The Sebelius Shakedown: Private Sector Asked to Fund Obamacare Implementation

Last Friday – May 10 – The Washington Post reported that Health and Human Services Secretary Kathleen Sebelius had “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.” The article explained that “[o]ver 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” promoting the health care law.

Secretary Sebelius’ fundraising effort focused, in part, on supporting a group called Enroll America – an online coalition run by a former top Obama White House official. An industry executive, with direct knowledge of the Secretary’s funding request, indicated that “there was a clear insinuation by the administration that the insurers should give financially to the nonprofits.”

A non-partisan ethics expert said 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.”  This raises yet another disturbing issue, as HHS is currently negotiating with health plans to set premium rates and confirm plan participation in the health care law’s insurance exchanges. Private companies and organizations should never be compelled to enter into a quid pro quo arrangement in order to avoid regulatory punishment.  

News reports detailing the Secretary’s actions are troubling. President Obama’s health care law gave Secretary Sebelius unprecedented power to regulate a substantial portion of the U.S. economy. She controls a budget of nearly $1 trillion and oversees health care industries ranging from insurance to hospitals. At best, requesting health care industry executives, whom HHS regulates, to donate money for the Administration’s health care law enrollment efforts is a blatant conflict of interest. At worst, her conduct may have violated appropriations law by increasing federal spending without congressional authorization.

As Congress initiates and intensifies its investigation into Secretary Sebelius’ actions, one thing is certain: the President’s top health care official has a lot of explaining to do. Just for starters, the American people deserve to know:

• Legal Authority. The Washington Post quotes an HHS spokesman saying 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.” What specific legal authority permits the Secretary, or any other HHS employee, to solicit financial donations to implement the health care law?

• Decision-making. Which HHS officials participated in the decision to contact private entities and solicit donations?

• Involvement. Did any HHS officials or staff other than the Secretary solicit donations from outside groups and businesses?

• Beyond HHS. Did any other Obama Administration officials or staff outside HHS conduct similar solicitations?

• Legal Consultations. Did Secretary Sebelius, or any HHS staff, request an official legal opinion – or consult with the HHS Office of General Counsel – about the propriety of soliciting donations? If the answer is yes, what official guidance did the legal analysis contain?

• Quid Pro Quo. What specific steps has HHS taken to ensure the Obama Administration will not favor businesses and organizations that gave money to outside groups, or punish those that did not donate?

Prior to her latest efforts to shake down health industry companies for money to implement the health care law, Secretary Sebelius has made other questionable decisions.

In September of 2010, health insurance companies started informing customers how much the President’s health care law would increase premium rates. Secretary Sebelius responded with a warning shot. She issued a letter to insurers warning that the Administration planned to “keep track of insurers with a record of unjustified rate increases: those plans may be excluded from health insurance Exchanges in 2014.” This was no idle threat. At the time, Medicare’s chief actuary had predicted that, in the future, essentially all Americans would buy health insurance through the government exchanges. Secretary Sebelius seemed to threaten that any insurers telling customers the reason behind premium increases would be put out of business.

More recently, in September of 2012, the U.S. Office of Special Counsel concluded Secretary Sebelius violated the Hatch Act when she made political remarks during a speech she made in her capacity as a federal employee. In that speech, Secretary Sebelius said, “One of the imperatives is to make sure that we not only come together here in Charlotte to present the nomination to the President, but we make sure that in November he continues to be President for another four years.” Secretary Sebelius campaigned for President Obama while traveling on official federal business. While federal workers who are found to violate the Hatch Act are often fired, Secretary Sebelius was not punished.  

Much of the media attention on the Administration’s scandals focused on the political fallout. The politics is not the real issue. The real issue is that the American people need to know that their government is not a thug. They need confidence that their government will act in the people’s best interest – not just in President Obama’s best interest. They need confidence that the Administration is not favoring – or punishing – the very industries it regulates, based only upon their support for the President’s health care law.

Health Care Headlines

The Hill: “GOP senators join Sebelius investigation”: Republicans on the Senate Finance Committee raised questions Tuesday about Health and Human Services Secretary Kathleen Sebelius's push to raise money for a group promoting the Affordable Care Act.

The Washington Post: Senator Lamar Alexander: “Sebelius fundraising ‘arguably an even bigger issue’ than Iran-Contra”: Senator Lamar Alexander is ranking Republican on the Senate Health, Education, Labor and Pensions Committee. On Saturday, he compared Health and Human Services Sec. Kathleen Sebelius’ fundraising for non-profits that support the health care law to the Iran-Contra Scandal. Since then, Senator Alexander has asked the Government Accountability Office to investigate her fundraising.

Las Vegas Sun: “Heller says IRS can’t be trusted to oversee Obamacare”: “With the recent events related to the Internal Revenue Service, I feel it is necessary that both Congress and the Department of Health and Human Services look closely at the money given to the IRS through the health care law,” Heller wrote in a letter to Health and Human Services Secretary Kathleen Sebelius. “I intend to introduce legislation this week to suspend IRS funding for new agents enforcing the health care law until Congress sees an improvement.”

Gallup: “Half of U.S. Small Businesses Think Health Law Bad for Them”: Forty-eight percent of U.S. small-business owners say the 2010 Affordable Care Act is going to be bad for their business, compared with nine percent who say it is going to be good, and 39 percent who expect no impact.

Wall Street Journal: “Eateries Fear Health Law’s Bite”: Some restaurant operators are scaling back expansion plans because of uncertainty about the expense of insuring employees under the new federal health-care law. The concerns are especially acute among smaller operators who are more likely to be on the cusp of the Affordable Care Act's requirements for increased coverage of workers.