The Medicare Maven

HCFA, which is a branch of the Health and Human Services Department, runs the Medicare program for the elderly and oversees the federal-state Medicaid program for the poor. By promulgating -- or dismantling -- regulations, the head of HCFA may be able to spur more participation by private managed care health plans in both programs. Providing additional managed care options for Medicare and Medicaid recipients is a key part of Bush's health care platform; currently, more than 80 percent of seniors still use Medicare's traditional fee-for-service program.

"Democrats had their foot on the brake on Medicare+Choice," the HMO part of Medicare, a health care lobbyist said. "They clearly didn't like private health plans." A Republican-led HCFA, to the contrary, could promote Medicare HMOs by cutting back on regulations, better publicizing managed care options, and asking Congress for more money for Medicare HMOs.

Managed care executives cite burdensome administrative regulations as a main reason why HMOs have fled Medicare and are beginning to leave Medicaid. And the executives are hopeful that the new HCFA chief, who has yet to be chosen, will lighten the load. "We're hearing an attention to the administrative issues here, which is very encouraging," said Karen Ignagni, president of the American Association of Health Plans, which represents managed care health plans.

HCFA could test Medicare reform concepts through demonstration projects, said Gail Wilensky, a former HCFA administrator who chairs the Medicare Payment Advisory Commission, which advises Congress on Medicare policy. HCFA could also create demonstrations to test prescription drug coverage proposals and competitive bidding arrangements, she said.

Medicaid, too, has the potential to undergo huge change under a new HCFA chief. In particular, HCFA could give states more latitude to structure Medicaid rules to their liking. Ron Pollack, executive director of Families USA, a consumer advocacy group, says he fears the result could be a Medicaid with fewer benefits and higher costs for participants. At worst, it could mean an end to Medicaid's entitlement status, he said. "HCFA will play a crucial role in granting or not granting waivers," Pollack said. "For states that don't want to follow the law that exists, there are waivers."

For example, he said, North Carolina placed a cap on enrollment in its Children's Health Insurance Program. States can't do that for Medicaid, because it's an entitlement program. Not without a waiver, that is. "There are potentially huge consequences," according to Pollack.

Pollack says that no one should underestimate HCFA's power. "They can achieve through the back door what they couldn't get through the front door."

One possible candidate for the HCFA post is Tom Scully, president of the Federation of American Hospitals, the trade association that represents for-profit hospitals. Scully, who was the lead health care adviser at OMB under former President Bush, is politically savvy and well connected to key members of Congress -- both Republicans and Democrats. Another possible candidate is Bobby Jindal, who was the staff director for the Bipartisan Commission on the Future of Medicare in 1998. Return to main story