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July 26, 2009
David Warsh, Proprietor


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Pausing at the Fork in the Road

Congressional leaders have postponed their work on health-care reform until after their August vacation. That’s a good thing. They should take a deep breath before setting in motion a system to gradually rebalance the incentives in a fifth of the American economy. If you believe, say, Wall Street Journal columnist Peggy Noonan, Obama’s drive has been blunted, even defeated. But no one who remembers the seeming impasses over the Social Security Reform of 1983 or the Tax Reform Act of 1986 will be persuaded. With the really big problems, and strong presidential leadership, Congressional deals have a way of popping out when you least expect them.

Just after last autumn’s election, Economic Principals called attention to former Senate Majority Leader Tom Daschle’s proposal for a Health-Care Fed.  Daschle failed to get the job he wanted as Secretary of Health and Human Services, but he remains active behind the scenes. Moreover, the heart of his proposal is very much alive, in the form of White House Budget Director Peter Orszag’s proposal for a new Federal agency to make changes and, as necessary, cut spending in Medicare (unless specifically overruled by Congress). David Broder in The Washington Post today describes the Independent Medical Advisory Panel (IMAC), its five members  subject to Senate confirmation,  that the administration has in mind. An independent authority is at the heart of Daschle’s plan, too –Like monetary policy, health-care policy shouldn’t be subject to the whims of subcommittee chairmen and special interests,” he writes in Critical: What We Can Do About the Health Care Crisis.

But the agency Daschle has in mind is not single toplofty board of experts in Washington, but rather a relatively decentralized and consultative organization modeled on the Federal Reserve System – seven governors who, with the presidents of a dozen regional banks, have set policy for US banks since 1913. Were a something like a Health Care Fed to eventuate in the current situation, then hospital managers, physicians, insurers and other service providers would, through a dozen regional authorities around the country, monitor health care in their districts, in a continuing effort to evaluate the effectiveness and costs of various treatments, much as bankers, business executives and community leader now maintain a nonstop colloquy with the central bank.

To get some sense of why a region-by-region approach is the key to smoothing out the wrinkles in the current medical system, see The Cost Conundrum: What a Texas town can teach us about health care, by Atul Gawande, which appeared in the June 1 New Yorker. Indeed, if you have time to read just one piece about health care reform this summer, let it be this one. It takes fourteen pages to print out a double-spaced version; its 7,800 words take about twenty minutes to read. Gawande is a practitioner of the Show, Don’t Tell style of journalism. In describing McAllen, Texas, as “the most expensive town in the most expensive country for health care in the world” he introduces enough evidence that, when he is done, you probably will require no more elaborate model of the problem, and will understand why there are two, and only two, possible broad outcomes. It is a masterpiece of magazine reporting and won’t be improved by any explication by me (except for this: in describing McAllen, located near the very southernmost tip of Texas, the author states that “‘Lonesome Dove’ was set around here.” It isn’t surprising that Gawande, a physician, hasn’t read Larry McMurtry’s famous novel about a 2,000-mile cattle drive, but apparently nobody who edited the piece at The New Yorker has either. That’s like saying that the Odyssey was set in Ithaca. )

Without Daschle as its point man, the administration hasn’t done a very good job of framing the issue. Great confusion has developed about its goals. Medical cost control? Or universal health care? The two are related – cutting the rate of growth in overall spending eventually can defray the cost of covering the uninsured. But the argument for expanding the safety net is an argument from fairness, while moderating the growth of medical spending is a response to a dire emergency. Presumably Obama laid the groundwork for the fall campaign last week when he used the occasion of a press conference to appeal directly to the American people. “If somebody told you there is a plan out there that is guaranteed to double your health-care costs over the next ten years, that’s guaranteed to result in more Americans losing their health care, and that is by far the biggest contributor to our deficit, I think most people would be opposed to that. That’s what we’ve got right now. So if we don’t change, we can’t expect a different result.”

After Labor Day, the president will have to become a lot more clear about what his IMAC would involve.  He’ll do better if he listens to Daschle’s advice about how to sell it. 

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