Rove-Backed Lawuit Against Health-Care Law Is Groundless, Sebelius Says

(Corrects headline on story that moved March 26.)

Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services, said a legal challenge to President Barack Obama’s health-care overhaul by a group aligned with Republican strategist Karl Rove is groundless.

“Nothing is further from the truth,” she said in the administration’s first public comment about the lawsuit’s claim that the administration was granting exemptions from parts of the law to unions out of favoritism.

Sebelius also said that the Massachusetts health-care law enacted under then-Governor Mitt Romney, a potential 2012 Republican presidential candidate, served as a framework for the administration’s measure. One difference between them, she said, is that the U.S. law deals with lowering costs, while Massachusetts “made a huge mistake” by focusing on access to care only.

“There’s no question that the framework looks very much like Massachusetts, bringing everybody in,” she said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.

The lawsuit over the health-care overhaul was filed by Crossroads Global Policy Strategies, a political group that spent millions of dollars to elect Republicans last November. It seeks to force the administration to reveal its reasons for granting waivers to the law.

Sebelius said it may be months before the administration decides whether to grant a waiver on insurer-spending rules in Florida, a case she said was much different from a previous exemption granted to Maine.

A waiver in the fourth-largest U.S. state might unleash a flood of other exemptions to a central provision of the law.

‘A Careful Look’

The administration is “taking a careful look” and is awaiting more information from the state, she said.

A year ago this week, Obama signed into law the most sweeping health-care legislation in four decades. It is designed to provide medical coverage to tens of millions of uninsured Americans and curb medical costs.

House Republicans, who took control of the chamber this year, say the law amounts to a government takeover of medical insurance. They have voted to repeal the measure and prevent it from being funded.

Sebelius disputed claims by the top Republicans in Congress that the overhaul would cost jobs.

800,000 Jobs

In an opinion article in the Cincinnati Enquirer this week, House Speaker John Boehner of Ohio and Senate Minority Leader Mitch McConnell of Kentucky wrote that according to the Congressional Budget Office, the law will result in 800,000 job losses over a decade.

Sebelius said those numbers “are the CBO saying that it is possible that some people will choose to retire early because they no longer will be desperately clinging to their job only to have health coverage.”

She also said a long-standing proposal by Representative Paul Ryan, a Wisconsin Republican and chairman of the House Budget Committee, to turn Medicare into a voucher system to cut costs and inject competition could be “dangerous.”

“If you are a seriously chronically ill elderly person without a real ability to navigate a complicated health system, you’re going to be in very serious shape without a guaranteed set of benefits,” she said. “You’d be on your own to figure out your own health care.”

The health-care overhaul will gain popularity as more benefits take effect, Sebelius said. She declined to say whether it would be a political liability for Obama as he seeks re- election in 2012.

Myths ‘Dispelled’

“We’ll continue to implement the bill in ways that will impact people positively,” Sebelius said. “The opponents would like to continue to drive the misinformation about the bill, but I think each and every day some of those myths are dispelled, and that’s good news.”

The health-care legislation -- Obama’s top policy accomplishment -- continues to weigh on his presidency. Two- thirds of the respondents to a March 4-7 Bloomberg National Poll said they opposed a requirement that all Americans have health insurance or pay a penalty. Forty-one percent said the legislation should be repealed.

On the issue of insurer-spending waivers, the Obama administration this month granted the first such exemption to Maine. The state won at least a two-year waiver to federal rules that require health insurers to spend at least 80 percent of premiums on patient care.

Maine’s Exemption

Insurers in the state selling policies to individuals will have to spend only 65 percent of premiums on patients, with the rest going toward profits and administrative costs. The exemption will last through 2012, with a possible one-year extension. The situation in Maine is “pretty unique” because the state is served by few health insurers, Sebelius said.

Florida, the fourth-most-populous state, has six insurers, led by UnitedHealth Group Inc. (UNH), that control 85 percent of the market for individual coverage, a more representative situation. It is the largest of the seven states seeking waivers, followed by Georgia, the country’s ninth-most-populous state.

Sebelius said she “absolutely” plans to stay in her post through Obama’s first term.

“I am definitely staying,” she said. “It’s incredibly important work.”

To contact the reporter on this story: Catherine Dodge in Washington at cdodge1@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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