Caught in the whirlwind

A bad week for HHS turned progressively worse as a maelstrom of controversies swirling around the Obama administration now threatens to distract federal officials from effectively implementing the 2010 healthcare overhaul.

As federal lawmakers called for an investigation into HHS Secretary Kathleen Sebelius' fundraising efforts for Enroll America—a not-for-profit organization working to educate Americans about enrolling in healthcare coverage—the White House found itself in damage-control mode last week, answering questions about a series of high-level scandals, including the Internal Revenue Service's scrutiny of Tea Party groups, last September's attacks on the U.S. consulate in Benghazi, Libya, and the U.S. Justice Department's seizure of phone records of Associated Press journalists.

Among those, the IRS matter and Sebelius' fundraising tactics have the greatest chances of inhibiting HHS' ability to successfully roll out the biggest healthcare coverage expansion the U.S. has seen in decades. And the timing of those investigations is especially unfortunate for HHS, just as the department is set to launch a nationwide education and public outreach campaign about the Patient Protection and Affordable Care Act. A recent Kaiser Family Foundation poll found that 42% of Americans don't know the seminal law is still on the books.

The IRS controversy could bubble over just as the Obama administration depends on the agency to carry out major provisions of the health reform law that go into effect next year. Some lawmakers are asking whether the agency can be trusted in light of the revelation that its tax-exempt division singled out applications from some conservative groups. In particular, Republicans insinuated that because the IRS is responsible for enforcing the individual coverage mandate and determining eligibility for health insurance exchange subsidies, IRS employees would have access to sensitive personal information and could wield it against political enemies.

On May 15, Sen. Dean Heller (R-Nev.) introduced the IRS Accountability Act to halt funding to the IRS for new agents to enforce the Affordable Care Act. The next day, Rep. Tom Price (R-Ga.) went further with the Keep the IRS Off Your Health Care Act of 2013, which would prohibit the IRS from implementing or enforcing any provision of the ACA.

“The same agency that just committed an appalling violation of the American people's trust is going to be at the forefront of enforcing the healthcare law, including the individual mandate, which will require every citizen to prove to this agency that they've purchased government-dictated healthcare coverage,” Price said in a statement.

Then it was reported that Sarah Hall Ingram, who heads the IRS office on implementing the health reform law, was commissioner of the IRS division responsible for tax-exempt organizations between 2009 and 2012. During a May 17 House Ways and Means Committee hearing on the IRS controversy, Rep. Devin Nunes (R-Calif.) said he wanted to hold another hearing on the matter and have Ingram testify.

Healthcare industry observers, however, are split over whether the link between the IRS controversy and the ACA is legitimate or just plain politics.

“The IRS will not be holding information regarding people's medical records, nor will they have the opportunity to go to their health plan and demand any such information,” said Robert Laszewski, a former insurance executive and president of consulting firm Health Policy and Strategy Associates. “So there is no threat that the IRS will somehow politically retaliate against anyone within the new healthcare program by somehow using their healthcare information. Regarding Obamacare, the IRS isn't going to know more than the identity and income/job information they already have in their files.”

But the perception could be damaging nonetheless, Laszewski said. “The appearance of the manager at the heart of the IRS scandal is going to add lots of fuel to the fire as critics of Obamacare, particularly those that see the new health law as more too big and too powerful government, just pile on this piece of news.”

Henry Aaron, an economist and health policy expert at the Brookings Institution, said that accusations from Republicans about the IRS' role in the ACA are not valid, and there is no reason to believe the agency's employees would misuse personal information, just as they are prohibited from doing so now regarding income tax returns.

He added that legislation to remove funding from the IRS for Affordable Care Act purposes would be “shooting ourselves in the foot.” President Barack Obama's proposed 2014 budget asks that $440 million be diverted to the IRS to enforce the ACA.

A former Senate aide who worked on the healthcare law said that while the controversy raises questions about the operation of the IRS, there is hope the office will learn from the experience.

“The most recent controversy adds to the question of whether the agency can competently implement and enforce the law,” the aide said. “Having said that, when the IRS faced controversy in the '90s, the agency did a 180 and became a much more efficient regulator,” he said, referring to events that led to the Internal Revenue Service Restructuring and Reform Act of 1998. “We could potentially see that here in the wake of this controversy, which could lead to smoother implementation and enforcement in the coming years.”

Meanwhile, Sebelius sits at the center of a federal probe that House and Senate GOP leaders requested regarding her fundraising efforts for Enroll America.

As the House of Representatives voted a third time last week to repeal the entire Affordable Care Act, several high-ranking Republican lawmakers sent a letter to Gene Dodaro, comptroller of the Government Accountability Office, asking the office to conduct a complete investigation of Sebelius' activities, starting with compiling a full list of all outside entities from which HHS has solicited funds to help implement the law.

House Energy and Commerce Committee leaders also sent letters to the chief executives of H&R Block and 11 major health insurers seeking information about their communications with HHS. They also hit HHS and Enroll America with lists of questions.

HHS spokesman Jason Young said in an e-mail that Sebelius has not made fundraising requests of any entity that HHS regulates, and that the fundraising she has done was for Enroll America, not for the law. That's an important distinction, he noted, because the secretary has authority under the Public Health Service Act to urge others to support not-for-profit groups promoting health.

“Since March, the secretary has made two fundraising calls on behalf of Enroll America to two organizations—the Robert Wood Johnson Foundation and H&R Block—neither of which is regulated by us and both of whom share a commitment to helping uninsured Americans,” Young said.

Previous HHS secretaries from both political parties, he added, sought private-sector support for other programs such as Medicare Part D, the Children's Health Insurance Program and the Children's Inn at the National Institutes of Health.

Anne Filipic, president of Enroll America, said in a statement that the group is focused on ensuring that millions of Americans know that they're eligible to enroll for coverage come October. “That's why we're working with a broad range of organizations—including consumer advocates, companies and other stakeholders—to build the team and develop the communications tools needed to get the word out to individuals who stand to benefit in just a few short months,” Filipic said, adding that her group is “proud” to be working with Sebelius on that effort.

Lawmakers stuck to party lines when asked about the administration's headaches and how the growing docket of investigations could divert attention and resources from healthcare.

“I think HHS can handle both,” Rep. Chris Van Hollen (D-Md.), ranking member on the House Budget Committee, said in an interview. “In other words, there's obviously an appropriate role for congressional oversight—appropriate, meaning people should get to the facts, instead of trying to spin conspiracy theories,” he continued. “But it's very appropriate they get the facts. I'm sure HHS has the capacity to respond to reasonable requests and implement the Affordable Care Act. Now to the extent that the requests get to be totally unreasonable, that raises other issues, but we'll see when we get there.”

But Rep. Charles Boustany (R-La.), a physician who serves as chairman of the House Ways and Means Oversight Subcommittee, countered that the problems facing the administration—and specifically the IRS scandal—don't bode well for the Affordable Care Act.

“I've had deep concerns as to whether the IRS is equipped to deal with this, but given these abusive practices, it really gives me major concern about having this agency, with this much power, prying into other personal areas of information beyond just simple tax returns,” Boustany said. “I think it calls into question how this whole healthcare law is implemented and the basic structure of how it's going to operate.”

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