Budget request denied, Sebelius turns to health executives to finance Obamacare

May 10, 2013

HHS Secretary Kathleen Sebelius is asking private industry executives to help fund Obamacare's implementation.

Health and Human Services Secretary Kathleen Sebelius has gone, hat in hand, to health industry officials, asking them to make large financial donations to help with the effort to implement President Obama's landmark health-care law, two people familiar with the outreach said.

Her unusual fundraising push comes after Congress repeatedly rejected the Obama administration's requests for additional funds to set up the Affordable Care Act, leaving HHS to implement the president's signature legislative accomplishment on what officials have described as a shoestring budget.

Over the past three months, Sebelius has made multiple phone calls to health industry executives, community organizations and church groups and asked that they contribute whatever they can to nonprofit groups that are working to enroll uninsured Americans and increase awareness of the law, according to an HHS official and an industry person familiar with the secretary's activities. Both spoke on the condition of anonymity to talk openly about private discussions.

An HHS spokesperson said Sebelius was within the bounds of her authority in asking for help.

But Republicans charged that Sebelius's outreach was improper because it pressured private companies and other groups to support the Affordable Care Act. The latest controversy has emerged as the law faces a string of challenges from GOP lawmakers in Washington and skepticism from many state officials across the country.

"To solicit funds from health-care executives to help pay for the implementation of the President's $2.6 trillion health spending law is absurd," Sen. Orrin G. Hatch (R-Utah) said in a statement. "I will be seeking more information from the Administration about these actions to help better understand whether there are conflicts of interest and if it violated federal law."

Federal regulations do not allow department officials to fundraise in their professional capacity. They do, however, allow Cabinet members to solicit donations as private citizens "if you do not solicit funds from a subordinate or from someone who has or seeks business with the Department, and you do not use your official title," according to Justice Department regulations.

HHS spokesman Jason Young added that a special section in the Public Health Service Act allows the secretary to support and encourage others to support nonprofit groups working to provide health information and conduct other public-health activities.

Sebelius is working "with a full range of stakeholders who share in the mission of getting Americans the help they need and deserve," Young said. "Part of our mission is to help uninsured Americans take advantage of new, quality affordable insurance options that are coming thanks to the health law."

Young said that Sebelius did not solicit for funds directly from industries that HHS regulates, such as insurance companies and hospitals, but rather asked them to contribute in whatever way they can.

But the industry official who had knowledge of the calls but did not participate directly in them said there was a clear insinuation by the administration that the insurers should give financially to the nonprofits.

Meredith McGehee, policy director for the nonpartisan Campaign Legal Center, which researches government ethics issues, said she was troubled by Sebelius's activities because the secretary seemed to be "using the power of government to compel giving or insinuate that giving is going to be looked at favorably by the government."

The success of the Affordable Care Act largely hinges on whether enough people sign up for insurance coverage. If only a small number of sick people participate, premiums would spike.

But spreading information about the law to the 30 million uninsured Americans has been a struggle, partly because there isn't enough money to fund the effort, HHS officials have argued.

The Affordable Care Act included $1 billion to be used in overall implementation of the law. Congressional Budget Office projections, however, estimated that federal agencies will need between $5 billion and $10 billion to get the law up and running over the next decade. And because many states have refused to partner with the federal government in setting up the law, the burden on HHS has grown.

HHS has repeatedly requested additional funds from Congress to assist in the implementing but has been turned down.

After Congress rejected a request in March for nearly $1 billion in additional spending for fiscal 2013, the White House asked for $1.5 billion for fiscal 2015 to set up and run dozens of exchanges that will provide Americans options for health insurance. The new marketplaces will launch in October for open enrollment.

"We requested additional money . . . but we didn't receive any additional funding for the exchanges," Ellen Murray, HHS's assistant secretary for financial resources, said last month at a budget briefing. "So we've had to come up with a Plan B. We've been working very hard to develop that."

In 2012, budget documents show that HHS pulled hundreds of millions of dollars from programs not specifically earmarked for the Affordable Care Act's implementation.

On top of that, the agency announced Thursday that it would use $150 million in Affordable Care Act funds meant to build additional community health centers to train thousands of health-care outreach workers at facilities that already exist.

"Investing in health centers for outreach and enrollment assistance provides one more way the Obama administration is helping consumers understand their options and enroll in affordable coverage," Secretary Sebelius said in a statement.

Many of Sebelius's calls have gone to current supporters of Enroll America, the most prominent nonprofit group working on the health care law's implementation, an HHS official said. Its president, Anne Filipic, joined the group in January after serving as the White House's deputy director for public engagement.

"We all have a lot of work to do between now and the Marketplace opening in October," Filipic said in a statement. "That's why it's so important that the public, private and non-profit sectors are coming together to educate consumers about the opportunities that will be available to them later this year. Secretary Sebelius recognizes how important the work Enroll America is doing and we're thrilled to be working with her."

Health insurers plan to run their own outreach campaigns alongside the work of the Obama administration. They have a vested interest in recruiting Americans to enroll in their specific products rather than those of their competitors.

"As open enrollment gets closer, health plans will be engaged in a variety of innovative outreach activities," spokesman Robert Zirkelbach, spokesman for the trade association America's Health Insurance Plans, said.

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