Sebelius Bargains With Governors to Shore Up Health Law

Kathleen Sebelius quietly charmed one governor’s business-executive dinner guests in Colorado and publicly berated another for his Medicaid stance in Pennsylvania. She surprised a Republican governor in Utah with her flexibility and disappointed a Democratic one in West Virginia with her lack of timely answers.

Sebelius, the 65-year-old Health and Human Services secretary, has had to get creative with the task of selling President Barack Obama’s health-care law to an often skeptical - - sometimes hostile -- group of governors.

That has meant schmoozing, bargaining, and sometimes browbeating state executives whose jobs she knows well. She served as governor of Kansas from 2003 until 2009 and her father, the recently deceased Jack Gilligan, held the job in Ohio from 1971 until 1975.

“As a former governor, I used to be on the receiving end of a lot of” federal health-care programs, Sebelius said in an Aug. 22 question-and-answer session in Philadelphia. “It has given us a framework of flexibility, trying to make sure that people understand there isn’t just one cookie-cutter approach. We’re eager to work with states.”

Still, her goal of allowing flexibility at times has been overruled by White House political considerations or reined in by agency policy experts who administer the law. As the Oct. 1 start date approaches for the online health insurance exchanges that are the cornerstone of the 2010 Affordable Care Act, Sebelius says the refusal of some governors to cooperate may undermine their effectiveness.

Misinformation Challenge

“This law will work better in states where everybody wants it to work,” she said. “It is more challenging when there’s misinformation put out on a regular basis, where you have to tell people, ‘Yes, the law will indeed apply to you’.”

While the measure was enacted more than three years ago, partisan warfare over it is as vibrant as ever. A band of Republican senators is vowing to choke off its federal funding. Some Republican governors have balked at installing the law’s central elements, including federally subsidized Medicaid expansions to help the poorest individuals afford care and the online exchanges where consumers can purchase insurance.

Polling Drop

Public support is dropping as the law goes into effect. In a CNN/Opinion Research Corporation national poll conducted Sept. 6-8, 39 percent favored all or most of the measure, while 57 percent were partially or completely opposed. That’s a turnaround from January, when the same survey found support for the measure, at 51 percent, outweighing opposition, at 44 percent.

Sebelius will spend the next several weeks trying to overcome those hurdles by touring the country encouraging individuals to enroll for coverage. She’s also trading on her relationships and experiences as a former governor in an all-out drive to make the initiative a success.

In Colorado, she had dinner with Democratic Governor John Hickenlooper and a group of skeptical business executives, charming the attendees while systematically shooting down their every criticism of the law.

“She changed the tone in that room,” Hickenlooper said in an interview. “She’s out there working with every state, saying, ‘If you need a waiver, let’s figure out what it is. Let’s get going’.”

In Utah, she worked with Republican Governor Gary Herbert to allow the state to continue its small-business health exchange while adding a federal marketplace for individuals.

Arkansas Bargain

In Arkansas, she risked a backlash within her own party by striking a bargain with Democratic Governor Mike Beebe to try a Republican-style method of expanding Medicaid, in which private insurers get federal money for covering new enrollees.

“She is adhering to the principles of the Affordable Care Act, but at the time she’s trying to get governors to ‘yes’ on some difficult and controversial issues, especially given the volatile political environment we’re in,” said Ron Pollack, the vice president of Families USA, a Washington-based health-care consumer advocacy group.

As of Sept. 3, 16 states and the District of Columbia were establishing their own insurance marketplaces, and seven others were partnering with the federal government to operate exchanges, according to the Henry J. Kaiser Family Foundation, a nonprofit health-research organization based in Washington. Another 27 states are leaving the job of running their exchanges almost entirely to the federal government.

Medicaid Expansion

At the same time, 24 states and the District of Columbia are expanding their Medicaid programs under the law, while 22 states aren’t and four others are still debating the issue.

Sebelius hasn’t stopped lobbying to win more participation. She used a Hispanic outreach stop in Philadelphia last month to publicly scold the state’s Republican governor, Tom Corbett, for refusing to expand his state’s Medicaid program as envisioned under the law.

Calling his decision “a terrible tragedy,” Sebelius concluded by saying that Corbett could still change his mind.

Governors from across the political spectrum praise Sebelius for being accessible and responsive to their requests for help navigating the law, a 906-page behemoth that has spawned tens of thousands of pages of regulations.

‘Understands’ Challenges

“It’s helpful that Secretary Sebelius has been a former governor and she understands the uniqueness of the states, the challenges we all face, which are different,” said Herbert, the Utah Republican.

Kentucky Governor Steve Beshear, a Democrat who consulted with Sebelius before deciding in May to expand his state’s Medicaid program, said his former colleague gave him the information he needed and understood the politics he faced.

“Because of her service as governor, she understands what a decision-maker is and what you need to make a decision,” Beshear said in an interview.

Still, many also say her pragmatism and flexibility have fallen short, undermined by White House political considerations, bureaucracy in her agency, or both.

“I’ve talked to Secretary Sebelius, I’ve met with her staff, and they all seem to be very open and concerned, but you never get an answer back,” Mississippi Governor Phil Bryant, a Republican, said in an interview. “She’s a good listener and eager to help, but that’s about all you get.”

When North Carolina Republican Governor Pat McCrory called Sebelius last month concerned that a new regulation might lead hospitals to bill Medicaid for ineligible patients, she returned his call, yet offered no assurance she could help.

‘Very Complex’

“She was going to get back with me, and I appreciate that, but these are decisions that could impact states by the tens of millions of dollars,” McCrory said in an interview. “I respect her and I trust her, but she’s got a heck of a job, trying to implement a very complex bill.”

Democratic Governor Earl Ray Tomblin of West Virginia fired off a July letter to Sebelius complaining that he wasn’t getting the answers he needed about the state’s Medicaid expansion or the federal-state insurance exchange.

“There are some decisions within the administration that have not been made,” Tomblin said in an interview. “She’s the one that says, ‘I’ll get you the answers,’ but it’s ‘as soon as I get them’.”

Sebelius has earned her reputation for political practicality. She was elected twice as a Democrat in Kansas, a state that backed President George W. Bush by 62 percent during her tenure.

Limits Seen

“She is a creature more of pragmatism than of dogma,” says Matt Salo, executive director of the National Association of Medicaid Directors. Still, there are limits when it comes to implementing the law, he added.

“Yes, she’s the secretary; yes, she’s the face of this; yes, she’s the point of contact for governors, but I think it’s been unclear from Day One who is in charge, although it’s been clear that it’s not necessarily her,” Salo said. “This is true of any secretary. It’s the powers above and the powers below that serve as real checks on what you can do.”

Those checks were on display in Arkansas, where Sebelius worked with Beebe on a Medicaid expansion that would be acceptable to his Republican-dominated legislature.

“Because Kathleen was a governor and understood all these dynamics, which are political as well as substantive, she was knowledgeable enough to be open to it,” Beebe said.

On ‘Tightrope’

Negotiating the details, though, has been “a tightrope,” he added. In February, Sebelius agreed in principle to the use of federal Medicaid expansion dollars to allow new beneficiaries to buy private insurance. Then she got an earful from health-care advocates with close ties to Obama’s team.

In a meeting organized by Pollack, those advocates said the plan could become a precedent that ultimately subjects the poorest patients to higher medical costs, less benefits and the whims of unscrupulous insurers.

A month later, the Department of Health and Human Services outlined in a memo the requirements for any state that wished to pursue such a plan, including that the coverage provided had to be identical to what Medicaid offered. It also said Sebelius would consider permitting only “a limited number” of such programs, without saying how many.

“This was a case where the political judgment was really at the White House, and the technical judgment was down there” in the Centers of Medicare & Medicaid Services, the federal agency that administers the programs, said Joseph R. Antos, a health policy analyst at the American Enterprise Institute.

Even now, the deal isn’t finalized. Beebe submitted a waiver to HHS Aug. 6 to allow the program to go forward.

To contact the reporter on this story: Julie Hirschfeld Davis in Washington at jdavis159@bloomberg.net

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net

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