Investigative Group

Obamacare Health Nominee Pounded on Conflicts Of Interest

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Liberals and conservative have grave ethical concerns about Andy Slavitt, a former health care executive President Barack Obama nominated as his top administrator at the U.S. Centers for Medicare and Medicaid Services.

Slavitt’s confirmation hearings could serve as a high-profile flash point about the revolving door that exists between the government and the healthcare industry, especially in Obamacare.

The hearings could also give Congress to peek into the close links between the Obama administration and United Health Group, Slavitt’s former employer and the nation’s largest health insurer.

The White House went out of its way to bury the Slavitt announcement, issuing an after-hours statement with his name the last of four on the nominee list.  The other names included minor appointments for an AMTRAK board position and another for the U.S. Mint.

Of greatest concern to Congress is the apparent conflict of interest Slavitt poses as a top administrator at an agency that will set the rules for his old boss and the nation’s largest insurance company, United Health Group.

Craig Holman, a lobbyist for the Ralph Nader-founded Public Citizen told The Daily Caller News Foundation the nomination was “highly inappropriate” and that it “undermines the president’s own executive order on ethics.”

Holman said he was worried over an administration decision to issue Slavitt an unusual “ethics waiver” that exempted him from the president’s ethics rules when he joined CMS in July 2014 as a deputy administrator.

The ethics executive order, signed by the president early in his first term in 2009, barred federal appointees from working on issues related to a former employer for two years.

The rare waiver issued to Slavitt eliminated that restriction and permitted him to work immediately at CMS on financial and regulatory matters that could affect the bottom line for United Health Group.

“I have asked CMS to provide details on how it’s walling off Mr. Slavitt from potential conflicts of interest.  I will continue to ask these questions as part of the nomination process,” said Republican Sen. Chuck Grassley, the chairman of the Senate Judiciary Committee, in a statement to TheDCNF.

Senate Finance Committee Chairman Orrin Hatch also said he too will focus on conflicts of interest that seem to dog Slavitt.

“Mr. Slavitt will need to answer a number of tough questions regarding his former employer and their relationship with the agency,” Hatch said in a statement.

Grace-Marie Turner, president of free market health care reform advocacy group the Galen Institute, agreed with Holman on the ethics waiver.

“It does show that the Obama administration promised when they first came into office, that they were going to keep special interests out of a position to make policy decisions that potentially have a conflict against the public interest, “ she said. “It is the direct violation of that pledge to the American people.”

Clouding Slavitt’s appointment further was the fact that upon his arrival at CMS a year ago, he was allowed to pocket tax-free, $4.8 million from health industry stock including that of United Health Group.

The new administrator will wield far-reaching power over the country’s healthcare system during a period when new transformational Obamacare rules and regulations are still being put into place.

Slavitt has been acting CMS administrator since his former boss, Marilyn Tavenner, resigned earlier this year over repeated Obamacare failures.

As the current caretaker, Slavitt run a massive bureaucracy of 165,000 employees that implements Obamacare, Medicare and Medicaid programs. To underline his influence, Slavitt oversees benefit payouts in excess $1 trillion, according to the agency.

CMS also is the largest single purchaser of health care in the United States, paying for almost one-third of the country’s health expenditures.

On the other hand, United Health Group is the largest health insurance company in revenues. It reported $122 million in operating revenues in 2013, about one-third which came from government coffers.

United Health may get significantly larger and more influential as the company is reported to be seeking to take over another insurance company.

Congress is also concerned about a larger, disturbing problem: how officials and money seamlessly move between CMS and United Health Group.

Slavitt, himself, is exhibit number one. He was the founder and a top executive at Optum, a United Health Group subsidiary that specialized in advanced data, analytics and technology in health care. Before joining CMS, he had been at Optum for nearly a decade.

His firm in 2012 recruited Steve Larson, director of the Center for Consumer Information and Insurance Oversight, which was mainly responsible for creating Obamacare. Larson became executive vice president at Optum, the same title shared by Slavitt.

Slavitt was also at Optum when his company bought QSSI which was hired by CMS to help building the hub for the Obamacare website, Healthcare.gov. QSSI was later promoted to overall operator of the troubled website.

Without explanation, earlier this year QSSI refused to re-bid on the Healthcare.gov contract even though it had the advantage of being an incumbent.

A knowledgeable congressional source told TheDCNF shortly after QSSI announced its withdrawal that removing QSSI from CMS could ease pending conflict of interest charges for Slavitt if the president decided to nominate him.

Then there are the profits United Health enjoys from CMS. The company sold insurance on many Obamacare’s state exchanges last year.

United Health Group’s major profit centers also are based with Medicare and Medicaid. About 40 percent of the company’s operating revenue comes from administering Medicare and Medicaid.

United Health executives have directly worked on health care reform too. Lois Quam was senior adviser to then-First Lady Hillary Clinton’s White House Task Force on National Health Care Reform, known in 1993, as Hillarycare.

She left the task force to found United Health’s Ovations subsidiary and be its first CEO. She brokered the deal with AARP that today serves as the underwriter of its highly profitable Medigap coverage.

The health care giant reported in 2013 that it collected $3.4 billion in revenues in Medigap insurance.