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Official State Business: Why Sebelius Makes Sense

Anthony Wright is executive director of Health Access California, the statewide health care consumer advocacy coalition. He blogs daily at the Health Access WeBlog and is a regular contributor to the Treatment.

While Kansas Governor Kathleen Sebelius was a top contender to become Barack Obama's running mate during the campaign, she was not Obama's first choice to run the Department of Health and Human Services after the campaign was over. That distinction went to former Senator Tom Daschle. And when Daschle had to withdraw, many worried that whomever Obama picked to succeed Daschle would lack his uniquely deep sense of how Washington works.

But while Sebelius' experience has been in Kansas rather than Washington, that's not necessarily a disadvantage. The federal government doesn't have unilateral control over health policy, after all. States have significant jurisdiction on health issues themselves.

You can see that shared reponsibility most clearly in the administration of Medicaid and the State Children’s Health Insurance Program (SCHIP). Although the federal government sets broad guidelines for how the programs must operate, states have enormous leeway to determine the programs’ benefits, eligibility, reimbursement rates, structure, and funding.

States are also responsible for licensing and regulating private health insurance companies, overseeing everything from plan solvency to benefit packages.

Sebelius, who served as Kansas' insurance commissioner before becoming its governor, is extremely familiar with these issues--more so than many in D.C. That should equip her well to run HHS--and, no less important, to help steer a health reform effort that's bound to change the roles both states and the federal government play in health care.

Start with money. Health care is second only to education as a portion of state budgets, and second only to defense as a portion of the federal budget. Virtually any reform will likely readjust the proportion of money states and the federal government contribute, most likely putting more burden on the feds and less on the states. This isn't necessarily a bad thing. States, who have balanced-budget requirements, end up cutting their health programs during economic recessions--in other words, at exactly the time when the need is greatest. Shifting more of the financial burden to Washington would alleviate this problem.

Reform will also mean new regulations and oversight for the insurance indistry. Most of the proposals now under serious consideration would fundamentally change the rules by which insurers do business, requiring them to cover consumers regardless of “pre-existing conditions,” and creating an exchange through which individuals and businesses could more easily buy coverage. But it's open question who, exactly, will enforce these new measures. It could fall to Washington. Or it could fall to the states, perhaps within some minimum federal requirements, but allowing some flexibility.

Sebelius, drawing on her experience in Kansas, should have a pretty good sense of what sorts of arrangements will work--and which ones won't. Its yet another tough balancing act required in health reform, one for which she is well suited.

--Anthony Wright