Jan. 19, 2005 - President George Bush's nominee to head the Department of Health and Human Services told lawmakers Wednesday that the administration is likely to attempt significant changes to the Medicaid health program for the poor in the president's second term.
Michael O. Leavitt, the administrator of the Environmental Protection Agency, appeared headed toward easy Senate confirmation during an appearance before the Senate Finance Committee, getting the backing of lawmakers from both parties.
If approved, Leavitt will take over the department with the government's largest budget and will also take command of the HHS at a critical time for several of its high-profile agencies, including Medicare, Medicaid, and the FDA.
Leavitt, 53, served three terms as a Republican governor of Utah before being named to head the EPA in 2003. Bush nominated him several weeks ago to replace outgoing HHS Secretary Tommy G. Thompson, who announced plans to seek work in the private sector.
Leavitt offered few details on his views of the influential programs he is likely to oversee. If confirmed by the Senate, he will take over Medicare less than a year before the program is due to start offering partial coverage for prescription drugs to more than 40 million elderly and disabled beneficiaries. The benefit is set to begin Jan. 1, 2006.
Finalizing the rules governing that benefit, known in Washington as Medicare's Part D, will be "the main event at HHS in 2005," Leavitt said. The agency is soon expected to lay out final rules governing the benefit, including which drugs Medicare will cover and how much beneficiaries who sign up late for the program will be forced to pay in penalties.
"There will inevitably be flaws. But we will not fail," he said.
But Leavitt also signaled to lawmakers that the Bush administration is likely to soon call for broad changes to Medicaid, saying that the program is "not meeting its potential to do good in the lives of the nation's poor."
Lawmakers repeatedly asked Leavitt for his position on news reports indicating that the White House is soon to propose a plan to replace the current Medicaid financing structure with one that caps federal payments and gives states more leeway in setting medical benefits.
Such a plan worries the program's advocates because it would limit federal funding even as Medicaid's rolls continue to grow in future years. The possible proposal is particularly worrisome to lawmakers of poorer states with tighter budgets.
"[It] means basically the states will have to pay for it. Our state can't. They'll simply drop coverage," said Sen. John D. Rockefeller, D-W.V.
Sen. Olympia Snowe, R-Maine, told Leavitt, "I think it would be a mistake to go down that road."
Leavitt largely evaded questions on whether he would support or oppose Medicaid caps. But he did voice support for increasing states' leeway in deciding on the size of health benefits, often seen as a hallmark of plans to limit federal payments to yearly block grants.
"They need to have the maximum amount of flexibility to reach the largest number of people possible," he said.
Prescription Drug Prices
Lawmakers also questioned Leavitt about his position on prescription drug importation, a policy that many of them want to pursue as a way to lower the cost of medications.
Congress has passed bills several bills allowing for importation from Canada and other industrialized countries, though the program was never implemented by either the Clinton administration or by Bush. Senators vowed Wednesday to reintroduce legislation in an attempt to legalize drug importation in 2005.
"If in fact it can be done safely then it is a discussion we should be having," Leavitt told the lawmakers. The Bush administration released a report several weeks ago concluding that the U.S. could not police the safety of an imported drug supply without spending billions of dollars on inspections.
Republicans and Democrats also told Leavitt that they will renew efforts to give Medicare the authority to negotiate lower drug prices with pharmaceutical companies. In announcing his resignation in December, Thompson listed the lack of negotiating power for Medicare as his chief regret about the drug plan.
But Leavitt appeared instead to back the administration position of opposing government negotiation, which drugmakers say would amount to federal price controls.
"My instinct is it is an open and rigorous market that ultimately produces the best outcome here," he said.
The Finance Committee could vote on Leavitt's nomination as early as Thursday, though a vote before the full Senate is not expected before next week, congressional aides say.