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Obama Bids Health Secretary Goodbye as He Names Successor

By Alex Wayne, Julianna Goldman and Drew Armstrong
April 11, 2014 12:07 PM EDT 310 Comments
Health and Human Services Secretary Kathleen Sebelius speaks about the Affordable Care Act during her visit to Community Health and Social Services Center on Nov. 15, 2013 in Detroit.
Photographer: Joshua Lott/Getty Images
Health and Human Services Secretary Kathleen Sebelius speaks about the Affordable Care Act during her visit to Community Health and Social Services Center on Nov. 15, 2013 in Detroit.

President Barack Obama thanked Kathleen Sebelius for helping pass the 2010 health-care law and named Sylvia Mathews Burwell his new health secretary, calling her “a proven manager” who knows how “to deliver results.”

In getting the Obamacare exchange website running, “there were problems,” the president said in the White House Rose Garden. “But under Kathleen’s leadership, her team at HHS turned the corner, got the job done, and the final score speaks for itself.”

About 7.5 million have enrolled in insurance plans under Obamacare, the government has said. The Patient Protection and Affordable Care Act, though, faces battles in court and in Congress, where Republicans haven’t dropped efforts to gut the measure. The Health and Human Services Department under Burwell is also faced with helping the $3.1 trillion U.S. health-care industry continue to adapt to the overhaul and its millions of newly insured beneficiaries.

“I hope the Senate confirms Sylvia without delay,” Obama said about Burwell, currently the director of the Office of Management and Budget. “Last time she was confirmed unanimously. I hope not that much has changed.”

First Chapter

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Sebelius’s resignation closes the first major chapter of the Affordable Care Act, known as Obamacare. The law is projected to eventually offer health insurance to 25 million more people in the U.S., paid for with changes to Medicare, taxes on health-care providers and a requirement that all Americans have insurance.

In early March, Sebelius told Obama that after the period when people could enroll in insurance ended last month, she would leave. “She’s earned that right,” Obama said, noting the partisan debate that had surrounded the law. “She’s got bumps, I’ve got bumps, bruises,” he said.

While Sebelius had been criticized since the troubled rollout of the health law’s new insurance exchanges last fall, when online marketplaces didn’t work for about two months, she gave no public sign she would step down. Kansas Insurance Commissioner Sandy Praeger, a Republican who has worked with Sebelius since 1991, said she was at a dinner last week where the health secretary spoke and that “she seemed like she was in it for the long haul.”

Sebelius said she had expected the difficulty around the law. “I knew it wouldn’t be easy,” she said at the White House. “There is a reason that no earlier president was successful in passing health reform.”

New Leadership

She raised the idea of resigning with Obama in early March, the president said. She told him that the end of the first enrollment period for the health law on March 31 would be the right time to transition the department to new leadership.

U.S. Senator Charles Grassley, an Iowa Republican who sits on a committee that will consider Burwell’s nomination, said the administration’s delays and other changes to the law had damaged Sebelius’s standing with lawmakers.

“She was given a law that was just about written in pencil the way the deadlines changed all the time,” he said in an e-mail from a spokeswoman. “That put her in a position of having a strained relationship with Congress.”

Burwell “might have a fresh start with the public and Congress, but the flawed law is still the law,” Grassley said.

Economics Background

If confirmed, Burwell, 48, would bring a background in economics and management to the health position. She was deputy director of OMB during the Clinton administration and also served as chief of staff to then-Treasury Secretary Robert Rubin during a time that included the 1995 budget standoffs that led to partial government shutdowns.

Before joining the Obama administration last year, Burwell was president of the Wal-Mart Foundation. The Senate confirmed her for her current position on a 96-0 vote.

A former Democratic governor of Kansas, Sebelius, 65, was an early backer of Obama’s first campaign for president. She spent five years running HHS, presiding over the largest change to government health programs since Medicare and Medicaid began almost 50 years ago.

“From her work on Head Start, to expanding mental health coverage, to advancing cutting-edge health care research and, of course, her unwavering leadership in implementing the Affordable Care Act, Secretary Sebelius often calls her work here the most meaningful of her life,” Dori Salcido, a department spokeswoman, said in an e-mail confirming Sebelius’s resignation.

HHS Money

HHS spent about $886 billion in 2013 -- a quarter of all federal dollars. The majority of that goes to Medicare, the health program for the elderly and disabled, and Medicaid, the joint state-federal program for the poor.

Assessing Sebelius’s work, the number of people who signed up for coverage through Obamacare may trump the difficulties in getting there. In total, 7.5 million Americans signed up for private health plans through the exchanges, half a million more than the government’s most optimistic estimates, Sebelius said yesterday at a congressional hearing before her resignation was announced.

The secretary “played a key role that enabled the Affordable Care Act to become the law of the land, and she worked tirelessly to implement it successfully,” Ron Pollack, executive director of Families USA, a Washington-based health advocacy group that supports the law, said in an e-mail. “We owe her an enormous debt of gratitude for her excellent work in improving health care for families across America.”

Computer Issues

That was despite numerous computer issues that stymied early sign-ups when the website was introduced last October. People who tried to use the U.S.-run website healthcare.gov encountered delays, couldn’t log on, or began an application only to see their data vanish in what the Obama administration termed “glitches.” Sebelius was accused by Republicans of covering up or not knowing about the difficulties, which lasted from October until December.

Sebelius took the blame. “Hold me accountable,” she said of the problems at an October congressional hearing.

“This is the right decision,” U.S. Senator Lamar Alexander, a Tennessee Republican, said in an e-mail from a spokeswoman. “The challenge for Ms. Burwell, or any other successor, is to help Congress find the right way to repair the damage Obamacare has done to American families.”

House Majority Leader Eric Cantor, a Virginia Republican, offered Sebelius a back-handed compliment.

Impossible Task

“I thank Secretary Sebelius for her service,” he said on Twitter. “She had an impossible task: nobody can make Obamacare work.”

The online insurance exchanges were the centerpiece of the law’s effort to provide access to health coverage for the country’s estimated 48 million uninsured. Enrollment began to surge in December as the deadline for coverage beginning Jan. 1 approached. That increased further in March, the last month when people could sign up for 2014 health plans, as the program matched, then beat its enrollment goals.

Sebelius “spent a lot of time going to states,” Praeger said in a telephone interview. “I think the HHS putting ads out -- that were very good -- the last month or so, resulted in a big surge the last couple of weeks.”

Sebelius wasn’t Obama’s first choice to lead the department. Former Senate Majority Leader Tom Daschle’s nomination to the post stalled after reports he had to pay about $140,000 in back taxes and interest, partly related to chauffeur services. Sebelius’s nomination was announced on Feb. 28, 2009, and she was confirmed two months later.

She became the point person on Obama’s effort with the new health law, a top campaign promise the president pushed through Congress while dealing with a financial crisis and strong political opposition.

State Flexibility

As secretary, Sebelius repeatedly emphasized that the law gave states flexibility on its implementation. That included letting them design and set up the marketplaces for people to shop for new insurance. Still, many governors in Republican-led states declined, leaving the U.S. to run more of the markets than it planned.

The insurance components of the law were the most debated yet were not entire measure. It also contains provisions to improve quality of care and to try and reduce financial incentives that drive up spending, which were just as important to Sebelius, said George Halvorson, former chairman and chief executive officer of Kaiser Permanente, the nonprofit health organization.

“There’s a fairly rich vein of quality-related elements that are pretty much invisible -- important, but invisible,” Halvorson, a Sebelius friend, said in a phone interview. “Those were things that she took very seriously and spent time on, to make sure the hospital infection rate reporting happened, for example.”

Challenges Ahead

Despite the law’s enrollment achievements, Burwell faces challenges.

Twenty-four states haven’t agreed to an expansion of Medicaid, which was a key part of providing coverage to the uninsured. The federal government runs insurance marketplaces in 36 states, more than the Obama administration anticipated, after most declined to take on that responsibility. Republicans in Congress have resisted providing billions of dollars Obama has requested to build and run the insurance exchanges.

Before joining the Obama administration, Sebelius was elected as governor of Kansas for two terms, from 2003 to 2009. She also spent about a decade as the state’s insurance commissioner, a role that would prepare her for the job running Obamacare.

Remaining Members

She is one of six Obama cabinet members who have remained since the beginning of the administration, including Attorney General Eric Holder and Secretary of Education Arne Duncan.

She is also the first daughter of a U.S. governor to be elected to the same post. Her father, John Gilligan, was Ohio’s governor from 1971 to 1975, according to her biography on the HHS website. Gilligan, who served in Congress when Medicare and Medicaid were created, died last summer, as Sebelius was promoting the Affordable Care Act’s new insurance programs.

“It feels like the baton has been passed and I get to maybe help fill in the gap for a lot of people in terms of health coverage,” Sebelius said in an interview in August, shortly before his death. “That’s a pretty great place to be.”

To contact the reporters on this story: Alex Wayne in Washington at awayne3@bloomberg.net; Julianna Goldman in Washington at jgoldman6@bloomberg.net; Drew Armstrong in New York at darmstrong17@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net Bruce Rule

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