Matthew Holt

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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Jonathanヴィトン 財布 中古ヴィトン バッグ 人気ray ban usTodd Thorpe Recent comment authors
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Todd Thorpe
Todd Thorpe

Here’s a novel thought…how about all of you read the Constitution of the United States for once. And pay special attention to the enumerated powers granted our Federal Government. Or the “list of negative libertys” as our President “complains”. How about we send social security and medicare to the recycle bin and do away with these plans altogether. Do you really think they give a rat’s a.. about the 46 million uninsured? That’s chump change to somebody like George Soros. The lawmakers could throw 46 million on the problem right now and not blink and eye. That’s a lot less… Read more »

Wendell Murray

“he promotes himself as a scholar of failed attempts at health reform past”
Not true. Senator Daschle focuses on two issues:
1. The politics of attempts at national healthcare reform in the recent past (mostly surrounding the Clinton Administration proposal in 1993-1994)
2. The reasons why a Federal Health Board is needed.
He does a good job on both in my opinion. No attempt at scholarship here at all. The writing style is journalistic, far from academic, a fact that makes the book quick and easy to read, but something that does not diminish its value.

Tom Leith
Tom Leith

In Defense of Critical Well, OK, so 137 (a whopping 67%) of 206 pages are devoted to history, and if the notions of a Federal Health Board and PPOs are the president-elect’s idea of “fresh thinking” great disappointment is just around the corner. But this is an accessible read for non-wonks that, whether one favours a UK style system, a German-style system, or a Swedish-style system, describes a “necessary thing”: an independent evaluation and policy board. Senator Daschle points out a mostly-successful analog in our own political system, saying in effect “we have de-politicized money, we can de-politicize healthcare finance.”… Read more »

Matthew Holt

Wow this is too much fun to resist for one last time. On the 30%, Nate’s “writing” is so confused that I thought he was talking about the variance in cost between what healthy people and sick people get charged. In fact he was talking about the 30% that I refferred to as the off the top cost taken by insurers in the individual market. Nate denied this was the number pointing to a report that in Minnesotta this number was only 9% but neglecting to point out that the average MLR for that year was between 25% (yes only… Read more »


Seriously what does this say about government ran healthcare where they force you against your will to take the program they dictate? These individuals wish to opt out and pay for their own care and the government won’t allow it. How more unAmerican can a system get? Other parties who have attempted to opt out have gotten letters from the SSA saying the bureaucracy was “not going to make a determination” about their request. An affidavit from David A. Nelson is included with the filed suit. When applying for Retirement Insurance Benefits at the SSA in Albany, Oregon, he… Read more »


Sorry couldn’t resist… “It’s called Medicare. Heard of it? It’s got a total mandate. Everyone over 65 is in it.” Um LIAR Persons age 65 and older who did not pay Social Security contributions, or were not “grandfathered” into the program by attaining 65 by 1967 may apply for Medicare Part A. Individuals choosing to enroll in Part A must also be enrolled in Part B of Medicare which also carries a monthly premium. notice choosing and may apply In general, the Part A premium increases 10 percent for each 12-month period that enrollment, (effective coverage), is delayed past… Read more »


One question Matt then I’ll accept your apology and let it rest. This is cut and paste from you;
“what exactly is the justification for the 30% off the top that individual insurers & the distribution channel (yes that’s the scumbag brokers like you) receive?”
Posted by: Matthew Holt | Jan 5, 2009 10:35:38 AM
Who can’t read and type?


Maybe you should move to a more conservative state like FL where they haven’t destroyed their market like CA has. CalChoice being a perfect example of poorly designed risk pools. Personally I think 200% is low and doesn’t adequtly allow for the risk variance but it has worked for them. Better then the 450% and 1000% CA tried to hit you for, whats wrong with the people running your state? “After the COBRA period ends, a HIPAA-eligible person is provided one of two methods for continuing coverage, depending on the type of prior coverage that was terminated. If the prior… Read more »

Matthew Holt

Nate. I understand your role. You sell health insurance. It’s an unneccesary role. We miss Ron Grenier around here–he too sold bullshit underwritten HSA/HDHP policies and decided that THCB was good forum to advertise them. We were all amused for a while. Thankfully he left in the end, and his schlock will hopefully soon be out of business, as will yours. Having said that, you appear very similar in your inability to make an argument or stick to the point. And while we’re discussing childishness, you were the one who started calling people liars. And now you say I’m using… Read more »

Average Individual policy loss ratio 91%. Matt please explain how these carriers pay “30% off the top that individual insurers & the distribution channel (yes that’s the scumbag brokers like you” while at the same time returning 91% of premium in claim payments? That would be 121% on average. Is the State lieing to everyone when they publish these reports or have you just been caught once again making facts up to support your lies?


Matt, I’m so disappointed you retreated to such childish arguments. It betrays your intentions of reform when you make such arguments. It’s interesting you would eliminate my role yet you don’t even know what it is. What’s that say about you? Ironically I totally agree with Deron. That is exactly what I advocate and the best solution to the problem. Never in my career have I said or thought that someone who played by the rules shouldn’t have coverage. Unlike yourself I know how to define the word insurance, waiting till your sick to buy it isn’t insurance. The problem… Read more »