Former Senate Majority Leader Tom Daschle withdrew on Tuesday his nomination to be Secretary of Health and Human Services for the Obama Administration.

Daschle withdrew his nomination after questions arose in regard to his failure to pay income tax for consulting work and the use of a car service and driver during the period of 2005 through 2007. In total, Daschle failed to pay $128,203 in taxes, which he eventually paid last month, along with $11,964 in interest.

“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, and without distraction,” Daschle said in a public statement. “Right now, I am not that leader, and will not be a distraction”

“Tom made a mistake, which he has openly acknowledged,” President Obama said in an official statement. “He has not excused it, nor do I. But that mistake, and this decision, cannot diminish the many contributions Tom has made to this country, from his years in the military to his decades of public service.”

Still, the announcement came as a blow to the Obama administration, not only because Daschle is now the third Obama cabinet nominee to withdraw their name, but also because Daschle was clearly a key part of the administration’s plans to reform healthcare.

Not only was Daschle tapped by Obama to be the Secretary of HHS, but he was designated by the President to serve as director of a newly formed White House Office of Health Reform, as well. Obama also named Daschle ally Jeanne Lambrew as the new office’s second in command. Lambrew worked on health policy during the Clinton administration as the program associate director for health at the Office of Management and Budget and as the senior health analyst at the National Economic Council.

Daschle’s thoughts on healthcare are well known via the book “Critical: What We Can Do About the Health-Care Crisis,” which he co-authored with Lambrew and Scott Greenberger. Obama has described the book’s examination national healthcare reform was is “groundbreaking” and “filled with fresh ideas and creative solutions.”

Politically, this put the administration’s healthcare reform in favorable legislative environment in which to advance an agenda, and the HHS and reform office will jointly shape that agenda.

Daschle’s nomination had been warmly received by the HME industry for the most part, because Daschle was familiar with DME issues and had been a homecare industry supporter in the Senate, according to Wayne Stanfield, president of National Association of Independent Medical Equipment Suppliers. Now, the industry faces the unknown.

“The withdrawal of Senator Daschle as nominee for HHS is certainly a blow for the homecare industry,” Stanfield said. “Daschle represented a new direction for healthcare, one that would be based on prevention and wellness. He literally wrote the book on healthcare in this country and how we could set a new course to improve quality and reduce cost. I hope President Obama can find another nominee with the vision and energy to follow the same path to reform. Prevention and wellness is where healthcare must go and DME providers will do well.”

Tyler Wilson, president and CEO of the American Association for Homecare, voiced similar sentiments: “Mr. Daschle would have brought a lot of understanding and experience about health care issues to his position as HHS secretary,” he said. “Let’s hope that the next nominee brings the same insight and, for the sake of the homecare community, let’s hope that person has an appreciation for the critical role home medical equipment companies serve in meeting the health care needs of a this country.”

That said, the news should not necessarily impact President Obama’s overall healthcare agenda, or the HME industry’s ability to lobby for objectives such as an alteration or cessation to competitive bidding or the 36-month oxygen rental cap, said John Shirvinsky, executive director of the Pennsylvania Association of Medical Suppliers.

“The President is the President, and the healthcare agenda is going to be what the President determines it should be,” he said. “Tom Daschle would have been a valuable asset given his Washington experience, his legislative experience, his political acumen, and his knowledge of the healthcare sector, but there are plenty of other people who are qualified to take over the position.

“We’ll continue to work with the Obama administration, and the key health committees in Congress are pretty much the same as they were last year,” Shirvinsky continued. “That’s where our major work needs to be done right now … Our objectives haven’t changed, our game plan hasn’t changed, and we’ll look forward to hearing who the president’s new selection is.”