"Towards A Health-Care Fed"

Are you ready for a Federal Health Board?:

Towards a Health-Care Fed, by David Warsh, Economic Principals: ...The current economic emergency will pass. ... Stability in property markets will be restored. New frameworks for the domestic and international financial systems will be established. ...

But even as it addresses these urgent but essentially cyclical matters, the Obama administration has begun moving on two pressing structural reforms: it intends to reorganize markets for health insurance to provide universal coverage, and to take some tentative but long-lasting measures to cope with climate change.

President-elect Obama’s strategy on the first problem became clear last week when he chose Tom Daschle to lead the push for universal healthcare as Secretary of Health and Human Services.

Daschle,.. last spring, in Critical: What We Can Do About the Health-Care Crisis,... (aided by writers Jeanne Lambrew and Scott Greenberger) described a broad plan by which to proceed. Forget about trying to spell out the details of universal health care coverage in a single great omnibus Act of Congress. That was the approach that failed in 1993, brought down by intense pressure from interest groups.

Instead, he proposed, create a Federal Health Board (FHB), loosely modeled on the Federal Reserve System, with a mandate to provide a public framework for a largely private health-care delivery system. ... [S]uch a board could create standards that would serve as models for private insurers..., especially in devising distinctions between basic and supplementary plans.

A health-care Fed couldn’t single-handedly solve problems of choice, access, cost-containment and quality control, wrote Daschle. What it could do would be to provide an institutional setting in which details could be worked out by experts from all the relevant interest groups, insulated from political pressure and yet at the same time accountable to elected officials.

Daschle identified three key aspects of a model that, for nearly a century, has worked successfully for setting monetary policy and that could be expected to serve equally well in the making of medical policy: its independence, its decentralization by regions, and an extensive set of feedback mechanisms engineered into it.

Governors of a Federal Health Board would be appointed by the president to ten-year terms, confirmed by the Senate, chosen on the basis of their stature from the health benefit, insurance, and clinical communities, and served by a large staff of analysts – insurance underwriters, marketing specialists, accountants, economists, nurse-researchers, statisticians, engineers, scientists and policy experts.

Regional boards, much like the twelve Reserve Banks of the Federal Reserve System, would help anchor the Board itself to the real world of health care delivery systems, which differ widely around the country. Boards of community and business representatives would advise these regional boards, insuring a steady flow of appraisal and feedback. ...

Finally, while Congress would have the ultimate say on the Health Fed’s powers, pains would be taken to foster the atmosphere of calm deliberation that is a hallmark of the bankers’ Fed, as opposed to the pandering to special interests that is all too often at the heart of the process when Congress makes policy. ...

Interestingly enough, the idea of a Health Care Fed was broached first, as far as I know, by Peter Diamond, of the Massachusetts Institute of Technology, in his presidential address to the Econometric Society, in Philadelphia, in the summer of 1991 (and in an oped piece in The New York Times the same day). Diamond ... went even further. He proposed that the Fed should divide the entire populations into many large groups, or risk pools, then act to play the role of a corporate benefits office in supervising the various plans that would be offered to consumers.

The idea of formulating risk pools of 20,000 to 200,000 persons turned out to pose insuperable problems, having to do with the mechanics of maintaining competition among companies... But the concept of supervising health insurance policy through a combination of central and regional offices, with a mixture of independence and political accountability has held up surprisingly well. ...

The politics of acceptance are enormously complicated. Getting to yes will be a lengthy and often tedious process. ... You’ll understand it better in the days ahead if you keep the administration’s ultimate objective – a Federal Health Board – in mind throughout.