HHS Secretary Nominee Leavitt Expected To Face Rising Costs of Medicare, Medicaid

President Bush's nominatation on Monday of Environmental Protection Agency Administrator Michael Leavitt as the new HHS secretary raised speculation that the former Utah governor "may have to cut billions of dollars" from CMS, among other reforms, the AP/Las Vegas Sun reports (Sherman, AP/Las Vegas Sun, 12/13). Leavitt served as Utah governor for 11 years before Bush appointed him as EPA administrator last year. Bush said that Leavitt, a Republican, is a "fine executive" and a "man of great compassion," adding, "He's an ideal choice" for HHS secretary. Leavitt said that he is "looking forward" to the move to HHS (Kaiser Daily Health Policy Report, 12/13). Leavitt said, "I'm persuaded that we can use technology and innovation to meet our noble aspirations and not compromise our other values that we hold so dear" (Lueck, Wall Street Journal, 12/14). In addition, Leavitt said that he hopes to enact medical liability reform and find "ways to reduce the cost of health care."

Social Issues
As HHS secretary, Leavitt likely would face "huge challenges" related to "an array of divisive social issues," such as abortion, embryonic stem cell research, family planning and sexual abstinence, the New York Times reports. According to the New York Times, the positions that Leavitt has taken on such issues, "so far as they are known, generally resemble those of Mr. Bush" (Pear, New York Times, 12/14). However, Leavitt has not publicly indicated his positions on embryonic stem cell research or prescription drug reimportation (Baker/Connolly, Washington Post, 12/14). According to senior Republican congressional aides, if Congress passes expected budget reductions for fiscal year 2006, CMS "would be unlikely to escape," the AP/Sun reports (AP/Las Vegas Sun, 12/14). Bush also said that he will seek to expand HHS funds for faith-based groups, which in 2003 received $568 million for community health programs and other services (Alonso-Zaldivar/Shogren, Los Angeles Times, 12/14).

Expectations, Predictions
The nomination of Leavitt, who is a Mormon, "may give some comfort to religious groups opposed to federal funding of stem cell research," the Wall Street Journal reports (Wall Street Journal, 12/14). Other health care advocates said that as EPA administrator, Leavitt "deferred to industry" at the expense of public health, the Post reports (Washington Post, 12/14). According to the AP/Sun, Leavitt "shares Bush's enthusiasm for market-based approaches to fixing problems" (AP/Las Vegas Sun, 12/14). According to the Washington Times, Leavitt "is viewed favorably among the rank and file at HHS, especially because of his track record on family issues." An unnamed HHS official said that Leavitt is "expected to be a vocal advocate" of "family strengthening programs" and lobby for "pro-marriage grant programs," the Washington Times reports (Curl, Washington Times, 12/14).

Health Care Record as Governor
According to the Chicago Tribune, Leavitt has limited experience in health care, although he previously served as president and chief executive at an insurance firm and made efforts to reform Medicaid as Utah governor. Bush said, "Gov. Leavitt was a leader in welfare reform, resource management and environmental stewardship. He improved child welfare services in the state and made strides toward expanding access to health care for children" (Kilian, Chicago Tribune, 12/14). Efforts by Leavitt to reform Medicaid as Utah governor led some observers to consider him "an innovator who helped shape national Medicaid policy," although others said that his reforms reduced benefits and increased costs for beneficiaries, the New York Times reports. As Utah governor, Leavitt in 2002 sought and received a "revolutionary" federal Medicaid waiver that allowed the state to provide limited benefits to about 25,000 low-income residents to expand the program, "while cutting benefits for some already on the rolls," the New York Times reports (Pear, New York Times, 12/14). Leavitt in the late 1990s also attempted to lobby Congress to transform Medicaid into a block grant in which each state would receive a predetermined amount of funds to administer the program without restrictions. Cindy Mann, a Medicaid official in the administration of former President Bill Clinton, said that the approach to Medicaid "simply spends less because it gives people much, much less coverage" (Washington Post, 12/14).

Other Professional History
Leavitt, prior to his tenure as Utah governor, served as head of the Leavitt Group, which owns 100 insurance agencies that sell Medigap policies, among other products. Although Leavitt maintains an investment in the Leavitt Group valued at between $5 million and $25 million, Medigap policies sold by the company account for less than 1% of revenue, according to Dane Leavitt, the president and CEO of the company and Leavitt's brother. "I have never had a discussion with him on any of those topics, and I don't anticipate having one," Dane Leavitt said. Michael Leavitt also has small investments -- each valued at less than $15,000 -- in Johnson & Johnson, Merck and Medtronic, according to a 2003 financial disclosure report. White House spokesperson Trent Duffy said, "We're confident that Gov. Leavitt will take the necessary steps to avoid any conflicts of interest" (AP/Las Vegas Sun, 12/14).

McClellan 'Passed Over'
Bush "passed over" CMS Administrator Mark McClellan, who observers had considered the "leading candidate" for HHS secretary, because the president considered him "indispensable in his current position," where he will implement the new Medicare law over the next few years, the New York Times reports. According to the New York Times, any "misstep or delay in carrying out" the Medicare law "could be a huge political embarrassment" for Bush (Pear, New York Times, 12/14). McClellan said that Leavitt is "a very effective leader and a wonderful person." He added, "There has never been a more important time to be at" CMS (Wall Street Journal, 12/14). Sen. Orrin Hatch (R-Utah) predicted that McClellan in the future would become HHS secretary, "one of the most important, difficult jobs in all of government today." Hatch said, "Ultimately it will be his. Mark's a young man. Even he can benefit from watching a very fine administrator like Mike Leavitt" (Washington Post, 12/14).

Other Reaction
Lawmakers from both parties on Monday called Leavitt "measured, reasonable and highly analytical," the Journal reports (Wall Street Journal, 12/14). According to the Washington Post, Leavitt is a "Bush loyalist" and "known commodity" who has "greatly impressed" the president in his tenure as EPA administrator. Former Oregon Gov. John Kitzhaber (D) called Leavitt a "moderate Republican" who can "understand complex problems and is passionate about broad, sustainable solutions" (Washington Post, 12/14). Kitzhaber also said that "there's a real value to having a [former] governor in the Cabinet," adding, "If they in fact are going to whack the money in (health) programs, Mike is certain to be in the position of dealing with other governors, who undoubtedly will come unglued when that happens" (Los Angeles Times, 12/14). John Nelson, president of the American Medical Association, said that he hopes to work with Leavitt to "reform the broken medical liability system, improve Medicare and increase access to health care" (Chicago Tribune, 12/14). CDC Director Julie Gerberding said in a statement that Leavitt "brings to HHS extraordinary leadership and vision necessary to tackle the very issues that affect all Americans, including problems like diabetes, heart disease, breast cancer, smoking, obesity and injury." She added, "As governor of Utah, Mr. Leavitt was a national leader on homeland security issues which will serve him well in his new capacity as secretary of HHS" (Deans, Atlanta Journal-Constitution, 12/14). Sen. Edward Kennedy (D-Mass.) also praised the nomination of Leavitt as HHS secretary (Los Angeles Times, 12/14). However, Georges Benjamin, executive director of the American Public Health Association, questioned whether Leavitt has adequate health care experience, adding that a president should not name "a physician to run the Justice Department." He said, "You don't have to be a doctor. But health care experience is essential" (Chicago Tribune, 12/14).

Confirmation Prospects
At his Senate confirmation hearing, Leavitt likely will face "tough questions on Medicaid" related to his efforts to reform the program as Utah governor, the Journal reports. Sen. Max Baucus (D-Mont.), ranking member of the Senate Finance Committee, which will hold the confirmation hearing, said that although he supports the nomination of Leavitt as HHS secretary, he has concerns about the Bush administration position on Medicaid (Wall Street Journal, 12/14). Sen. Byron Dorgan (D-N.D.) has said he would block the confirmation of Leavitt unless the White House considers a proposal to legalize the importation of prescription drugs (Washington Post, 12/14). However, the Los Angeles Times reports that the Senate is "expected to easily confirm Leavitt" (Los Angeles Times, 12/14).

Additional Coverage

• The New York Times on Tuesday examined the recent professional history of Leavitt, who as Utah governor "generally pursued an ambitious approach to expanding health coverage" with policies that favored "aggressive, even untested solutions" (Janofsky, New York Times, 12/14).
  
  
• The Salt Lake Tribune on Tuesday examined the tenure of Leavitt as EPA administrator and whether his nomination as HHS secretary is "a reward for being a loyal team player" (Gehrke, Salt Lake Tribune, 12/14).

Broadcast Coverage
Several broadcast programs reported on the nomination of Leavitt as HHS secretary:

• NPR's "All Things Considered": The segment includes comments from Bush and Leavitt (Gonyea, "All Things Considered," NPR, 12/13). The complete segment is available online in RealPlayer.
  
  
• NPR's "All Things Considered": The segment includes comments from John O'Toole, director of the National Center for Youth Law; Ray Scheppach, executive director of the National Governors Association; LaVarr Webb, a political consultant who served as policy director for Leavitt in Utah; and Ted Wilson, former director of the Hinckley Institute of Politics and former Salt Lake City mayor (Berkes, "All Things Considered," NPR, 12/13). The complete segment is available online in RealPlayer.
  
  
• NPR's "Morning Edition": The segment includes comments from O'Toole; Robin Arnold-Williams, director of the Utah Department of Health under Leavitt; and Wilson (Berkes, "Morning Edition," NPR, 12/14). The complete segment is available online in RealPlayer.