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Obama Nominates Sebelius to Health and Human Services

By Drew Armstrong, CQ Staff

March 2, 2009 -- President Obama's cabinet, and his team to push health care reform, took one step closer to completion Monday when he officially nominated Kansas Gov. Kathleen Sebelius as secretary of Health and Human Services.

"Kathleen... knows health care inside and out," said Obama, announcing the pick. "Fixing what's wrong with our health care system is no longer just a moral imperative, but a fiscal imperative," said Obama, calling Sebelius "critical to that effort."

The Department of Health and Human Services oversees programs such as Medicare and Medicaid, the Food and Drug Administration, the National Institutes of Health and a constellation of other public health and welfare agencies, responsible for nearly $80 billion in discretionary spending and hundreds of billions more through entitlement programs. Obama's budget proposal, issued last week, also set aside a $634 billion fund over 10 years to pay for health care overhaul.

Obama also named Nancy-Ann DeParle director of the White House Office of Health Reform, a post Obama created specifically to help push his overhaul efforts. She will also have the title of "counselor to the president." Obama called DeParle "one of the nation's leading experts on health care and regulatory issues."

Obama also used the announcement to keep beating the drum for overhaul. "The odds are long, it's failed too many times. . . . That's the conventional wisdom," Obama said. "I didn't come to Washington to take the easy route."

DeParle was administrator of what is now the Centers for Medicare and Medicaid Services in the Clinton administration, and has also worked at the Office of Management and Budget.

She is a managing director at the investment firm CCMP Capitol, a New York-based private equity fund, heading up its health care division. According to CCMP's web site, the firm has active investments in several health care companies, including a hospital company and several other medical services companies, including one company that runs a Medicare Advantage plan—a private–sector version of Medicare funded by the government and long attacked by Democrats.

The company, CareMore Medical Enterprises, is a Los Angeles-based firm that runs private Medicare programs known as Medicare Advantage. Medicare Advantage plans are paid by the government as a private-sector alternative to traditional Medicare. Obama and Democrats have promised to cut payments to the plans in order to pay for health care overhaul efforts.

Another company, National Surgical Care, specializes in developing for-profit surgical centers owned by physicians, hospitals and investors. Some congressional Democrats, notably Rep. Pete Stark of California, have tried to strictly curtail physicians' ability to own such hospitals and surgical centers.

Obama's choice of Sebelius won praise from senators, who must confirm the nomination.

"Gov. Sebelius is a strong choice for Health and Human Services secretary," said Senate Finance Committee Chairman Max Baucus, D-Mont., who was at the White House with Obama for the announcement. "Passing comprehensive health care reform is an absolute imperative this year, and as a former insurance commissioner Gov. Sebelius really gets what needs to be done."

And Sebelius has already won the backing of two of the Senate's more conservative Republicans, fellow Kansans Sam Brownback and Pat Roberts. The two issued a joint statement over the weekend praising the pick, though not administration policy.

"Obviously we will have different viewpoints than the administration on many issues including health care reform especially given the huge price tag," said the senators. "We look forward to talking with Governor Sebelius about the details of the president's plan," they said.
Roberts sits on the Senate Finance Committee, which will hold Sebelius' confirmation hearing, as well as the Health, Education, Labor and Pensions Committee, which will also have a hand in any health care overhaul legislation.

Sebelius' confirmation will first go before the Finance Committee before proceeding to the full Senate. "We'll go through our regular vetting process for nominees and announce a hearing when that's complete," said committee spokeswoman Carol Guthrie.

The administration is already stocked with aides who can be considered health care overhaul experts. OMB Director Peter Orszag is a health care expert who made study of overhaul options a priority while he was director of the Congressional Budget Office. And academic Jeanne Lambrew is second in command at the White House Office of Health Reform.

As governor, Sebelius has called for universal health care, a major theme for Democrats during the 2008 presidential campaign. "We must commit ourselves to universal coverage, improved quality of care, and increased affordability," she said in her Jan. 10, 2007, state of the state address. No such program was enacted.

Before she was elected governor of Kansas in 2002, Sebelius was the state's insurance commissioner for eight years. In that job, she fought a major battle with the health insurance industry. In 2001, Indiana-based health insurer Anthem announced it would buy Blue Cross Blue Shield of Kansas. Unlike private, for-profit health insurers, Blue Cross Blue Shield of Kansas is owned by its state policy holders.

Though Blue Cross Blue Shield of Kansas' members approved the sale to Anthem, Sebelius used her power as insurance commissioner to block the move, taking the fight all the way to the state supreme court, where she eventually prevailed.
Sebelius is Obama's second pick to head HHS. His original choice, former Senate Majority Leader Tom Daschle (1987–2005), was forced to withdraw after revelations that he had paid $140,000 in back taxes and interest in early January.

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