Is HHS Secretary Sebelius's Solicitation of Private Industry Support for Obamacare Illegal, or Merely Unethical?



Is President Obama's top health official violating federal regulations by asking health industry executives to kick in money to support the implementation of Obamacare?

Last week, 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." According to the Post, an HHS source and an industry official have affirmed that over the last 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 that are working to enroll uninsured Americans and increase awareness of the law."

Over the weekend, The New York Times reported that two organizations expected to be supporting the law are The Robert Wood Johnson Foundation, which is expected to give $10 million, and H&R Block, which will give a "donation" of $500,000. The Post and the Times reports also indicate that Secretary Sebelius has made contact with insurers, asking them to support the health law's implementation.

Is this legal? Here's the Post on the relevant rules:

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 regulation.

Does the insurance industry, which is heavily regulated by Obamacare, count? You might think so. But a flack for Sebelius tells the Post that the answer is no, not technically, because Sebelius did not explicitly ask for financial donations. Instead, "[HHS spokesperson Jason] said that Sebelius did not solicit for funds directly from industries that HHS regulates, such as insurance companies and hospitals, but rather asked them to contribute in whatever way they can."

That's not how the insurers understood it it. An "industry official who had knowledge of the calls but did not participate directly in them said there was a clear insinuation by the administration that the insurers should give financially to the nonprofits," according to the Post. Something like this, perhaps? Hey, we're short on money here. It would be nice if you could help with whatever you can, hint-hint, nudge-nudge.

Or maybe just: Hey, insurers. We just passed a law mandating that everyone in the country buy your product. So how about a million bucks? Or even a couple million? Over the weekend The New York Times reported that, according to an insurance industry executive, "some insurers had been asked for $1 million donations, and that 'bigger companies have been asked for a lot more.'" That sounds rather like there was a direct solicitation.

So is Sebelius violating the relevant regulations? We'll know more soon enough. Sen. Lamar Alexander, the top Republican on the Senate Health Committee, is expected to ask the Government Accountability Office to look into the matter.

It wouldn't be the first time Sebelius had violated federal guidelines.

Last year, the U.S. Office of Special Counsel concluded that she had violated the Hatch Act, which restricts political activity by executive branch office holders, by billing and labeling a political speech as official travel.  

Nor, as Cato Institute Health Policy Director Michael Cannon points out, would it be the first time that Sebelius used her position to, ah…encourage insurers to get with the program:

Shortly after ObamaCare became law, insurers began telling their customers how much it was going to increase their premiums. In a September 2010 letter to insurers, Sebelius shot back that premiums would rise no more than 2 percent, even as her department predicted increases as high as 7 percent. Insurers that didn't toe the party line "may be excluded from health insurance Exchanges in 2014." That was no idle threat, I wrote at the time. Since "Medicare's chief actuary predicts that in the future, 'essentially all' Americans will get their health insurance through those exchanges," Sebelius was essentially threatening to put insurers out of business if they disagreed with her. 

Even if Sebelius has not technically broken the law, there's something distinctly unsavory about her fundraising pitches. As Meredith McGehee, policy director for the Campaign Legal Center, told the Post last week, "It sounds like the people she's going to are people that are being regulated by her agency, I think that is definitely problematic. That's not a statement about the value of the law, but it's a statement about using the power of government to compel giving or insinuate that giving is going to be looked at favorably by the government."  

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  1. So is Sebelius violating the relevant regulations?

    Do you really think that matters? That anyone will be punished if so?

    1. Regulations? WE don’t need no steenkeen regulations!!!

      1. This morning I was listening to NPR as we libertarians are wont to do. And none other than Cokie M.F. Roberts, the most admired woman in America, was assuring me in soothing tones that the Obama administration was “remarkably scandal-free.”

        Really Cokie? I mean, really?

        Well if you just redefine everything that’s illegal as “legal,” yeah, I guess it’s “scandal-free.”

        These media courtesans are killing me. Rectum-licking sycophants, I swear to god.

  2. Maybe all government programs should be funded this way. A dangerous precedent.

  3. H&R Block, which will give a “donation” of $500,000.

    Hmmmm. Well, they are the company that will help you figure out what your “tax penalty” is.

    1. H&R Block: your penalty preparation source.


    2) I blame Bush.

    3) This is appropriate and necessary to counteract teh evul done by the Koch brothers and their agents.

    3) What difference – at this point – does it make?

    1. 4) If the Republicans hadn’t been trying so hard to gin up a scandal, we would be able to pay attention to scandals like this. Which it’s not.

      1. 5) Fried chicken!

    2. 3) What was 3 again?

  5. Seebelius doesn’t want a lot, just enough to wet her beak a little.

    1. ‘Bribe’ is such an ugly word. I prefer ‘extortion’. The ‘X’ makes it sound cool.

  6. This is it, isn’t it? The point at which democrats turn this around and point to market failure, because the healthcare industry isn’t doing enough to facilitate implementing the exchanges. Not the flawed premise, the thoroughly bureaucratized undergirding, the opaque nature of the legislation, the absence of market pricing, diminished competition, rising premiums and reduced coverage, the effects borne by the jobs market in light of the mandate; no, the errant free market did too little, because evil Kochspiracy to discredit Obama.

    1. Damn those evil corporations for not donating enough!

  7. I remember when Sebelius was getting high marks for being a sane and rational governor with a bright future ahead of her. I even remember some pundits recommending that McCain pick her as a running mate (doesn’t matter that she was a D, she was supposedly a centrist).

    So either the early analysis on Sebelius was totally wrong, or this administration has totally corrupted her.

    1. I think both can be true…

      1. Did I say XOR?

    2. Wait wait wait. Was she a governor during the Bush administration? Because that would explain a lot.

      1. She was Governor of Kansas from 2003 to 2009

        1. we’re not in Kansas anymore.

    3. Kathleen: Tell me, schatze, is it twue what they say about the way you people are… gifted?

    4. She’s a rancid statist — a perfect running mate for McCain regardless of the letter after her name.

  8. Government: The model framework for mobs everywhere.

  9. I think Obama is only pissed because this gives team red another thing to hold hearings over. I bet this was also something in a report that he should’ve read. I blame his golf habit.

  10. And if the GAO finds she violated the law, what happens? We wait for Eric Holder to charge her?

  11. Those guys make all kinds of crazy sense man.


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