Why Tom Daschle Had to Withdraw and Who Will Replace Him?

Howard Dean?  Kansas Gov. Kathleen Sebelius?  Former NIH director Harold Varmus (now at Memorial Sloan-Kettering Cancer Center)?  Dr. Atul Gawande? Former Oregon Governor John Kitzhaber?  John Podesta, founder and president of the Center for American Progress, formerly chief of staff to President Bill Clinton?  These are a few of the names being floated in the mainstream press and the blogosphere as possible replacements for Tom Daschle as Secretary of Health and Human Services and/or healthcare czar.

But before replacing Daschle, let’s consider why he is stepping out of the game, and what this means for healthcare reform. In announcing his withdrawal, Daschle put his finger on why he must leave: “If 30 years of exposure to the challenges inherent in our system has taught me anything, it has taught me that this work will require a leader who can operate with the full faith of Congress and the American people.”

When explaining his departure, most pundits emphasize the fact that he failed to pay about $128,000 in back taxes mainly for the use of a limo and driver over three years. No question, anything that gives headline writers a chance to pair the word “liberals” and “limos” is truly unfortunate. But Daschle is not the only government official who has ever had to explain an “oversight” regarding his taxes. (Though the fact he was the second cabinet appointee who found himself in that position posed a serious problem for the administration.) 

Still, what is more troubling is the recent disclosure that Daschle had taken more than $200,000 in the past two years speaking to members of the health care industry that he was assigned to reform.

The speaking fees were just a portion of the more than $5.2 million the former senator earned over the past two years as he advised health insurers and hospitals and worked in other industries such as energy and telecommunications, according to a financial statement filed with the Office of Government Ethics.

Among the health care interest groups paying Daschle for speeches were America's Health Insurance Plans, $40,000 for two speeches; CSL Behring, $30,000; the National Association of Boards of Pharmacy, $16,000; and the Principal Life Insurance Co., $15,000.

Daschle knew that he wanted to become a leader of healthcare reform. What was he thinking?  Perhaps  he had spent too many years in Washington. Here, I must quote Bob Laszewski, editor of the Health Care Policy and Marketplace Review:“ I have a friend who says that when you first come to Washington you see it as this ugly political swamp but after you are here awhile it begins to seem like this wonderful hot tub. He says that's when it's time to get out of town and go back home.”

Many would argue that it is difficult to find a senior federal official who has not moved in and out of the industry he oversees. Perhaps. And perhaps we need laws to block—or at least slow—the revolving door.

In any case, it is essential to remember that healthcare is not just another industry. It is an industry charged with protecting our health. Any suspicion of graft within Health and Human Services would be like a hint of corruption with the Federal Aviation Administration: lives are at stake.

How would you feel if you heard that the new head of the FAA had taken large speaking fees from various airlines—and now he was being appointed to an oversight position where he would be responsible for overhauling the industry and making sure that airlines did not continue to cover-up the causes of major airline catastrophes?

Fortunately, our airline industry has not shown a penchant for scandal. By and large, it is quite forthcoming when it comes to co-operating with accident investigations. The same, unfortunately, cannot be said about our healthcare industry. 

With some regularity, drug companies are accused of repressing evidence that their favorite blockbusters are causing heart attack and strokes or device-makers forget to inform the FDA about heart devices that implode inside a living heart. Over the past 15 years, for-profit hospitals have found themselves the target of FBI raids that revealed they had been lying to Medicare, lying to insurers, lying to shareholders—or, in the worst cases, performing unnecessary surgeries on perfectly healthy patients, leaving some dead, others maimed.

As I have documented in Money-Driven Medicine: The Real Reason Health Care Costs So Much, this is an industry fraught with conflict of interest.  This is why reform needs to be overseen by someone who is perceived as being above suspicion—purer than Caesar’s wife. 

When it comes to his dealings with the industry, Daschle may well be pure of heart—but, as he acknowledges, the way that the public will perceive him has been muddied.  An experienced politician, Daschle knows, all too well, how the opponents of reform would use this.  Moreover, it is time for the Obama administration to make it very clear to all that it means what it has said about change in Washington. 

This is why Daschle had to step down.

This is a loss because he seemed uniquely positioned to serve as the Obama administration’s liaison to Congress. Among his Congressional colleagues he is reported to be well-liked on both sides of the aisle. Arguably, this is because he is not the strongest leader Democrats have ever had. When it came to controversial issues such as standing up to President Bush on the war in Iraq, or the tax cut for the very wealthy, Daschle was timid.

The recent vote on what should have been a slam-dunk for the Democrats—expanding healthcare for poor children—turned into a sometimes bitter battle, an indication that the ideological opposition to reform remains fierce. Perhaps the administration will need a liaison made of stronger stuff—here John Podesta comes to mind.

Nevertheless, Daschle seemed sincerely dedicated to the cause of providing health care for all Americans. And, without question, his departure will slow the process—though I expect Senate Finance Chairman Max Baucus will continue to push ahead in Congress. And Baucus’ white paper is not very different from the President’s, so in that sense, the administration will still be well-represented within Congress.

But it will take time to find a replacement for Daschle, more than a week or two, I would wager. Here are a few of the names being bandied about, and the reasons why they might, or might not, be viable candidates:

Howard Dean: The fact that Dean is an M.D. makes him an attractive candidate. We need a healthcare reform leader who understands that medicine is not a business, but a profession---which means that it must put patients first. Dean might be able to rally doctors; their support is, I believe, crucial because patients will listen to their doctors. As Governor of Vermont, Dean expanded health insurance to children, and faced the challenges of health care reform. (He also paid off the state's public debt, signed civil unions into law, and delivered a balanced budget every year.)  To cap off his resume, as Chairman of the DNC he implemented the 50-state strategy that many say gave Obama the foundation for victory.   On the other han, Rahm Emmanuel, opposed the 50-state strategy; rumor has it this is why Daschle’s name was never on the short list for Secretary of  HHS. There is also the fact that many media pundits simply don’t like Dean. Whether that should be counted as a point in his favor or a point against him is open to question.

Dr. Atul Gawande: The American Prospect’s Ezra Klein threw Gawande’s name into the ring. But in a private interview at the Families’ USA conference last week, Gawande said twice “I know nothing about politics.” He said it cheerfully, smiling, a man happy that he knows nothing about politics. He also has a job that he clearly loves as a surgeon and brilliant writer. It is hard to believe he would give that up.

Former Oregon Governor John Kitzhaber: Kitzhaber is dedicated to health care reform.  An M.D., he is extremely intelligent, honest, articulate and charismatic. In many ways he would be the ideal candidate. But Kitzhaber hates Washington. Many years ago, when the Democrats tried to draft him to run for the Senate, he told me that after visiting the city, he had determined that he would never work there.  Too many lobbyists, too much intrigue, too much graft--- impossible to get anything done.  Perhaps he would view Obama’s D.C. differently, but I’ve been following Kitzhaber’s career, and I doubt it.

Kansas Governor Kathleen Sebelius: Former insurance commissioner in Kansas, she knows the issues, and has a good relationship with Obama. Sebelius is a well-respected politician, but since she is coming from outside the beltway, she wouldn’t make as much sense as Obama’s liaison to Congress. Still, she might well be an excellent choice as Secretary of HHS. It’s quite likely Obama will replace Daschle with two people. But I have no idea as to whether she wants the job.

Former NIH Director Howard Varmus:  The Wall Street Journal’s Healthblog mentioned Varmus (along with Dean and Daschle) as one of three candidates for the post when the short list was first being prepared, and mentioned him again today. Clearly the Nobel Laureate has the ability, but does he have the temperament—and again, would he want the position?

CAP president John Podesta: As a politician he is more than Daschle’s equal—and a stronger figure. Moreover, Podesta understands both the policy issues and the politics involved in healthcare reform. The most liberal reformers might object that Podesta is too much of a centrist. On the other hand, when it comes to healthcare reform that may be what is needed, not just to achieve consensus, but to avoid disaster. See my recent post on Dr. Atul Gawande’s prescription for what I call reality-based reform: Gawande stresses that when it comes to universal coverage we need to proceed in a way that allows for continuous learning from mistakes, constant tinkering with reform.