The nomination of Michael Leavitt to head HHS may signal the Bush administration's plan to ratchet up efforts to reform the Medicaid program after a similar initiative fizzled almost two years ago.
Last week, President Bush nominated Leavitt, 53, to replace Tommy Thompson as HHS secretary, 11 days after Thompson resigned. Administrator of the Environmental Protection Agency since 2003, Leavitt was previously governor of Utah for 11 years, where he gained notoriety by securing a waiver from HHS allowing Utah to expand Medicaid coverage to about 25,000 uninsured residents. With the waiver as Leavitt's most notable healthcare accomplishment, some in Washington are betting that the administration may once again attempt to rejigger the healthcare program that covered 53 million beneficiaries in fiscal 2003.
The first of its kind, the Utah waiver was hailed by some as an innovative solution to the problem of the uninsured and panned by others who said the reduced benefits provided under the program have fallen short of reasonable standards for health insurance.
Nomination awaits confirmation
Leavitt's nomination, which awaits Senate confirmation, surprised many in Washington who had thought that CMS Administrator Mark McClellan was Thompson's heir apparent.
"I think what it signals is (the administration) is looking to be very innovative in Medicaid reform," said a Washington lobbyist who spoke on the condition of anonymity.
Some Democratic lawmakers still see the Utah waiver as a first step by the administration to gut Medicaid.
"For the past two years, I have raised questions about the troubling direction this administration has taken in granting waivers that undermine the fundamental nature of Medicaid," Sen. Max Baucus (D-Mont.), the ranking Democrat on the Senate Finance Committee, said in a news release. "And while many governors have sought waiver authority under Medicaid, in some respects the Utah waiver has laid the groundwork for the administration's current path." The Finance Committee has jurisdiction over Leavitt's nomination.
The Bush administration, however, views Leavitt as a Medicaid trailblazer.
In early 2003, the administration tried to increase the flexibility states had in administering the federally and state-funded Medicaid program by proposing what essentially was a block-grant approach (Feb. 3, 2003, p. 7). Under the proposal, states would have gotten fixed amounts of federal money for Medicaid instead of receiving their funding on an ongoing basis as needed. The proposal would have granted states the freedom to make changes to their Medicaid programs without applying for an HHS waiver, as is currently required.
When Thompson announced the plan on January 31, 2003, at a press conference in the HHS auditorium, Leavitt, still Utah's governor at the time, was on stage to voice his support.
Consumer groups, many governors and Democrats, however, quickly criticized the plan, arguing it would shift too much of the Medicaid financial burden onto already cash-poor states and would put state budgets in jeopardy. During fiscal 2003, federal and state governments spent a combined $278.3 billion on Medicaid, and the CMS projects that by 2009 that figure will reach $445 billion if changes are not made to the program.
After the outcry, the administration did not exactly abandon the proposal but has not pursued it further either. Last year's $413 billion deficit and a projected deficit of $367 billion for fiscal 2005, however, have led to talk of impending budget cuts. If Congress does start cutting into programs, both Medicaid and Medicare could be vulnerable. Last week, the American Hospital Association and 25 other healthcare provider organizations sent a letter to the president asking that he leave cuts to Medicaid and Medicare out of his fiscal 2006 budget.
"Everything we hear is that Medicaid is on the chopping block," said a Democratic staff member of the House Ways and Means Committee who asked not to be named. If there are no outright cuts to the program, reductions could be achieved through reforms to the program, she said.
So high is the level of concern for Medicaid's future that Democrats are likely to ask for assurances from Leavitt during his confirmation hearings that he would protect Medicaid's status as an entitlement program, said another Democratic Senate staff member who spoke on the condition of anonymity.
Provider organizations enthusiastically welcomed Leavitt's nomination. American Hospital Association President Richard Davidson called him "an excellent choice" to head HHS. John Nelson, president of the American Medical Association who worked as Utah's deputy director of health under Leavitt, said: "We applaud President Bush for his choice of a well-seasoned leader to head this vital department."
Out of the spotlight
Since his nomination, Leavitt has stayed out of the media spotlight, and his media office did not respond to repeated requests from Modern Healthcare for an interview. At the news conference announcing his nomination, Leavitt gave little insight into what his healthcare agenda would be if the Senate confirms him.
"I look forward, as the president said, to the implementation of the Medicare prescription drug program in 2006, medical liability reform and finding ways to reduce the cost of healthcare," he said.
The fact that not much is known about his healthcare record is a source of concern to some Democrats, the House Democratic staff member said.
"The little bit of experience he has is bad experience with Medicaid," she said.
But Rod Betit, executive director of the Utah Health Department from 1992 to 2003, said Leavitt was very active on healthcare issues while he was governor. In addition to overseeing the Medicaid waiver, Leavitt helped Congress craft legislation on the State Children's Health Insurance Program that allowed Utah to expand coverage under that program. Leavitt also was instrumental in increasing childhood immunizations. When he took office, Utah ranked dead last according to the percentage of children immunized. By the time he left, Utah had risen to the middle of the pack, Betit said.
"I would say he's a very effective manager," said Betit, now president and chief executive officer of the Alaska State Hospital & Nursing Home Association.
In picking Leavitt, the administration bypassed several other high-profile names with healthcare ties, most notably the CMS' McClellan, who had been pegged as Thompson's likely successor. A former health policy adviser to Bush, McClellan rose quickly within the administration, becoming commissioner of the U.S. Food and Drug Administration in 2002 and succeeding Tom Scully as head of the CMS in March.
In a teleconference with reporters the day that Leavitt's nomination was announced, McClellan declined to say whether he had wanted the HHS job.
"There's never been a more important time to be at CMS," he said, adding that opportunities abound to improve the agency. "I'm very focused on that and I'm going to remain so."
Citing the challenges ahead for HHS, including implementation of the Medicare law, continuing support of medical research and the threat of bioterrorist attacks, Bush said, "Mike Leavitt is the right leader to lead HHS in meeting all these vital commitments."
-with Mark Taylor
What do you think? Write us with your comments. Via e-mail, it's [email protected]; by fax, dial 312-280-3183.