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Obama Appoints Savvy Insider to Key White House Health Post

March 2, 2009 -- In appointing Nancy-Ann DeParle to head his Office for Health Reform, President Obama is getting a consummate health policy insider who knows not only key federal health programs, lawmakers, health aides, health policy wonks, reporters, and the budget process but also the health industry.

DeParle's ties to industry could evoke the firestorm of criticism that engulfed the nomination of Tom Daschle to become Health and Human Services Secretary, but it also gives her an edge in bringing an industry perspective into the conversation over revamping the health care system. Unlike Hillary Rodham Clinton when she headed the White House health overhaul effort in the Clinton administration, DeParle is unlikely to be at loggerheads with a health care industry angry that it has been shut out of the process.

DeParle did not immediately respond to an email message Monday seeking comment.

DeParle's health policy career in Washington includes stints at the White House Office of Management and Budget overseeing federal health care budgets, her service administering the Medicare and Medicaid programs and several years serving on the Medicare Payment Advisory Commission (MedPAC). She also is familiar with health care issues from the perspective of the states.

Obama praised DeParle as "one of the nation's leading experts on health care and regulatory issues" in announcing her appointment Monday along with his nomination of Kansas Gov. Kathleen Sebelius to become secretary of the department of Health and Human Services.

Obama said of DeParle: "As commissioner of the Department of Human Services in Tennessee, she saw firsthand our health care system's impact on workers and families. In the Clinton administration, she handled budget matters for federal health care programs and took on the tremendous task of managing Medicare and Medicaid."

As administrator of the Health Care Financing Administration, which later became the Centers for Medicare and Medicaid Services, DeParle faced enormous administrative challenges implementing the sweeping changes in the Medicare payment system required under the 1997 Balanced Budget Act. She also had the job of assuring that Medicare and Medicaid payment systems wouldn't crash because of the "Y2K" glitch that required a major review of software systems as the millennium approached.

DeParle's ability to work tirelessly and to prioritize and focus under heavy pressure allowed her to meet both challenges. In doing so, she earned the goodwill of key Republicans in the GOP-controlled Congress, such as then House Ways and Means Health Subcommittee Chairman Bill Thomas, R-Calif. DeParle also worked with Republicans on the Hill in the successful launch of the State Children's Health Insurance Program.

Her administrative and political skills and ties to academia could be strong assets in negotiating something so delicate, complex and massive as an overhaul of the U.S. health system. Her academic credentials include a degree from Harvard Law School and a degree in politics, philosophy and economics from Oxford University.

DeParle fits the Obama pattern of appointing left-leaning, business-savvy pragmatists. She counseled fellow Democrats hostile to the Bush administration Medicare prescription drug proposals to go along with the new benefit, saying its flaws could be improved later. DeParle has served on the board of various companies at the center of innovation and private sector cost control, according to Bloomberg News, such as the pharmacy benefits manager Medco Health Solutions, the health information technology company Cerner Corporation and the heart device maker Boston Scientific Corp.

She also has served as managing director of the investment firm CCMP Capitol, a New York -based private equity fund, where she headed up its health care division. The fund has investments in CareMore Medical Enterprises, a Los Angeles-based firm that runs private health plans in Medicare; and National Surgical Care, which develops for profit surgical centers owned by doctors.
DeParle may face criticism from the left or from watchdog groups for her connections. Daschle's nomination began to founder because of unpaid taxes but also because of fees he received from speaking to health care organizations and his work as a special public policy advisor for clients of the Washington, D.C. firm Alston & Bird.

Like Daschle, DeParle wasn't a lobbyist and so complies with the Obama directive against hiring employees who had lobbied Congress or the federal government in the previous two years. But her service on the board of companies is likely to raise questions about what compensation she received. Unlike Daschle, DeParle's appointment will not have to be confirmed by Congress.

Initial reaction to DeParle's appointment from the left was favorable. "Nancy-Ann DeParle's extensive experience with health and budget issues, her relationships on the Hill, and her relationships within the Administration make her a great pick to head the new White House Office for Health Reform," House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif, said in a news release Monday.
Roger Hickey, co-director of the left-leaning Campaign for America's Future, said "Nancy Ann DeParle, with her experience in state health programs and as director of the Health Care Financing Administration in President Clinton's administration, clearly has the experience and health care expertise to help the president win what the American people voted for – quality affordable health care for all."

Dan Mendelson, who served as Clinton's top budget official overseeing federal health programs, said of DeParle's corporate ties, "she worked in those organizations from a business standpoint" on issues such as governance and compensation. "You are not advising the company on getting things through Congress" in such a role, Mendelson said.

White House Press Secretary Robert Gibbs said when asked whether DeParle's board service was a conflict of interest, "the White House has confidence in her and her abilities as part of the health care reform effort here."

Another White House official who spoke on background said DeParle "does not need a waiver" from Obama's ethics policies. "She wasn't a lobbyist," the official said, adding that the White House has "full confidence" in her compliance with the ethics policy. The official late Monday could not provide any information regarding DeParle's board compensation.

The official added that DeParle would recuse herself from any meetings involving the companies with which DeParle has had financial ties and that she is ending her connection to those companies and with the private equity firm. While DeParle's role would entail bringing in a wide range of viewpoints and ideas, the official downplayed her role in meeting with industry groups, saying she would lead interagency efforts on health reform, coordinating the work of HHS, the White House National Economic Council and the White House Office of Management and Budget.

Mary Agnes Carey contributed to this report.

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