Monday, January 26, 2009


The new Administration had not yet begun when a bill to enlarge SCHILD, an insurance plan supposedly for children and twice previously vetoed by President Bush, was passed by the House with no amendments allowed. One significant change is that new immigrants no longer have to verify their status to qualify for inclusion. This quasi invitation to free health care is an incentive to Mexican residents to move to the United States.

Still unveiled is Senator Kennedy’s task force, which he, long determined to play a major role in health care, organized to write the health-care bill.

Still another player is President Obama’s nominee for Secretary of Health and Human Services, Tom Daschle, former Senate Majority Leader. Simultaneously approved by the President is Daschle’s new Federal Health Board (FHB). He will head it. Its members will be named by President Obama with the consent of the Senate.

The FHB, which Daschle likens to the Federal Reserve Board, will make decisions in health care as does the Fed in monetary policy. As the Fed indirectly sets the interest rate, the FHB will indirectly set the prices of drugs and medical procedures. The FHB, an additional bureaucracy, will centralize a fragmented administration and could save us $85 billion a year if we could match the efficiency level of France , Finland , and Japan , says Daschle..

With the new Secretary comes his new book, What We Can Do About the Health-Care Crisis, with his name on the cover with two others’ below (in smaller type) who are experienced in health care, Scott S.Greenberger and Jeanne M.Lambrew. In this book we learn about how Secretary Daschle intends to coordinate or transform our fragmented—some say “broken”— health-care system into a central planning agency for health care.

The FHB will not be a free-market system. Its bureaucrats can deny coverage of “unproven or ineffective treatments and procedures.” It will, perhaps indirectly, set prices of drugs and procedures. The Bush Administration adopted a coding system that doctors and hospitals will use to bill insurers, which will increase the number of codes hospitals and doctors use to describe diagnoses to 68,000 from 13,000. Hospitals will have 87,000 codes to describe procedures, up from 3,000.

The FHB will block expansion of specialty hospitals like doctors’ hospitals. The FHB will stop duplication of equipment by hospitals and doctors.

The FHB will control the introduction of new technology. “Many patients with insurance want any care that might do some good, and plenty of doctors will oblige them. Sometimes doctors do things they don’t believe are medically necessary because they want to defend themselves against lawsuits,” observes Daschle. (But the cause, hyperactivity of tort lawyers, is not mentioned.)

Some commentators may question whether central planning of the health-care industry will lower costs. It might raise them and create shortages as of doctors.

The FHB will apply as well to a new type of Medicare that will parallel the FEHBP, the Federal Employees Health Benefits Program, says Daschle. The FEHBP is open to present and former Federal employees and Members of Congress, who have their choice in over 200 private plans. The federal government subsidizes FEHBP enrollees.

In time, it is likely though not explicit that the trend will be towards increasing public and decreasing private health care, as “average Americans would gain the security that comes with stable, quality coverage,” comments Daschle. One may question it, since the FHB “will have to reduce or deny payment for new drugs and procedures that aren’t as effective as current ones. Doing so will rankle powerful interest groups, such as drug manufacturers. Who will benefit? Average Americans . . .“

But suppose average Americans need a drug or procedure which the FHB declares they do not need. Many are the Canadians who come to the U.S. for the drug or procedure their socialist universal system has denied them.

Not mentioned in the book are Health Savings Accounts, or malpractice litigation expenses. Autism has been denied.

Meanwhile states have been creative. A recent referendum in Arizona would have made it impossible to force residents into a government-monopoly system like Canada ’s or a private system. The referendum failed by a very small margin. Massachusetts has a universal system and is now encountering a shortage of doctors.

In Louisiana , Governor Jindal, who believes government-run health care is inherently flawed, proposes to move people from state-run Medicaid, which is becoming very expensive, to private health plans. Medicaid recipients would be able to choose among several privately-run plans. His proposal acknowledges key concepts of reform: “accountability, consumer choice, cost efficiency, marketplace competition, and transparency.” Enrollees would pay a flat-rate monthly fee, which would vary with enrollees’ health and risk. Jindal would negotiate reimbursement fees with hospitals, providers, and pharmacies. Administrators would coordinate patient care within the network. Jindal is trying out his proposal in four Louisiana cities.

Daschle sees it differently:

The goal is a Board that is a standard setter that allows a private delivery system to operate within a public framework. A highly regulatory approach is unlikely to succeed.

By Natalie Sirkin
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