The new administration’s health care ideas have both good and bad for our industry. We just don’t know what we are up against yet.

By  Scott Sinder Sinder and Elizabeth Glidden

In his first official presidential address, President Obama made just a single reference to health care, promising that his administration would “wield technology’s wonders to raise health care’s quality and lower its cost.” If only it were that easy.

A few things, though, are clear. First, the president committed his new administration to advancing the valuable work begun under Secretary Michael Levitt’s Department of Health and Human Services (HHS) to bring needed technology reform to the health sector. These long-overdue advances should help to eliminate mistakes and bring more efficiency to the delivery and financing of health care in this country.

The president selected former Senate Minority Leader Tom Daschle to lead HHS. (As of this writing, he had not yet been confirmed.) President Obama also has created a new White House Office of Health Reform. In the past, the creation of analogous White House policy advisory offices like the National Security Council or the National Economic Council has resulted in difficult turf battles and disharmonious relationships between the White House and the agencies whose roles some perceived as at least partially being duplicated. In this case, however, the president named someone very close to Secretary Daschle to be the director of the new office: Tom Daschle.

Both Secretary Daschle and Director Daschle will be focused on pushing through health care reform legislation that attempts to accomplish at least some of the following:

• Create a National Health Insurance Exchange that would function as a clearinghouse intended to make it easier for businesses and individuals to shop for the best insurance.
• Reform medical malpractice insurance rates by strengthening antitrust laws in a manner purportedly designed to prevent insurers from overcharging doctors. The president also would like to use the legislation to promote new medical malpractice tort reform initiatives.
• Increase insurance industry competition in markets where the insurance business purportedly is not competitive by forcing insurers to pay out a share of their premiums for patient care for the uninsured.
• Provide reinsurance for catastrophic coverage to reduce insurance premiums for such coverage.
• Create a new tax credit that refunds up to 50% of premiums paid by small businesses on behalf of their employees.
• Require large employers that do not offer coverage to their employees to contribute a percentage of payroll toward the cost of the national plan.
• Require that health plans disclose the percentage of premiums that goes to paying for patient care as opposed to administrative costs.
• Reward providers who see patients enrolled in the new public plan, the National Health Insurance Exchange, Medicare and FEHB.
• Eliminate inequalities in health care by requiring hospitals and health providers to collect, analyze and report health care quality for disparity populations and hold them accountable for any differences in treatment reflected in that data.
• Require coverage for children.
• Investing an additional $10 billion a year over the next five years to facilitate the system’s broad adoption of standards-based electronic health information systems, including electronic health records.

It’s quite a list. And each component has the potential to fracture any coalition that Secretary/Director Daschle may be able to assemble. To add to the magnitude of the challenge, many members of Congress have their own ideas about the direction in which the health reform efforts should move. For example, Sen. Max Baucus, D-Mont., the chair of the Senate Finance Committee, which has primary jurisdiction over health care legislation in the Senate, released his own blueprint for reform immediately after the election. He would guarantee health insurance for all Americans by facilitating sales of private insurance, expanding Medicaid and Medicare, and requiring most employers to provide or pay for the health benefits. Unlike the Obama plan, which mandates coverage for children only, the Baucus plan eventually would require everyone to have health insurance, with federal subsidies for those who could not otherwise afford it.

Daschle, a veteran of the Hillary-Care debates, has a deeper appreciation than most of the political complexities of the health care reform debate. He has written a book dedicated, in part, to examining the challenges that this type of reform effort must overcome. A core proposal in the book is the creation of a new federal health care body—described as a Federal Reserve Board for health care—that would oversee the reform effort in a way that would insulate it from the daily scrutiny and tumult of the political arena.

However inconceivable it might seem at first blush, this idea should be taken seriously. Many members of both parties believe that reform is necessary, as do ever-expanding swaths of the business and consumer rights communities. Delegating responsibility for the hard decisions to an “independent” oversight board for the sector would obviate the need to actually reach political agreement on any of the hard questions while at the same time giving all of the reform-oriented stakeholders the opportunity to claim victory that something positive was done.

Any such development has the potential to completely federalize the entire health care sector, including the insurance component. That could create opportunities (for agent licensing, mandate harmonization, and solving the value-added-services compensation conundrums, for example) as well as an unpredictable range of threats that we can only begin to fully imagine.

Sinder, a partner at Steptoe & Johnson, is CIAB General Counsel.
. Elizabeth Glidden is an associate in Steptoe’s Government Relations & Public Policy Group. eglidden@steptoe.com.