What Sebelius Left Undone

Kathleen Sebelius may have launched the Affordable Care Act, bungled its rollout and managed the subsequent repair effort, but she is leaving the Obama Administration long before the full effects of the law are known or felt by the vast majority of Americans. Sylvia Mathews Burwell, the director of the Office of Management and Budget, is expected to be nominated to replace Sebelius, who will officially resign on Friday. If confirmed by the Senate, Burwell will be tasked with turning the page on the Administration’s embarrassing early implementation of the ACA while managing the critical next steps in the effort to reform the U.S. health care system.

“Secretary Sebelius has soldiered through, but now really is a good time for somebody new who can say, ‘That was then. This is now,’” says Gail Wilensky, an economist, health policy expert and former official under Presidents George H.W. Bush and George W. Bush. “Now we are really getting ready for round two.”

The top agenda item for Round Two is preparing for the next open enrollment period on the insurance exchanges, which begins this fall. More than seven million Americans signed up for private insurance during the enrollment period that began in October 2013 and ended in March, but the Congressional Budget Office estimates 24 million Americans will get coverage this way by 2017.

Overseeing the exchange program and the federal subsidies to blunt the cost of coverage for millions of Americans will fall squarely on Burwell’s shoulders. She will need to enforce regulations intended to ensure the networks of doctors and hospitals included in future health plans sold through the exchanges are adequate. And Burwell will be in charge of guiding ACA programs designed to keep insurance premiums stable in the coming years, which is crucial to keeping coverage affordable for Americans who do not receive insurance through employers or government programs.

Burwell’s top priority, says Wilensky, will be “trying to ensure the next enrollment is nothing like the last enrollment period.” Computer software problems with the ACA’s federal exchange hobbled enrollment last fall and drew criticism that Sebelius and the entire Obama Administration were incapable of managing the ACA, the most significant and sprawling piece of health legislation since Medicare became law in 1965.

Also on Burwell’s plate are a number of critical ACA provisions not yet in place. The employer mandate, which was originally supposed to go into effect this year, has been put off until 2015. Insurance exchanges for small business owners, which were also originally planned for a 2014 launch, are still not operational. The so-called Cadillac tax, a fee to be levied against high-cost health plans, is scheduled to fall into place in 2018.

In addition to implementing provisions of the ACA, Burwell will also need to do some finessing and negotiating. The expansion of the Medicaid program, a primary way the ACA was expected to reduce the number of Americans without insurance, has only happened partially—so far. About half of all states have opted not to expand eligibility for the program, forgoing billions of dollars in federal funds, because their political leaders oppose the ACA. But behind the scenes, Sebelius had been cajoling a number of red-state governors to try to get them on board with creative compromises that would allow expansions of their programs without whole-heartedly endorsements of the ACA’s approach.

“There are a lot of Republican governors who have indicated an interest,” says Wilensky. Burwell will no doubt continue this effort and may have more success than Sebelius by the end of this year. “After the 2014 election cycle, it could be a lot easier for some of the state legislatures,” says Wilensky.

Unlike Sebelius, who oversaw HHS while the ACA was being written and debated, Burwell will take the reigns at a time when the health reform policy-making is largely over and pure management experience is more in demand. This is a role Burwell, a veteran of the Clinton administration and Bill & Melinda Gates Foundation, is well suited for, says Jonathan Gruber, a professor at MIT who worked as a paid consultant to the Obama Administration on the ACA.

“I know lots of people who think incredibly highly of her. She’s not really a health person, but she’s a manager’s manager,” says Gruber. “Right now, we need to just manage that policy and and I think she’s a great choice in that sense.”

And finally, Burwell will walk into her first day of work at HHS surely wanting to improve morale at the Department of Health and Human Services, where bureaucrats have fallen under heavy and relentless criticism in the past six months.