From the federal overhaul of American medicine that brought us the Cornhusker Kickback, the Louisiana Purchase, and Gator Aid, we can now add the Sebelius Shakedown. In what it calls an “unusual fundraising push,” the Washington Post writes, “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.” According to the New York Times, Sebelius has suggested “seven-figure donations.”
Sebelius’s actions, which may or may not have violated federal law, are certainly an abuse of authority. When possibly the second-most powerful person in Washington comes and suggests that perhaps you should make a donation to her administration’s favorite cause, it’s hard to say no — especially when she holds almost unchecked power over the business sector in which you compete.
The Times writes, “After first denying that [Obama] administration officials had engaged in fund-raising, [Ms. Sebelius’s] department confirmed Friday that [she] had made calls soliciting support from the health care industry, including insurance and pharmaceutical executives.” The Times adds, “The Department of Health and Human Services [HHS] said that Ms. Sebelius’s actions to supplement money appropriated by Congress were proper and would continue.” Sebelius, the Times notes, has been fundraising since March.
According to the Times, “several executives said they were uncomfortable with the discussions because the federal government has the power to approve or reject the health plans they want to sell in insurance markets that will be run by federal officials in more than 30 states.” The Times writes, “An insurance executive said that some insurers had been asked for $1 million donations, and that ‘bigger companies have been asked for a lot more.’”
Sebelius has encouraged that donations be made to Enroll America, a sort of community organizing group for Obamacare. The Times reports, “The president of Enroll America, Anne Filipic, worked on Mr. Obama’s 2008 campaign, became an aide to Ms. Sebelius, was later deputy executive director of the Democratic National Committee and then worked in the Obama White House as deputy director of the Office of Public Engagement.” Comically, it adds, “But a former Obama administration official, who spends time raising money for Enroll America, said its work [is] ‘not political.’”
Whether these actions are strictly illegal is not entirely clear. The Post writes, “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.”
The notion that Sebelius is fundraising as a private citizen, when her fundraising is plainly aimed at supporting the legislation she’s charged with implementing as a cabinet secretary, seems laughable. It’s not as if Sebelius is asking people to buy a few boxes of her granddaughter’s Girl Scout cookies. In addition, she is clearly soliciting funds from those who seek to do business with her department. Worse, she’s asking for donations from entities whose actions she’ll be regulating. One former senior HHS official calls her actions “truly unbelievable,” adding that “the conflicts are breath-taking.”
The Post writes, “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.” But it seems highly unlikely that this exception was designed to green-light a cabinet secretary to ask for million-dollar donations from entities whose businesses she has the power to make or break.
This is hardly the first time Sebelius has engaged in questionable, or outright illegal, practices, in the interest of promoting Obamacare and the man who spearheaded its passage. The U.S. Office of Special Counsel (OSC) ruled last summer, without much fanfare from a press corps that wasn’t feeling particularly inquisitive at the time, that Sebelius violated federal law by using her official position to campaign for Obama. The OSC wrote that she “violated the Hatch Act’s prohibition against using official authority or influence to affect the results of an election.”
At a North Carolina event at which her official title was emphasized, Sebelius said, “This Administration is committed to keep working with you but I have to tell you, we have just begun, and a lot of what I have just explained could be wiped out in a heartbeat. So…one of the imperatives is to…make sure that in November he [Obama] continues to be President for another four years….North Carolina is hugely important in this next election…and it’s hugely important to make sure that we reelect the President.” Politico observes that “Hatch Act violations against sitting Cabinet secretaries are relatively rare,” and the Cato Institute’s Michael Cannon describes them as offenses “for which other federal workers are fired.”
A few months prior to violating federal law in that instance, Sebelius had launched the Senior Swindle, an $8.3 billion (yes, with a “b”) gambit to help Obama get reelected and of course help herself stay in office as well. That $8.3 billion in taxpayer money, about eight times what Obama raised for his campaign from private sources, was spent to hide the damaging effects of Obamacare’s Medicare Advantage cuts until after election. Sebelius used the money to avoid cuts to Medicare Advantage through November and did so under the guise of funding a “demonstration project,” since HHS secretaries are empowered to conduct modest demonstration projects from time to time.
But the federal government’s own Government Accountability Office (GAO) — the nonpartisan congressional watchdog — highlighted this “demonstration project” as a sham. It wrote that Sebelius “should cancel” the project and perhaps, sometime in the future, consider “conducting an appropriately designed demonstration.” The GAO noted that there had been 85 HHS demonstration projects since 1995, but this “demonstration project” would cost more those previous 17 years’ worth of projects combined. After Sebelius ignored the GAO and continued the project, and Mitt Romney and other Republicans failed to call attention to it, the GAO released another letter, declaring that it remained “concerned” about the project’s legality.
Ben Sasse, HHS’s assistant secretary for planning and evaluation until early 2009 and now the president of Midland University, said of the Senior Swindle, “If a presidential administration can simply make up the authority to make law and give itself the power of the purse to implement its new law — which not only isn’t designed to make existing law work but is actually against the purpose of existing law — why do we need a Congress?” Sasse added, “In scope and intention, this is something completely new, and if it’s allowed to establish precedent, the only limit on what future administrations could spend money on, or how much they could unilaterally spend, would be their own electoral calculations about what they could get away with.”
Now, Sebelius is looking to extend that dubious standard — doing whatever one can get away with politically — to cabinet secretaries’ solicitations of private donations to fund politically contentious efforts that they are undertaking as secretary.
Nor is this the end of the list of Sebelius’s unscrupulous or illegal actions. Last January, her department awarded a contract to a private company, QSSI, to help build and police the upcoming Obamacare exchanges — the government marketplaces through which millions of Americans will be required to purchase Sebelius-approved health insurance starting next year. The head of the HHS entity that awarded the contract was Steve Larsen, who has longtime ties to Sebelius. In June, Larsen was hired away from HHS by Optum, a subsidiary of UnitedHealth Group. Sometime that summer, QSSI was purchased by UnitedHealth Group, the parent company of UnitedHealthcare, which will be competing in the very exchanges that HHS contracted with QSSI to help develop and police. The Hill writes, “One critic familiar with the business rivalries of the insurance industry compared UnitedHealth Group’s purchase of QSSI to the New York Yankees hiring the American League’s umpires.”
According to an insurance industry insider who spoke with me on the condition of anonymity, when Sebelius became aware of UnitedHealth Group’s purchase of QSSI, she couldn’t very well void the contract because her department was so far behind in setting up the Obamacare exchanges. But she also couldn’t afford to let word get out that UnitedHealth Group had gained a potentially huge competitive advantage, thereby opening up the Obama administration to further charges of cronyism. So, according to my source, HHS, under Sebelius’s leadership, instead told UnitedHealth Group not to alert the Securities and Exchange Commission about the sale — in apparent violation of federal law, which required that the sale be reported within four days — until after the election.
One wonders whether UnitedHealth Group or its executives are among those whom Sebelius is now soliciting, as she seeks hefty donations to help implement her boss’s signature legislation.
Jeffrey H. Anderson is executive director of the newly formed 2017 Project, which is working to advance a conservative reform agenda.