Critical of Critical

Critical of Critical


Like legions of other wonks when I discovered that Tom Daschle was going to be Obama’s point guy on health care, I sent off for a copy of his book Critical. It’s a fast and easy read, but in its examination of the problem it doesn’t add much to superior books on what’s wrong with health care (much of the first section reads like an undergrad’s attempt to summarize Jonathan Cohn’s Sick) and there are some pretty weak logic flows and basic editing throughout (he refers to the book Uninsured in America on p155 as though it’s already been introduced before it actually gets introduced on p161). But ignoring all that, what does Daschle suggest we actually do?

First, he promotes himself as a scholar of failed attempts at health reform past, and of course a witness to the most recent attempt.

The ill-fated & exclusive White House study groups of Feburary
to May 1993 are therefore only to be repeated in set of window dressing
home study groups & Internet bulletin boards—who’s participants
will have as little actual positive impact on health reform as Ira
Magaziner did in 1993–4. Still the process now is notably open.

Then there’s the rather odd parade of things Daschle likes and wants
to see more of. Mental health parity is one, dental insurance is
another, and long-term care a third. To be fair these are three areas
crying out for a better solution, but Daschle doesn’t make it clear how
we’re going to expand the current definition of insurance to include
them. In addition these are areas for which Medicaid is the current de
facto half-assed solution. Medicaid is a program Daschle likes, while
many health policy wonks (well me anyway) think it should be abolished
and rolled into a genuine universal social insurance system, or at
least (as Paul Krugman suggests) be Federalized and thus removed from
the vagaries of state budgets.

But the actual coverage solution Daschle proposes, which is pretty
similar to the ones emanating from Clinton & Baucus are basically
to expand FEHBP and give it both a Massachusetts Connector-type role
and include in it a buy-in to Medicare, and to impose a pay or play
option onto employers. Somehow he’d also expand Medicaid and S-CHIP,
and then add to all this an individual mandate with subsidies to those
who can’t afford to buy-in to FEBHP. The whole thing is tied together,
sort-of, by a Federal Health Board.

Daschle is damn lucky that he didn’t call his board Fannie Med, but
he’s also unlucky in that he links it to the success of the Federal
Reserve at a time when that “success” is looking, shall we say, shaky.
However, the main role of the Federal Health Board would be as a
cost-effectiveness review organization with teeth—in that Medicare,
Medicaid & FEHBP would all be bound to follow its guidelines. So
essentially he’s advocating the creation of a national benefits package
based in some measure on real research and EBM, and assuming that
pay-for-performance will work in getting doctors & providers to
follow along.

Critics on the loony right (and old reliable Sally Pipes is there in the WSJ yesterday)
will call this rationing. More thinking critics on both sides will call
it the slow emanation of a messy single payer system, which is
essentially what it’ll turn out to be as the private plans toss the worse risks into the pool and employers steadily get priced out of providing health benefits. Jacob Hacker’s been pretty clear about that.
Daschle, like Obama, Gruber and the rest, would be happiest with a
UK-style single payer with a trade up option, but they dismiss that as
unrealistic for the US. They also dismiss as unrealistic the moderate
Emmanuel/Wyden attempts to decouple health care insurance from
employment and create a truer “market” based on social insurance
(closer to the Dutch model).

So the problem with this always comes back to two things.

One; most of the uninsured are working poor and their employers are
the NFIB small employer crowd who are all for health reform until they
figure out that it means they have to pay for it
. Even despite the
incredibly confused rhetoric coming out of NFIB lately, my guess is
that only a puny Massachusetts type “pay” fine ($213 or so) will be
little enough to get them to willingly back a public and compulsory
plan for their employees. And of course at that point all but the
richest of the remaining 55% or so of small employers who offer
coverage will ditch it too, meaning that the public subsidy for the
working poor to get insurance will have to be much greater than Daschle
thinks. Not to mention the continuing administrative nightmare of
figuring out whether someone should be in Medicaid, the new plan, or
covered by their family member.

Second, while it may be getting harder and harder for the Sally
Pipes of the world to get people worried about rationing when it’s
clear that we already have it here but that they don’t really have it
in Switzerland, Germany or France, the Federal Health Board will be
fought tooth and nail by the industry.

As I’ve been saying for a long time, to rationally rationalize the
health care system, we need to make cardiologists in Miami behave like
cardiologists in Minnesota with a consequent impact on the incomes of
doctors, hospitals and stent & speedboat salesman in high cost
areas (Yes, Jeff, I do mean Louisiana, New York, Los Angeles and Boston
too). If the Federal Health Board has teeth, that’s what it’ll do, and
the AMA, AHA, AdvaMed, PhRMA et al know it. Which is why the PhRMA front organizations have been railing against cost-effectiveness for so long.

So my guess is that the Federal Health Board, if it gets
established, will get defanged by lobbyists immediately. The
consequence of that is that the mish-mash of an “expand what we got
now” system will cover a few more people at a lot more cost (as has
been the Massachusetts experience). That’s OK because suddenly we’re
rich (or at least suddenly the government is pretending it is!).

But in a few years the stimulus will end and health care costs will
have kept going up. Then we’ll realize that due to more cuts in
Medicaid & subsidies for the working poor, and continued cream
skimming and bad behavior by private-sector health plans, enough people
have fallen through the cracks of the incremental expansion that we’ll
be back where we are today again.

I still think that the odds of significant reform in the next
Congress are less than 50/50, although they’re well north of where they
would have been sans financial meltdown and recession. But
Daschle’s book and the picks Obama has made to run health care in the
White House suggest that modest incrementalism is all we’re going to
get. I’ve always been a believer that only a big bang reform will be
able to solve the core problems of our system (primarily the incredible
costs lumped on some of those unlucky enough to be very sick). How this
gets done without a clear social insurance system that everyone pays
into according to ability, and in which there’s no real distinction between
choice of services due to the individual’s ability to pay, I don’t know. And I’m
afraid neither does Daschle.

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51 Comments on "Critical of Critical"

Jeff Goldsmith
Dec 31, 2008

Thoughtful posting, Matthew.
The problem with focusing on the uninsured is that the biggest societal risk remains Medicare, and the Democrats, because they still “own” the program, have a lot of trouble talking candidly about how to reform it. Since most private insurers shadow price against Medicare payment rates and coverage, how Medicare structures the benefit and devises a less inflationary and more thoughtful payment strategy for a program which is going to shortly begin acquiring 76 million new customers is, as Graham Greene would have said, the heart of the matter.
What scares me about Daschle is the excessive faith in a technocratic solution to the Medicare benefits and payment conundrum. The health economists who staff it won’t be able to find enough “evidence” to justify what are going to be, at their base, still political decisions. Fannie Med, as you cleverly put it, is a deux ex machina solution to what will remain a fundamentally political problem- how to separate the strong from the weak claims on Medicare spending, and how to avoid overpaying for solutions that provide negligible societal benefit.
Having said all this, I’m more optimistic than you that Obama will commit the political capital to a comprehensive solution and not simply kick the can down the road.

Dec 31, 2008

Genuinely excellent analysis, Matthew.
I wholeheartedly agree with your critique of Daschle’s book. It’s the fuzzy work of a thoughtful and well-intentioned lay person, rather than the targeted analysis of a wonk. Accordingly, its recommendations tend to be ideological, idealistic and conventional, rather than fresh and pragmatic.
To me, offering up Daschle the politician in the form of Daschle as health care expert is reflected perfectly in the health care reform parties being held around the country, showing just how earnestly the Obama team – and most visibly Daschle – want to be seen to care about what regular people think about how health care change should work. Of course, to those of us who have spent much of our careers focused on the problems of national health care reform, the changes critical to making health care better are hardly a mystery. This should be especially true for someone like Daschle, who in the last several years has laid claim to being an authority on the subject. So the window-dressing of health care reform parties rings hollow as pure political theater.
That said, leveraging Daschle’s political resources in the cause of HC reform may make good sense. He is well intentioned and committed to change, and oriented in approximately the right direction. Most important, he can potentially leverage his accumulated Congressional cachet to bring home the votes that are the keys to meaningful change, especially against the backdrop of very powerful, entrenched industry lobbying efforts. The big bet is whether Daschle is strong enough to successfully spearhead real change in this environment.
I’m hoping that the real strategic planning octane behind the Obama health care effort will be folks like Peter Orszag, who have consistently shown a deep understanding of the cost, transparency, mis-aligned incentives and technology-as-answer-to-all-our-prayers problems, and who, as his recent CBO reports detailed, recognize that major structural changes will be required to actually impact the system.
In other words, I’m hoping that the Obama HC effort will be an amalgam of the experiences, perspectives and skills of the various players assembled to make it happen, rather than the personal weaknesses of specific players designated to be its most visible facilitators.

fresno dan
Dec 31, 2008

“The health economists who staff it won’t be able to find enough “evidence” to justify what are going to be, at their base, still political decisions.”
Nice post and comments. I would disagree that these are “political” decisions. What makes them even more contentious is that they are “values” questions (I would concede that the distinction between values and politics decisions, may be semantics, but I think people are much less willing to compromise with regard to “values” as opposed to “politics”).
For example, just setting the value of a human life is difficult. Lets be hypthetically generous and say 10 million. Who would be willing to pull the plug on the incubator for the deformed but photogenic infant at 10.2 million? Or less emotion laden, but a real money question: Who should get statins? If it costs 10 billion a year to extend the average life by a week, is it worth it? A month? A year? Add a concept like YPLL (year of potential life loss)and decide – save the baby or 100 seventy-nine year olds?
Medical care will always be contentious because there arn’t too many people willing to say, “I ain’t worth that much, I’ll die.” The vast majority of medical interventions are of dubious value. To the extent that there have been any improvements in public health, they have been due to better water quality, decreases in smoking, and vaccines. Yet if your doctor says its a good idea to get a nuclear magnetic scan, are you really goint to say, “I can do without?” And if somebody else says, your doctor is wrong, you don’t need that, are you going to go along with it?
I would be happy with a medical reform that gives us France’s system, but I never see contentiousness about medical coverage abating.

Dec 31, 2008

Brian, the Clinton team was “all wonks all the time” and look how far they got. The Obama team is going to be innundated in wonks, most of whom are Democrats, and really want to “help”. Crowd control is already a major issue. In fact,
thoughtful well intentioned lay people with good political radar and judgment are precisely what are needed right now, not input from the “wonkery”. Agree on the Potempkin Village theatricals. Not an improvement over Hillary’s staged town meetings. . .
I really wonder about your statement “the changes critical to making healthcare better are hardly a mystery”. The system is so vast and there are so many things wrong with it that the question of where Obama/Daschle should start and where they spend their limited political capital is actually highly complex. As Daschle correctly observed in his book, It has been political judgment and the inability to manage the “industry” pushback where past efforts have broken down.

Dec 31, 2008

Great food for thought.
The idea that we should find it comforting
if we envison a Federal Health Board as a
sort of medical Federal Reserve has struck me,
from the outset, as crazy..
Alan Greenspan’s tenure as Fed
chairman demonstrates that the Fed
chairman is appointed at the pleasure
of the president, and
serves his political interests.
Paul Volcker was an exception.
It would be better to compare the Federal
Health Baord MedPac. Appointed by the Comptroller General, they members of MedPac are well-informed, intelligent and generally apolitical. (When you read their reports it is hard to believe that it is a government body–it’s only the writing style that gives them away.)
But I don’t see how to truly insulate a Federal Health Board from Congress adn lobbyists unless it has separate funding. (Here I come back to the dedicated VAT tax proposed by Emanuel as the sole funding for healthcare. It is Not Regressive because what the poor and middle-class get in return (free healthcare) is worth more than what they would pay in taxes. If Healthcare is funded by something like a VAT–that grows, automatically with the economy– the Board would not have to go back to Congress every year for appropriations. That’s the key–not being dependent on Congress, or the heatlh care industry–for money.
I think that the Health Board’s evidence-based research could have teeth if Medicare used it to Raise Co-Pays and lower fees for less effective or marginally effective treatments.
And, truth to tell, that is rationing–just a different form of ratinoing than we are practicing today. Today, we ration care according to abilitiy to pay. Tomorrow, we hope to ration care according to how effective a product or service is–using financial disincentives to steer doctors and patients away from less effective care.
I wouldn’t use the “R” word when trying to sell reform, but I think reformers should be honest about this when talking to each other. We’re talking about saying No. We’re talking about less care, fewer treatments. What we have to explain to the public is that we are not saying No to something they need– we are trimming in areas where risks outweigh the potential benefits.
Jeff– I agree that Medicare is “the heart of the matter”– which is why I see reforming Medicare first as an excellent demonstration project for national health reform.
Medicare can do many things that the most recent CBO report calls for: insist on a discount from drug-makers; assume that diagnostic imaging equipment is used 75 percent of the time –as the evidence shows–(instead of 50 percent of the time), and lowering fees accordingly; beginning to track which hospitals and doctors are “outliers” in terms of efficiency (more treatments, outcomes not better, probably worse), informing them, and utlimately, if they cannot change, paying them lower fees.
Medicare can also use evidence-based reserach and
guidelines from the NCI and the Preventive Servcies Task Force to raise co-pays and lower fees for less effective services–or services not recommended for patients fitting a certain profile. (Mammograms for average-risk women under 50 and over 70; PSA tests, etc.)
There is a pretty fair consensus on what Medicare needs to do among the doctors and public health experts on The Century Foundation’s Working Group on Medicare reform, and generally, we’re just following recommendations aleady made by MedPac.
A great many people know what needs to be done. The problem is having the political will to do it. But I think Medicare’s economic crisis will create the political will–especially when the alternative is for Medicare to slash phsician’s fees, across the baord, by 20% in Januayr of 2010.
Matthew– I agree that it’s unlikely that the Obama adminsitation will try to accomplish universal coverage next year.
But I think they will expand Medicaid and SCHIP, cancle some or all of the windfall bonus for Medicare Advantage insurers, and back many of the Medicare reforms listed above, including insisting on discounts from drug-makers. There are also many people who agree with you that Medicaid should be folded in Medicare, or , at the very least, made a federal program. (I totally agree.)
If they did all of that, I would hardly call it
“incremental reform.” I would see it as paving the way for universal health reform.
See the newest, long CBO report and its 117 optoins for increasing revenues and/or cutting costs, virtually all of which would also lift quality.
As I wrote on HealthBeat today, I agree with Bob
Laszewski that it will take more than one piece of legislation to make this work. It will be a process.
But I believe that Orszag et. al. will do it thoughtfullly, and that Daschle will be, as Brian suggests, the facilitator in Congress.

Dec 31, 2008

tcoyote, I agree that the Clinton failure was partly attributable to its supposed experts, of whom most were academics and relatively few actually had practitioner experience. And of course the politics of that effort were a top-down mess. You are also correct that the ranks of the Obama team are going to be mostly eager-beaver (ideological) Dems. But that is why I’m hopeful that the hands at the helm will be more sober, experienced and strategic, like Orszag.
I stand by my statement that the most fundamental changes we need are fairly well-known and understood: e.g., establish some level of universal coverage; payment reforms that move away from FFS to reimbursements tied to results; retool the national HC infrastructure, particularly leading to analytics/EBM/comparative pricing & performance transparency; promote meaningful consumerism. Many of us – you and me included – have long experience grappling with the structural underpinnings of the crisis, and I’d bet that, on this and related wonk communities, we could obtain remarkable consensus on the broad brush strokes of what any meaningful effort must focus on.
That said, you are correct that knowing what changes are essential and figuring out how to start and where to spend limited political capital is highly complex, far more difficult than merely having good ideas about how to fix the system, and the real challenge of the reform process. However, the local HC meetings ask for recommendations on the changes that should be made, and not how to translate them into policy. The calculus of getting good policy made would have to figured out no matter what recommendations were on the table.


All good comments after a good post. Let me just add that neither Daschle’s book, nor the CBO reports, nor most of the discussions about health care reform now brewing and stewing in DC have taken place within the context of what we now understand is the most severe economic downturn in almost a century. I can’t help but believe that the reality of 10% unemployment, the demise of the auto industry, the retreat of credit broadly, and the true suffering of the public will have real impact on what the Obama White House and Congress will agree to do to change the way health care is paid for and delivered in this country. But I would suggest that we need to start factoring in the state of the economy to our prognostications. Even the CBO hasn’t done that yet! Kind regards, DCK

Dec 31, 2008

Thanks for comments all (and I wont ask what you lot are all doing indoors on a beautiful crisp winter day in the Sierras….oh, you’re not all here?)
I will pick up on David’s point. I think that the only reason we’re at a 50/50 chance of major health reform is because of the crisis. I seriously believe that Obama wasnt too concerned about health care in the primaries–at least not for his first term–because it would cost too much and be too big fight. Instead the sudden financial crash and the recession it’s causing on main street are now making things bad enough that spending $200bn a year extra on health care seems doable in the context of spending $1 trillion to forstall a repeat of the 1930s.

Dec 31, 2008

Been reading your blog for a while now, just wanted to wish you all a happy new year…

Dec 31, 2008

A few more thoughts after reading this very good post and discussion:
We will know that the Obama team is serious about reforms to the health care system (and not just about incrementally expanding access to care) when they start a campaign to educate the American public about perverse incentives, how higher spending doesn’t result in better outcomes (Wennberg et al) and the other background insights on the causes of our current problem that those of us reading this blog take for granted but the general public has NO IDEA about.
Because without a sustained education campaign there is no chance that the public and many finger-to-the-wind politicians will support reforms that require large changes in the way medicine is practiced, lower revenues in real terms for providers, and ultimately amount to a change in mindset in healthcare from entrepreneurialism to public service. Providers are the most trusted part of our current system, and so their cries that they are being forced to undergo unfair hardship, pull back on needed care and services to the needy, etc., will all be given the benefit of the doubt unless that basic trust is undermined.
And so the Obama administration will have to consciously set out to undermine the public’s faith that their providers are acting in their best interest, or even that most providers interests are very closely aligned with patient interests. Once the public believes that their doctor or hospital is no more their friend than their insurer or government agency, then we have a chance at deep reforms. I think Matt is right here and Maggie is wrong: reforms that threaten to cut provider revenues will be eviscerated until and unless the general public has a quite different view of where the problems lie in healthcare.
As things stand, we won’t get to that point for several years, as healthcare’s share of GDP expands from 16% to 20%, companies drop coverage and organize more effectively to lobby for cost control reforms, and more of the insured middle class directly feels the pain of high costs in the form of more cost-sharing.
I have long argued that the surest way to accelerate public awareness of the poor value we get from our healthcare spending is to enact universal healthcare with modest reforms now. “Modest” means the most delivery system reform that providers, insurers and pharma will accept without tanking universal healthcare. At best, these lobbies will allow reforms that make universal healthcare revenue neutral, and probably not even that. But we should take such a deal to start, because with the additional taxes, paid mostly by those with incomes in the top 30%, and with the new premiums that the uninsured will be forced to pay, there will be a shock that will make more of the public look for answers to high costs. Also, conservatives will be less likely to defend the system and more likely to see it as wasteful now that government subsidies are more strongly associated with it. And liberals will no longer need to obsess about universal healthcare and can focus on making the system more affordable, and the fact of universal coverage will lessen the anger at insurers that leads to scapegoating and allow more focus on the causes of 80% or more of our poor bang for the buck that lie with the providers and suppliers of care.
That’s not to say that we shouldn’t try to reform, say, the Medicare payment system now. It is to say that we shouldn’t tie the fate of a universal healthcare bill to it, and that when it comes time to expend limited political capital the smarter move is to spend it on getting universal healthcare first. Once that is in place, the game changes and it will be easier, not harder, to reform Medicare’s payment system and make other changes such as reducing volume-based payments and mandating evidence-based medicine.

Jan 1, 2009

Well, heck. I hadn’t got through the book yet, hadn’t even gotten to the unveiling of Fannie Med (love that), but I’d already wondered “So what’s to keep the lobbyists from doing again what they did before?”
What do you think it’s going to take? A really massive uprising of some sort? Some game-changing set of rule changes? Is that unlikely or even impossible?

Jan 1, 2009

Thanks to those who sent private notes.
> no chance that the public and many finger-to-the-wind
> politicians will support reforms that require …
> lower revenues in real terms for providers
I’ve only begun studying the HC system this year, but this one strikes me as both a massive reality and a big challenge: by the time we get our costs under control, we’ll be spending a lot less money (duh?), and a whole lot of people are going to have to find work elsewhere.
It’s not as bad as it might look, though, because a fair amount of the spending will go back into care for the millions of people who today are getting absolutely screwed by lack of care, going into bankruptcy, dying, and so on.
I’m no Matthew when it comes to wonkishness but it’d be horribly inhumane if we asserted this mess is unsolvable.
I myself have never been denied care but over the years I’ve experienced all the other economic injustices and stupidities of today’s system. It’s insane and sometimes terrifying. If you yourself haven’t, please go find one of the horror story people and talk to them.

Jan 1, 2009

I definitely agree that the public needs education.
The basic message: “More care is not necessarily better care; it may even be hazardous to your health.”
But I do not agree that “the Obama administration will have to consciously set out to undermine the public’s faith that their providers are acting in their best interest, or even that most providers interests are very closely aligned with patient interests.”
First of all, we do not want to t undermine trust between patient and doctor. Without trust, you don’t have a profession, simply an industry.
Moreover, driving a wedge between doctors and patients on the issue of health reform is a terrible idea.. Many doctors are the allies of progressive reform; and they understand the problem of waste in the system as well as you or I do.
As for cutting doctors’ fees: many doctors rexognize that we need to cut fees for less effective specialty services while raising fees for cognitive services (talking ot and listening to the patient, co-ordinating care, trying to involve the patient in chronic disease management.) Oncologists, for instance, are intersted in getting out of hte business of being highly paid to administer drugs, adn would prefer to be paid to counsel patients (laying out the pros and cons of further treatment).

Jan 1, 2009

Very good posting, and I agree with most of your conclusions about the Daschle book. Two points, from someone close to the “action” here in Washington, DC.
First, the economic crisis is one of the reasons the Obama Administration will push health reform. As the President-Elect said last week before he went on vacation, the problems with health care are closely associated with the economic crisis – implying the solution to health care will help with the economic crisis.
Moreover, it is the first year or two of a new Administration when they have to push for reform if they are serious. And judging by all the Clintonites who have been hired, some of whom are filling key health reform posts and will studiously avoid the mistakes of 1993-1994, they are full speed ahead with putting together a package for Congress in 2009. See the November 17 posting on our blog,, for further discussion of why the planets are in alignment for something to happen. I am not saying it will be your cherished single payer system. Rather it will be a combination of the latest “fad” reforms including an insurance mandate, Medicare buy-in, FEHBP-like health insurance exchange, premium subsidies, Medicaid expansion, etc., etc. The Federal Health Board and all manner of other theoretical improvements will also be added (whether or not they have been shown to work).
Will this prove to be the right solution, and cure all the ills of the system? Who knows. It is hard to imagine, however, a grand scheme at the federal government level that will have all the right answers. I mean, that was what Medicare was supposed to be in 1965 and look at where we are now?
Second, the education campaign referred to by JD is already underway, albeit for very different reasons. Rather than educate consumers about their health system and health choices, it is attempting to lay the political foundation for reform legislation. By framing the issue through their “outreach” efforts they hope to control the debate. As Daschle himself was quoted in yesterday’s Washington post:
“Daschle said lawmakers will be more likely to take up health reform if there is enough pressure from voters…he urged [Obama] to quickly capitalize on the good will that comes with a new administration. He said the [town meetings currently being held around the country] will add to the sense of urgency.
“It will lead to members of Congress taking note. It will lead to governors taking note,” Daschle said in an interview. “It’s going to lead to a greater degree of commitment on the part of elected people.”
(more at The Washington Post,
Stay tuned, it will get very interesting in February.

Jan 1, 2009

I’m pretty surprised to read your response back to jd– who I think is mostly spot on.
The basic message is not “more care is not necessarily better care” as that’s too narrow. Wennberg is part of the equation, but Berwick has the more comprehensive diagnosis– physicians are only doing the right thing 50% of the time. That’s not an acceptable rate, and that’s where the education is needed. The lack of accountability in the medical profession, coupled with the high degree of autonomy– that’s precisely what needs reform. Physicians are not “allies” of these reforms– they deride EBM as “cookbook medicine,” frown on comparisons based on outcomes data and any threat to their financial livelihood is met with dire threats about the health care system overall. I think you’re confusing the desires of many physician to see universal coverage become a reality– which is true– with a desire to see real reforms that will drive cost and quality improvements that are sustainable in the long-run. I’ve noted previously that you’ve too frequently focused your cost reduction efforts on cutting down profits of drug and medical device companies, this seems to be the other side of the coin– you’re underestimating the degree of change required from the medical profession itself. These are not changes that physicians will agree to willingly. Significant public pressure will be needed.