Gary Lauer, CEO of e-HEALTH, argues that some supervision is essential to implementation of major health reform. Here's what he has to say:

I’m glad Senator Daschle is addressing the issue of management here, because there’s a consensus among many that enrolling millions of uninsured Americans in health coverage will be as simple as building a government exchange. As the CEO of the largest online health insurance technology company in the country, I can assure you it won’t be that simple.

As Senator Daschle notes, it would be disappointing – unacceptable, I would add – to reform the health care system, only to see years of delay on implementation. Or worse, to see a process that’s confusing, inefficient or simply unsuccessful. Enrollment is more complex than it may seem: think of the millions of individuals who are not enrolled in Medicaid or the State Children’s Health Insurance Plan (SCHIP) today, though they qualify. Or think of Medicare Part D, where many seniors found the initial enrollment process to be daunting and, as a result, ended up on the wrong plan.

To maximize enrollment in coverage we need to maximize access. As a nation we ought to be engaging and empowering every viable organization, public and private, alone and in partnerships, to connect people to coverage. Health insurance exchanges could be extremely valuable, too – distribution mechanisms where people could find, compare and buy coverage, not unlike what they can do today on eHealth, or in other places. A one-size-fits-all approach won’t work for all people: some will prefer to go online for help, others directly to an insurer or through their church, professional association or school. A nation as diverse as ours needs and deserves many paths to connect people to coverage. To me, it is not a process for intensive bureaucracy so much as for appropriate supervision.

The objective of health care reform is to ensure that all Americans have quality health insurance coverage. Forty-seven million Americans are counting on our collective success.

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I am pleased to see the thoughtful responses so far this week. I would like to respond with a few comments. Some contributors are concerned that a Federal Health Board will result in a health care system comprised of unaccountable board members and government run health care. This simply is not the case.

Let me be clear. I am not proposing one-size-fits-all health care. But I am proposing some reasonable standards for the system. Imagine how much chaos would ensue if we had local and varying standards for airline safety and rules of the road. We simply have to do better at ensuring effective use of our health care system, and this proposal would put the force of the federal government behind that goal. Of course, there are many situations where there are choices among therapies and uncertainty as to what will work best. This is where health care providers and patients must always have appropriate discretion.

Furthermore, there is common agreement that escalating health care costs are unsustainable. A Federal Health Board will reduce system wide costs in three ways. First, it will reduce administrative costs. The complexity of our system is not just confusing, but costly. Roughly 30 cents of every dollar in health care is spent on administration rather than health benefits. We have 50 state systems for Medicaid and insurance regulation. We have different health systems for active military versus Veterans versus reservists. A Federal Health Board that sets evidence-based standards for benefits and quality for Federal programs and insurance will lower complexity and ultimately costs.

Second, the Federal Health Board would reduce costs and promote quality by making the health-care system more transparent. It is nearly impossible for people to grasp what they are paying for and who provides the best care. This shroud of secrecy allows for wildly different prices for similar-quality care. The Board, by ensuring transparency, would increase competition based on price and quality.

Third, the Federal Health Board can reduce costs by setting standards for quality and coverage and promoting best practices. It would use information on the comparative clinical and cost effectiveness of different treatment options to set standards for Federal programs.

Finally, some opponents of the Federal Health Board argue that the establishment of a board would add another layer of bureaucracy and complicate an already complex system. I believe the opposite would occur. A Federal Health Board will simplify federal health programs and their coverage, payment, and quality systems. Having these programs come under a set of standards developed by the Board will reduce bureaucracy.

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Our health care non-system is dysfunctional in many ways. Unlike many other parts of the economy, however, it is leaderless and poorly managed at almost all levels. If we seek a rational, health care system that demonstrates basic system tenets, then we must connect all the components and establish accountability mechanisms from top to bottom.

The U.S. health care non-system is characterized by confused regulation and a supply chain that controls demand. Adam Smith’s hand is not only visible, but it writes backward. Therefore, the question of who will manage health care reform is really three questions:

1. Who is responsible for the health status of individuals?

2. Who will manage the delivery of care for people who are sick or injured?

3. Who will manage the health care system?

Individuals must take responsibility for maintaining their own health status until or unless their health deteriorates and medical intervention is required. Meeting this responsibility involves education, exposure to the results of research on risk and behaviors, and access to support systems. Government, at the state and federal level, is responsible for maintaining a safe environment conducive to good health and requiring disclosure of information relevant to maintaining health status.

If successful, health care reform will create incentives that put someone or some entity in charge of managing the delivery of care either at the individual or population level. It could be incentives that promote primary care physicians as coordinators of the overall care of a patient or more rigorous accountable care organizations or something else. The point is that patients and public/private payers must be able to determine accountability for patient outcomes.

At the same time, it is reasonable to assume that if reform passes, a health care economy that combines government regulation and private enterprise will continue. But even with a new framework in place, efforts will be made to compensate for reduced reimbursement, exploit professional autonomy and reposition for competitive advantage. Therefore, it makes sense to envision some type of national entity with responsibility for fostering a health care system that is more effective than simply the sum of its parts. This entity would need a significantly enhanced capacity to collect, integrate and share data and to use that data to trigger policy change. It must be accountable to the public for maintaining affordability and maximizing access.

Successful social systems have measurable goals, feedback loops and accountability for results. In health care, we need these characteristics at the individual, care delivery and system levels. Different people or organizations should manage each level. However, their goals and responsibilities should be clear and coordinated, and they should be held accountable for their performance.

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So, Senator Daschle, you’d like to see a “federal health board with the political autonomy” and the legal power to run our health system. Well, let’s think about that for a moment. Annual spending in America’s health system is larger than the economies of all but six countries in the world (and that includes the US economy). It is the size of the economy of Britain. And it is just as complex as any economy. Imagine if someone suggested that a special board of experts with “autonomy” (i.e. free from effective democratic control) should run the entire British economy, or the French economy, or the American economy for that matter. It’s one thing in an economy to have a Fed to establish basic rules over money, or a court system to establish and enforce contracts, or an FAA to monitor the airways. It’s quite another to appoint an independent central planning board to decide what will be produced and who gets what. The same is true in our health economy. Broad insurance rules? Yes. A subsidy system to make sure people can afford sufficient care? OK. But please, I suggest your vision of a board of “experts” to run the $2.2 trillion US health economy indicates you have more faith in central planning than would the good people of South Dakota.

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Larry McNeely, health care advocate for the U.S. Public Interest Research Group, argues for a bill in Congress that moves toward the same goals as does Sen. Daschle's federal health board. Here's what McNeely has to say:

"Former Senator Tom Daschle's remarks on health care note the "massive inefficiencies, a loss in quality, and higher costs." In a strong response, John Goodman of the National Center for Policy Analysis, a champion of free-market solutions to health care, says that the "[The incentives] are very, very perverse."

"While the two gentlemen might not agree on the solution, I suspect there is a certain amount of common ground in their analysis.

"Both would acknowledge that a key driver of both the skewed incentives and higher costs in our health care system is the current Medicare fee-for-service payment system that rewards volume over value, and expensive procedures and diagnostics over basic primary and preventive care.

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"Yet even relatively modest attempts to reform that system and implement recommendations from the non-partisan experts at the Medicare Payment Advisory Commission (MedPAC) are often met by a wall of special interest obstruction.

"The current health reform bills include long-discussed reforms to Medicare payment structure. But it's taken some strong leadership, an incredibly popular President, and near consensus among experts to get expansion of the Accountable Care Organization and Medical Home approaches into these bills. But these reforms, even if they pass, don’t fully address the underlying political and fiscal problem.

"A few years from now, when the next wave of delivery reforms will be needed to foster quality, and contain costs, Congress will be, in Daschle's words, "largely left with the virtually impossible responsibility of making managerial decisions that require extraordinary expertise and political courage. This is something that Congress is not equipped to do well."

And once again America will suffer as powerful special interest lobbies will line up outside of Congressional offices, ready to gut any proposal to contain costs or right incentives within our public programs like Medicare.

"Senators Jay Rockefeller, and Sheldon Whitehouse, along with Representative Jim Cooper have presented one solution. Their recently introduced MedPAC Reform Act would strengthen the existing Medicare Payment Advisory Commission (a commission originally set up – it should be noted – by a Republican president) and enable it to accelerate the testing and wide adoption of payment reforms within Medicare, without enduring the now-perennial process of passing a Medicare bill through the gauntlet of special interests in Congress.

"Some may demagogue this limited proposal. Certain conservatives may claim it's closer than it actually is to Daschle's broader health board model, or worse, conflate it with or European approaches to health care. This is a sign of intellectual laxity and political posturing.

"The proposal from Messrs. Rockefeller, Whitehouse, and Cooper merely aims at containing costs and improving quality in our existing public programs. It would enable the continual innovation in payment and delivery that will be essential to putting Medicare on a secure footing, trimming government health care costs, and making this year’s health reform fiscally sustainable. And if the newly strengthened MedPAC exceeds its bounds, Congress will have the power to veto the new MedPAC's rules by a 3/5ths vote.

"This vital legislation – which attacks the very “perverse incentive” anti-reform campaigners also decry – deserves bipartisan support and inclusion in the broader House and Senate packages, not demagoguery and political games

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"It’s not Senator Daschle’s Health Board, but it does move the country one step closer to better incentives and more efficient health care. That’s something both Senator Daschle AND Mr. Goodman should get behind."

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There are critical health care functions which must be shielded from the political process in order to facilitate robust reform of health care delivery. Some sort of board that is outside of, but accountable to the government could indeed address some of these functions.

Your point regarding the FAA and the aviation system is a prime example. At any time, the President can turn to the FAA for information on death or injury related to aviation. Where can the President turn today for information on the number of patient deaths due to poor quality or safety at an American health institution? There is no single trusted source for such information. Credible, transparent information (such as clinical outcomes, quality and value measures) aggregated by a neutral third party is critical to improving U.S. health care. The creation of this aggregation function would allow information to be publically available and would allow interested parties enough information to make meaningful decisions that could improve care.

There are other critical functions that could be handled by an entitty that is protected from the political process. Examples include:

• Administrative simplification of payment processes in the U.S.
• Defining standard data elements that must be collected in order to measure quality and value.
• Creating standards and milestones for real-time transactions and data interchange. (Standardizing data collection across all payers could allow the entity to collect more data than is currently available in claims datasets.)
• Introducing new payment mechanisms and conducting payment pilots to improve value. The entity should have the authority to change the health care payment system - but not set prices. This is critical because the most important thing is to change what we pay for and how we pay for it.
• Managing underuse and overuse of practice methodologies, and creating a mechanism that establishes benchmarks for utilization within the delivery system.
• Addressing the entire domain of quality (safety, improvement science, adverse events, clinical decision support, etc.).
• Comparing the effectiveness of different therapies through transparency of clinical measures.
  

Our current health care system which is without credible, transparent information available for public review and analysis could be compared to flying an airplane without an instrument panel. This is not only my personal viewpoint; these comments reflect the perspective of those who have participated in the work of the Mayo Clinic Health Policy Center since 2006. I must also add that while this is a critical component for meaningful reform, it would be disingenuous to think that it is a cure-all. It is vital, but represents a single aspect of change necessary to reform American health care.

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There are times when government has an important role to play in society, stepping up and creating the structures within which market forces and the spirit of enterprise can combine to lead to successes for individuals and for societal goals. That is one of the reasons the Chamber strongly supports creating an Exchange where people can easily compare health insurance plans and engage in smart, one-stop shopping.

However, people should never cede their freedoms – including the freedom to choose a plan that best fits one’s needs – to government bureaucracies. The push to create Federal Health Board with nearly god-like powers is extremely dangerous; this unelected and unaccountable board would have the annual ability to dictate to the nation who must pay certain taxes and who need not, what health plans must cover, and where a large amount of our tax dollars will go. This kind of “centralized command and control” is not “change we can believe in,” its government control of the health system.

Ever since Congress realized there is an easy way to avoid tough issues – just create a BRAC-like structure or a blue-ribbon panel – it has become a popular suggestion among Beltway insiders to address contentious issues. However it has rarely been successful, and has usually been a temporary body – the proposal to create a permanent body is problematic in so many ways.

The House proposes a group that would include 26 people – 8 government employees, 9 picks by the President, and 10 others – talk about stacking the deck. While the Senate HELP proposal was less clear, it included provisions that said the reports of this board would become law unless both the Senate and the House passed join resolutions of disapproval – a heavy lift by any standard.

Mr. Daschle is right to be thinking outside the box – we are going to need some innovative solutions here, or we might end up wasting $1.6 trillion to cover not even 1/3 of the uninsured, simultaneously messing up the parts of the system that currently work well. However, the last thing we want is an unelected, unaccountable federal body making “tough decisions” on our behalf. Once again, back to the drawing board.

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With all due respect, Sen. Daschle has gvien us the wrong diagnosis and the wrong solution.

We are in trouble because every single actor in the health care system faces perverse incentives. That includes 300 million patients, about 800,000 doctors, every nurse, every hospital administrator, every employee, every employer, every insurer, and every government agency (did I leave out anybody?). The incentives are not just a little bit perverse. They are very, very perverse.

No amount of "management" can make things work as long as social cost exceeds social benefit for every actor at every margin. True reform does not start at the top by trying to select a manager. True reform starts at the bottom -- by systematically correcting all the perverse incentives we have created.

Finding practical ways to do this, by the way, are what I and my colleagues at the National Center for Policy Analysis have been trying to do for two decades. We welcome constructive input from others.

Tom, you are onto something when you wonder if our federal agencies are up to the task of implementing real change in healthcare. The public sector's track record of measuring whether policy changes, new strategies, etc. actually work as envisioned is not encouraging. In the private sector, people are held accountable if their plans do not succeed. This rarely happens in government.

But would a federal health board help this? Healthcare is simply too complex for one group to “manage our system.” While I understand the conceptual advantages, such as avoiding politicians’ micromanaging, the dangers of a centralized health board are too great. Just look at the Federal Reserve and the almost unaccountable power it has wielded since last fall.

What I recommend is to 1) include specific goals in any regulatory or legislative change, so that we know exactly what we are working toward. 2) make relevant federal agencies publicly report their progress online so that the American people can see where things stand in real time. 3) release taxpayer-funded data from government health programs, like Medicare, so the public can assess and compare the performance of providers, hospitals, insurers, and others.

Despite our differing views on a federal board, you and I agree on more than most people think when it comes to healthcare. In fact, if you could put up all the ideas and “options” that have been discussed so far, I bet Republicans and Democrats agree on 75% of them, especially on delivery reform and promoting better health. Unfortunately, the 25% where they don’t agree gets the headlines, like a government insurance plan and employer mandates. Moving forward, we should continue to focus on those areas of agreement.

We look forward to discussing this and many other priorities this week when you join us at our Center for Health Transformation member meeting on Thursday.

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