to what retailers lose due to shoplifting. The major cost-shift is from government programs—Medicare and Medicaid—to private plans.

The government pays doctors to treat Medicare and Medicaid patients, but the rates it pays, on average, are less than the cost of care. This is why Medicaid patients, and increasingly Medicare patients, struggle to find doctors.

Putting more people on these programs will destabilize the remaining private system and create a political coalition for price and wage controls.

Americans will never tolerate this. Remember our managed-care experiment in the 1990s? It succeeded in its main goal of controlling costs without an aggregate reduction in quality. But in asking Americans to limit their choices, it prompted a bipartisan act of Congress to provide patients with a Bill of Rights.

Now Daschle proposes nothing less than a giant HMO with a federal bureaucracy setting the benefit plan.

Using Wrong Model

Daschle’s model is Massachusetts—an unfolding disaster that demonstrates how Daschle’s private/public model is merely a stalking horse for government-dominated health care.

The headline claim is that the Massachusetts program has signed up 442,000 more people for health insurance. The reality is that 80,000 of these were simply put on Medicaid, and 176,000 more on taxpayer-subsidized plans. Costs have exploded, requiring additional tax hikes, and the entire system is only possible due to sizable transfers from the federal government.

The plans are so unaffordable that in 2007, 62,000 people were exempted from the individual mandate due to their inability to pay for this so-called “universal coverage.”

The only way the Massachusetts plan will survive is with continued (and increasing) federal subsidies—tax revenue from residents of other states. The only way Daschle’s proposed plan would survive is with massive deficit spending—taxpayer money from future Americans.

Big Questions

Daschle and his colleagues have spent years developing the policy and political strategy to make the final push for taxpayer-financed universal health insurance. They have the players on the field, a crisis providing a sense of urgency, and a playbook filled with lessons learned from years of health policy reform disasters, most recently that of HillaryCare in 1994.

The big questions for believers in private medicine are at this point political and strategic. With employers and most insurers reportedly on board with the new administration’s desire for radical overhaul, who will step in to ask the tough questions?

Americans could easily find Obama’s 100-day honeymoon ends with a whole new health care regime they hadn’t bargained for.



Sally Pipes ([email protected]) is president and CEO of the Pacific Research Institute. An earlier version of this article appeared in The Wall Street Journal. Reprinted with permission.