What Next?

The health policy landscape was transformed by a huge earthquake this week when former Sen. Tom Daschle withdrew his name for nomination as secretary of Health and Human Services. The likely result, in the short term at least, is that the power center in health reform will remain with the Congress, not the Obama administration.

Daschle was in a unique position to wield extraordinary power because so many of his former staffers recently have been appointed to key positions in the Obama administration and because of his incredible influence on Capitol Hill as a former Senate leader. And as an early supporter of Mr. Obama for the Democratic nomination, Daschle enjoyed strong personal rapport with the new president.

Liberals believed that unique combination made comprehensive health reform a near certainty. News reports say the White House is shell-shocked and is at a loss now about who will fill the void since they didn't even have a second person in mind for the HHS job.

The list of potential contenders now, however, is quite long — Democratic governors such as Kathleen Sebelius of Kansas and Deval Patrick of Massachusetts, former Republican Massachusetts Gov. Mitt Romney, Sen. Ron Wyden of Oregon, and Mayo Clinic President and CEO Denis Cortese, M.D. Former Democratic National Committee Chairman Howard Dean, a physician, also has been mentioned, but he and White House Chief of Staff Rahm Emanuel barely speak to each other, so if that happens, the fireworks would be quite interesting.

While Daschle still could have been confirmed by the Senate, it just wasn't tenable for the Obama administration to have to continue to defend two tax cheats in his administration, after getting Treasury Secretary Geithner approved despite his failure to pay $43,000 in back taxes. The air of privilege over Sen. Daschle's failure to report and pay $146,000 in taxes and interest for the use of a full-time car and chauffeur was particularly jarring.

So what's next?

 

  • First, there will be a delay at HHS. Unless a suitable replacement already is far along in the vetting process for some other job, it will take some time before another nominee is selected. The Obama administration simply can't afford another mistake.

     

  • Second, Congress will take its own sweet time. Leaders in Congress already had said that it is unlikely major health reform legislation would happen this year. They want to build support among the various constituencies for tough reform measures and are finding that is harder than anticipated. The House Small Business Committee, for example, heard this week from small businesses virtually pleading with Congress not to impose a jobs-killing, and possibly business-killing, health insurance mandate.

     

  • Third, Congress will have more power now. Daschle would have been a powerhouse directing health reform, and it's going to be difficult to fill that role. But that may be just as well with Congress where committee chairmen with decades of experience are more than ready to take the lead. This means an individual mandate certainly will be in play.

     

  • Fourth, reform is well underway anyway. Even if Congress doesn't get to comprehensive health reform soon, it already is well on its way to drawing millions more people into government-controlled health programs.

President Obama signed a massive expansion of the State Children's Health Insurance Program on Wednesday. The stimulus bill contains tens of billions of dollars in spending to create more middle-class entitlements to health coverage through Medicaid expansion and creation of new government programs. And these two bills, coupled with the administration's regulatory machinery, are like a vortex drawing other huge segments of the health sector under government control, as we reported last week.

So Daschle's road to the nomination was stopped by a chauffeur-driven limousine, and there is a big traffic jam behind it now. But the journey still has just begun.

Grace-Marie Turner

Recent News Articles and Studies

'Stimulus' Bill May Change Health Care Forever
Medicaid: Not Just for the Poor?
Trojan Horse: Threats to American Health Care Lurk Within the Stimulus Package
The Cast Against Mandated Employer-Provided Employee Health Insurance: A Practical Small Business Perspective
Small Business Effects of a National Employer Healthcare Mandate
Comparative Effectiveness in Health Care Reform: Lessons from Abroad
Promoting and Using Comparative Research: What Are the Promises and Pitfalls of a New Federal Effort?
Medicare Part D: Good for Patients and an Opportunity for Pharmacists
The Effect of Medicare Part D Coverage on Drug Use and Cost Sharing Among Seniors Without Prior Drug Benefits

GALEN IN THE NEWS

'Stimulus' Bill May Change Health Care Forever
Amy Menefee, Galen Institute
The Washington Times, 02/05/09

The “stimulus” bill in Congress would fundamentally change the way health care is delivered to all Americans, writes Menefee. The bill would create a Comparative Effectiveness council in which the federal government would rule on which medical treatments are worth the money. Having the government make these decisions is beyond frightening — and it doesn’t make sense, writes Menefee. You are a unique human being, with genetic and environmental factors influencing your health. Having a board that excludes any treatment on the basis of comparative effectiveness is a danger to the health of those who fall outside the norms — and with government setting those norms, any of us could end up as outliers.

Medicaid: Not Just for the Poor?
Grace-Marie Turner, Galen Institute
National Journal Expert Blogs: Health Care, 02/04/09

The stimulus legislation making its way through Congress provides new money to the states to cover unemployed workers through their Medicaid programs — with the federal government paying all of the cost. States are charged with policing fraud in the Medicaid program, writes Turner, but with the federal government paying 100% of the premiums, there is little, if any, incentive for the states to make sure these taxpayer dollars are being spent wisely and carefully. Further, there have been no hearings about the implications of this Medicaid expansion, including compromising access to care for vulnerable, lower-income people on the program now.

HEALTH CARE REFORM

Trojan Horse: Threats to American Health Care Lurk Within the Stimulus Package
Tevi Troy
The Weekly Standard, 01/29/09

According to former HHS Secretary Mike Leavitt, the stimulus package, properly understood, is really the Democrats’ opening s
alvo on health care reform, writes Troy, former deputy secretary of HHS. The consequences of the bill’s health provisions will be two-fold: First, it will increase subsidies for health coverage, and, second, it will give government more control over the use of a variety of technologies used by health care professionals. The subsidies are at least up front and obvious, but the worst long-term damage could be in the bill’s attempt to assert control over the adoption and use of innovative health technologies.

The Cast Against Mandated Employer-Provided Employee Health Insurance: A Practical Small Business Perspective
William Dennis
National Federation of Independent Business Research Foundation, 02/04/09

Senior Research Fellow Dennis discusses the effects of a mandate that employers provide health insurance coverage for their workers and concludes that it would be highly regressive. He explains that the uninsured are often low-wage earners, and they eventually pay for their own insurance through job loss, depressed wages, and erosion of other benefits. The policy is also inefficient because it is too blunt to distinguish between those needing assistance in purchasing health insurance and those who do not. Finally, mandated employer-provided health insurance is unfair to small business employers and employees because the policy fails to address the real problems of high costs small businesses face in purchasing health insurance, while imposing a hefty, direct penalty on them — i.e., a tax — because they are small and lack market power.

Small Business Effects of a National Employer Healthcare Mandate
Michael J. Chow and Bruce D. Phillips
National Federation of Independent Business Research Foundation, 01/26/09

The NFIB analyzes the potential impact of a national employer mandate on small businesses to provide health care. The study conducted business simulations to measure the effects of a hypothetical national mandate requiring employers to offer private health insurance to all employees starting in 2009 and to finance a minimum of 50% of the cost. The results show that an employer mandate would have significant negative impacts on local jobs and on state revenues, particularly considering the rising costs of health insurance. Key findings:

  • Of the more than 1.6 million jobs lost between 2009 and 2013, small businesses would account for more than 1 million, 66%, of all jobs lost.
  • U.S. real GDP would contract by approximately $200 billion between 2009 and 2013.
  • Small businesses would lose roughly $113 billion in real output and account for 56% of all real output lost.
  • Labor-intensive industries (e.g. construction or restaurant) and businesses with 20-99 employees would experience the most job loss.

 

COMPARATIVE EFFECTIVENESS

Comparative Effectiveness in Health Care Reform: Lessons from Abroad
Helen Evans, Ph.D., Nurses for Reform
The Heritage Foundation, 02/04/09

The idea of a statutorily created agency charged with system-wide cost containment and rationing of medical services and technologies is becoming surprisingly fashionable in Washington policy circles. But the idea that government is intrinsically superior to a spontaneous and free market is groundless, writes Evans of the London-based Nurses for Reform. American policymakers who believe the health care systems in many European countries to be ideal should learn about citizens of the United Kingdom being denied the medicines they need. Studies of comparative effectiveness of medical devices, drugs, and technology should be conducted primarily within the private sector. It is clear from the British experience and other international examples that a comparative effectiveness strategy that relies on central planning and coercion would be counterproductive and also would lead to cost constraints that could worsen patients' medical conditions and damage the quality of their lives.

Evans has also edited a special edition of the Institute of Economic Affairs quarterly journal Economic Affairs that focuses on "Healthcare: State Failure."

Promoting and Using Comparative Research: What Are the Promises and Pitfalls of a New Federal Effort?
Scott Gottlieb, M.D.
The American Enterprise Institute, 02/02/09

Comparative effectiveness research (CER) has generated so much political interest as a means for curbing health spending that its complexities — and limitations — are being given too little attention, writes Gottlieb. These challenges are demonstrated by ALLHAT and CATIE, arguably the two largest medical studies ever undertaken. Launched in the 1990s, ALLHAT and CATIE compared different approaches to treating two common medical problems. In each study, the authors concluded among other things that newer and more expensive medicines were no better than the older and cheaper alternatives. In each case, however, these sweeping conclusions were revised — and in selected cases deemed wrong — as the CATIE and ALLHAT data underwent closer scrutiny and additional studies were released examining similar questions. Further, as many as seven years after findings from ALLHAT were released, these results have not meaningfully changed how doctors practice medicine. As we embark on what is likely to become a multi-billion dollar federal effort to sponsor CER, we should examine the federal government's previous efforts to underwrite CER, with all of its promises and shortcomings, and the lessons we should have learned about doing this science the right way, writes Gottlieb.

PRESCRIPTION DRUGS

Medicare Part D: Good for Patients and an Opportunity for Pharmacists
Joshua S. Benner, PharmD, ScD, and S. Lawrence Kocot, MPA, JD, LLM, The Brookings Institution
Journal of Managed Care Pharmacy, January/February 09

By almost any measure, the Medicare prescription drug benefit (Part D) is a success, write Kocot and Benner. Twenty-five million Medicare beneficiaries enjoyed guaranteed access and choice of a drug benefit in 2008. Based on bids submitted by prescription drug plans for 2009, the Centers for Medicare and Medicaid Services estimates that the average monthly premium for standard Part D coverage will be $28, an amount 37% lower than originally projected when the benefit was established in 2003. Finally, the program has been far less costly to taxpayers than expected — now estimated to be 38.5% ($243.7 billion) less than the originally projected budget for the period 2004-2013. A key reason for the economic success of the prescription drug program is that it uses competition among Medicare prescription drug plans and pharmacies to control costs.

The Effect of Medicare Part D Coverage on Drug Use and Cost Sharing Among Seniors Without Prior Drug Benefits
Sebastian Schneeweiss
, Amanda R. Patrick, Alex Pedan, Laleh Varasteh, Raisa Levin, Nan Liu, and William H. Shrank
Health Affairs, 02/03/09

The first year of the Medicare prescription drug program saw increased use of essential medications and reduced out-of-pocket spending for seniors, according to Schneeweiss and co-authors. The study looks at approximately 115,000 continuous users of three pharmacy chains who had no prescription drug coverage before Part D took effect at the beginning of 2006. The researchers found that co-payments for a month's worth of selected medication classes were $15-$80 lower after Part D had taken full effect, as compared to the pre-Part D period. The study also finds that previously uninsured people who enrolled in Part D were more likely to use medications that can improve health outcomes.

Upcoming Events

Grace-Marie Turner speaking on the Late Afternoon with Larry Shannon show
KMA-AM Radio Broadcast
Friday, February 6, 2009, 3:35 p.m.
Shenandoah, IA

Grace-Marie Turner speaking on The Morning Zone show
KGAB-AM Radio Broadcast
Tuesday, February 10, 2009, 7:00 a.m.
Cheyenne, WY

Grace-Marie Turner speaking on the Pittsburgh Renaissance Radio show
WMNY-AM Radio Broadcast
Wednesday, February 11, 2009, 5:30 p.m.
Pittsburgh, PA

8th Annual Strategic Medicare Policy Summit
The Center for Business Intelligence Event
February 12-13, 2009
Washington, DC
Grace-Marie will speak on a panel about "Medicare Expansion, Entitlement Reform and National Health Coverage" on Thursday, February 12.

Real Change or Pocket Change? The High Stakes of Entitlement Reform for Young Americans
The Heritage Foundation Event
Wednesday, February 18, 2009, 12:00 p.m.
Washington, DC

 

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Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features a commentary by Grace-Marie Turner on the major developments and issues of the week as well as summaries of writings by participants in the Health Policy Consensus Group and other articles of interest from the health policy world, plus announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at www.galen.org.

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