HEALTH: Sebelius’s Signature Battle
Obama's pick for secretary of Health and Human Services took a stand against insurance companies on behalf of Kansas consumers. But is the state's health-care system any better as a result?
By Daniel Stone | Newsweek Web Exclusive
Mar 3, 2009
newsweek.com
A Crucial Nominee: Kathleen Sebelius is Obama's second choice to head the department of Health and Human Services
If Kansas Gov. Kathleen Sebelius had a best-of album in dealing with health-care issues during her career, the tale of how she stood up to Big Insurance on behalf of consumers would probably be the title track. Obama's new choice to head the Department of Health and Human Services, Sebelius was the Kansas state insurance commissioner back in 2002, when she blocked a controversial and widely publicized takeover merger between two health-insurance providers. A for-profit company had made a very public offer to take over Blue Cross Blue Shield of Kansas, the state's nonprofit entity that covered more than 90 percent of Kansans. Both companies claimed that the merger was essential to them staying afloat. Anthem, the private company based in Indiana, was eager to spread its risk over a much broader pool of patients. For Blue Cross, the takeover would mean that it wouldn't have to insure everybody, including risky people with bad health, and could be more competitive.
Tasked with approving the deal, Sebelius argued that a takeover by a private company would be bad for consumers. "I am denying this takeover because it would have cost Kansas businesses, small employers and families millions of dollars in additional health insurance premiums," she told a roomful of reporters at the time.
It was a bold move that didn't make her any friends with either insurance provider (both of which appealed the decision, and lost, all the way to the state Supreme Court). They covered the state with anti-Sebelius ads and argued she didn't know what she was doing. But voters really appreciated the effort, which she deliberately made public. For three days, she summonsed Anthem execs to testify before state legislators and prove they wouldn't raise premiums, which of course they couldn't do. She also appointed a special commission to investigate the costs, which confirmed what Sebelius had predicted about the rise in premiums.
Hospitals and doctors' unions on the other hand, really liked her for pushing back against the takeover. Staying with the nonprofit Blues meant they wouldn't have to turn sick people away and that they wouldn't be pressured by a profit-hungry board of directors to cut corners. "She really stood up," recalls Gene Meyer, CEO of Lawrence Memorial Hospital just outside Kansas City, who opposed the takeover. "It was pretty gutsy, she did it in an open and pragmatic way."
But did Sebelius's battle against big business actually turn out well for these consumers? Apparently, it did. Policyholders weren't hit with higher premiums or lower-quality care. Anthem never went under for having too much liability stretched too thin. Blue Cross spokesman Graham Bailey remembers the period being very stressful for employees, but says the agency recovered and actually expanded. "We're in a solid position right now," Bailey says. "We're a strong company. We're still the largest insurer in the state."
The state as a whole is more of a mixed story. Premiums in Kansas still sit below the national average, as does the percentage of people without insurance. But a census report last year showed the uninsured rate rising rapidly, much more than the national average. The reason? "The private insurance industry is contracting and the public companies aren't expanding," says Peter Hancock, a spokesman for the Kansas Health Policy Authority. To many health-policy analysts in the state, drawing a correlation between the rise in the state's uninsured and Sebelius's stand against a private (and out-of-state) insurance conglomerate taking over the public infrastructure would be a stretch. Aside from the successful Anthem-Blue Cross denial, Sebelius had some setbacks on health policy. Several bullet points that she might want to leave off her resume were widely reported over the weekend. The Washington Post pointed out her failure to extend Medicare coverage in the state and The New York Times revealed her losing battle against the legislature to add a health arm to her administration. But that's small potatoes compared to the bulky system she'll inherit at HHS, and at a time when health-care reformers expect an upheaval of policy under Obama.
If confirmed, Sebelius will lead a department Obama initially intended to hand off to health-care-reform crusader Tom Daschle. And that's the only post she'll hold, as opposed to Daschle, who would have also worked in a dual role as head of a new White House office on health reform. (That position went to Nancy-Ann DeParle, former director of the Health Care Financing Administration, on Monday). Traditionally, White House officials craft policy, which the department secretaries support at congressional hearings and programs. The rest of the time, they're busy actually running their departments. "Daschle had such a unique understanding of this, that's the only reason he got both titles," says Ellen-Marie Whelan, associate director of health policy at the Center for American Progress. "Sebelius will have the job that every past HHS secretary has had."
Still, Sebelius's chief-executive experience is something Tom Daschle didn't have, and it gives her an advantage in knowing how to steer a ship, especially one that oversees hefty divisions like Medicare, the National Institutes of Health and the embattled agency of the hour, the Food and Drug Administration. She'll have to answer to public outrage over ongoing food-safety issues while taking into account the interests of businesses already strapped in a tough economy. All that may make the Blue Cross Blue Shield fight look easy. Her tenacity in Kansas seems to show she has what it takes to go up against The Man and win. But on the federal playing field, the man is usually bigger, better funded and has a lot more friends.
© 2009
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