SCENARIOS: Daschle brings stature to health care debate

(Reuters) - President-elect Barack Obama on Thursday chose former Senate Democratic Leader Tom Daschle to lead his drive to overhaul the U.S. health system. Daschle's nomination as secretary of health and human services would have to be confirmed by the Senate.

Here are some of the challenges Daschle will face and some of the advantages he brings to the U.S. healthcare debate:

THE PROBLEM

Healthcare costs in the United States are rising faster than wages and the general rate of inflation. The United States spends more per capita for healthcare than any other developed country but falls far behind most of them in the health of its citizens. About 46 million Americans, nearly 15 percent of the population, are without health insurance.

THE CHALLENGE

Provide affordable healthcare to all Americans while ensuring that those who currently have insurance, mostly through their employers, do not lose their current coverage. Also help small business obtain and keep health insurance for their workers. This has to be done against the backdrop of record budget deficits and a deep economic downturn.

SOLUTIONS

Health reform has been debated for decades, but so far Washington has been unable to bridge deep divisions over how to approach it. Democrats have pushed for universal coverage through the current employer-based system, while Republicans have favored using tax breaks to encourage more individuals to buy health insurance.

Obama has proposed building on the existing employer-based system to ensure Americans have access to affordable healthcare. To do that, he will likely use a carrot-and-stick approach to reward businesses that provide health insurance to workers with tax breaks, and make larger companies that do not provide such insurance pay a percentage of their payroll toward the costs of their workers' healthcare.

POTENTIAL OBSTACLES

Democrats will enjoy a strong majority in both the House of Representatives and Senate in the new Congress that starts work in January. But in the Senate, so far they are still two seats short of the 60 votes needed to overcome procedural obstacles that Republicans could put up to block legislation in the 100-member chamber. One Senate race from the November 4 election is yet to be decided in Minnesota.

An effort at health reform in the early 1990s by President Bill Clinton failed in the face of strong opposition by conservatives who painted it as socialized medicine. Experts say the effort was doomed when Clinton failed to bring various interest groups on board early in the debate.

Broad public support will be needed to overhaul such a huge chunk of the U.S. economy. A number of interest groups have formed around the issue. Some have begun discussions to try form consensus and it remains to be seen whether that can happen and whether the public will support a final proposal.

Businesses will be concerned about costs and the medical community will be worried about how an overhaul will affect care and the way it does business. Pharmaceutical companies will be wary of any effort to control prices.

Cost could be the biggest obstacle. The United States faces record budget deficits as the government tries to pay for two wars and cope with the financial crisis and a downturn in the economy. Any reform would add substantially to the government budget, but health reform proponents argue the cost of doing nothing would far outweigh the cost of providing health coverage to all Americans.

Working for Obama is the fact that many businesses, consumer groups and health groups are motivated to see a major overhaul of the health industry. They differ on how to do it and Daschle will have to balance those competing interest to achieve success. Reform advocates say the major difference between now and President Clinton's effort is that maintaining the status quo is not an option.

WHAT DASCHLE WOULD BRING TO THE TABLE

As former Democratic leader in the Senate, Daschle has a deep understanding of how Congress works and how to get legislation passed. He also knows how to bring various interests to the table to build support for legislation.

He is also expert on the issue, and is author of a book called "Critical: What We can Do About the Health-Care Crisis." In it he argues the United States cannot neglect the issue any longer because it weakens U.S. competitiveness.

As a former Senate leader, Daschle brings stature to the effort. As an early supporter and close adviser to Obama, he will likely have the kind of support from the new president that is critical in any White House negotiation with Congress.

(Compiled by Donna Smith in Washington, edited by Frances Kerry and David Wiessler)