Obama taps ex-Senate chief to head health agency

WASHINGTON (Reuters) - President-elect Barack Obama has chosen Tom Daschle, a key early supporter and former U.S. Senate leader, as his top official to overhaul the U.S. healthcare system, two Democratic sources said on Wednesday.

By turning to the former Democratic leader to serve as his health and human services secretary, Obama has signaled that his plan to extend health coverage to the 47 million Americans who lack insurance will be a high priority when he takes office on January 20.

Daschle will be well-placed to work with Congress and pull together various interest groups to try to build consensus behind a sweeping overhaul of the U.S. healthcare system, a $2.3 trillion industry that accounts for about 16 percent of the U.S. economy.

"It's an excellent choice," said Senate Finance Committee Chairman Max Baucus, a Montana Democrat. "He knows the Senate, he knows healthcare."

Daschle will likely face easy confirmation by his former Senate colleagues. But his wife Linda's lobbying activities, mostly for the aviation industry, could come under scrutiny.

Although she recused herself from lobbying the Senate while her husband served there, Republicans made it an issue in the 2004 election that unseated Daschle as the U.S. senator from South Dakota.

News reports said Linda Daschle would leave her current lobbying position at the end of the year to start her own public policy firm where she will not lobby.

Since losing his re-election bid in 2004, Daschle has worked as a public-policy adviser for the law firm Alston and Bird.

Baucus spoke about Daschle to reporters after a meeting of Republican and Democratic senators who will play a major role in shaping health reform legislation. The meeting included Senate Health, Education and Labor Chairman Edward Kennedy, a Massachusetts Democrat, who is working on his own proposal. Baucus last week unveiled his proposal calling for a medical insurance exchange to help people find affordable coverage.

Baucus said the group hoped to act quickly next year on healthcare.

Daschle currently heads Obama's healthcare policy group. He was an early supporter of Obama and encouraged the first-term senator from Illinois to make his presidential run.

Daschle was not immediately available for comment.

'WEALTH OF EXPERIENCE'

Healthcare reform advocates also applauded Daschle's selection.

"Senator Daschle has a deep commitment to securing high-quality, affordable health care for everyone in our nation. His new leadership position confirms that the incoming Obama administration has made healthcare reform a top and early priority for action in 2009," said Ron Pollack, executive director of Families USA, a liberal-leaning health reform advocacy group.

"Senator Daschle would bring a wealth of experience to HHS as the new Congress and administration begin their work to solve our health care crisis," said AARP Executive Vice President Nancy LeaMond. The advocacy group for older Americans is expected to be an influential player in the reform debate.

Daschle would also oversee existing healthcare programs like Medicare, which provides health insurance for the elderly and disabled. Its costs threaten to spiral out of control as the U.S. population ages. The department also oversees the Food and Drug Administration, which regulates most foods and all drugs.

Daschle, who was first elected to the Senate in 1986, was the top Democrat there between 1994 and 2004, and majority leader when Democrats controlled the chamber from 2001 to 2003. He was a member of the House of Representatives for eight years before becoming a senator.

He was reported to be a candidate to be Obama's chief of staff before that job went to Illinois Rep. Rahm Emanuel.

(Additional reporting by Caren Bohan, Jeff Mason and Andy Sullivan; Editing by David Alexander and Peter Cooney)