It was the dog days of summer, and secret negotiations between Massachusetts leaders and federal officials had dragged on for months. The word was that future funding for the state's first-in-the-nation healthcare law looked bleak.
But then, something shifted in the talks. And now, four months later, state leaders are jubilant that Washington will send more money than most had dreamed possible to keep the state's pioneering program afloat. News of the $10.6 billion in federal aid arrived last week.
At a time when many other states are lamenting the lack of support from Washington for health programs, how was it possible for a state known for its liberal leanings to win such backing from a conservative administration?
An unlikely bond forged years ago between Senator Edward M. Kennedy of Massachusetts, an icon of the left, and US Health and Human Services Secretary Mike Leavitt, a conservative former governor of Utah, is part of the answer. The friendship set a collegial tone for the negotiations. It was crucial in salvaging talks when the White House threatened to slash nearly $2 billion from the state's health financing package, key players familiar with the negotiations said in interviews last week.
The package, known as a Medicaid waiver because it offers not only money but flexibility in federal regulations, allows Massachusetts to provide subsidized health insurance to some residents with incomes higher than would typically be allowed under traditional Medicaid rules. It authorizes Massachusetts to spend up to $21.2 billion, half of it federal money, over the next three years on health programs. That's an increase of $4.3 billion over the state's last Medicaid waiver package.
Leavitt, who oversees the agency that negotiated the waiver with Massachusetts, said he has privately sought Kennedy's advice on reconciling Democrats and Republicans over health insurance issues.
"What I appreciate about him is he is unvarnished on what the political pressures on his side are and what needs to happen to progress," Leavitt said.
He traces their friendship to 2003, when President Bush nominated Leavitt to head the Environmental Protection Agency. Leavitt asked for Kennedy's support, to which the Senator suggested Leavitt come to New Bedford to tour some polluted sites. Leavitt agreed and, after winning confirmation, visited the city.
"We are in different parties and have different ideas on the issues, but no one can fail to admire his devotion and that day, and others, formed the basis of our relationship," Leavitt recalls.
That friendship was tested in early June, when the Office of Management and Budget stepped into the waiver negotiations because, the regulators said, they discovered that Massachusetts for 10 years had incorrectly listed many children in its Medicaid program when they should have been counted under a program called the State Children's Health Insurance Program, which is not funded by the waiver. The state's way of counting those children had, by Washington's estimate, given Massachusetts about $2 billion more than it was entitled to over the last decade.
"We are talking about having to write a check for $2 billion and having to send it to the federal government," said Governor Deval Patrick. "It was a big problem."
The clock was ticking. Federal funding for Massachusetts' last waiver package was set to expire June 30. Negotiations had hit an impasse. That's when Leavitt went to bat for Massachusetts, said a source familiar with the negotiations, calling Joshua Bolten, President Bush's chief of staff and former director of the Office of Management and Budget, to argue the state's case.
Kennedy also called Bolton from his cellphone on June 19, while en route to Hyannis Port from Boston, where he was receiving cancer treatments.
"We were all very conscious of his very personal challenges," said Dr. JudyAnn Bigby, Massachusetts secretary of Health and Human Services, who helped negotiate the state's waiver. "We wanted to respect the fact that even though he was very committed to this and we wanted to make sure he was kept informed about what was going on, that we would only use him when we needed him," Bigby said.
In his conversation with Bolton - and with $2 billion on the line - Kennedy suggested that if Massachusetts universal healthcare initiative was successful, it could be a model for the rest of the country, and a legacy for the Bush White House.
"The senator and Josh definitely did talk," said White House deputy press secretary Tony Fratto. "And Josh communicated to OMB the interest, and then they were able to work out their agreement in a way that was mutually satisfactory."
That agreement on the $2 billion difference came after several more weeks of tense talks, with Washington agreeing to extend the June 30 deadline. During that stretch, the normally restrained Leavitt posted on his blog a candid entry about a phone conversation he had with Kennedy.
"He sounded great! We talked briefly about his health. He was forward looking, crisp and as passionate as always," Leavitt wrote. "There wasn't a single hint of negativity or worry. I'm sure he has moments when both creep in, but the call was an unexpected lift to my spirits."
Ultimately, Washington allowed Massachusetts to keep the disputed $2 billion but insisted that it change its accounting method.
So why was Washington so generous with the Bay State?
"We are all going to learn from what Massachusetts is doing," said Leavitt of the state's innovative attempt at near-universal health coverage. "We will learn from things that don't work and do work, and every state will benefit from what is going on in Massachusetts."
Kennedy was not available last week to talk about his role in the negotiations, but heralded the outcome in a statement: "Any reduction in commitment would have put our reforms at risk."
Final details of the agreement are being worked out and officials say a signed deal is expected soon. Health policy specialists underscored the unusual nature of the agreement, in the context of shrinking federal dollars.
"You have bad relationships between the states and the administration around Medicaid recently, and in the middle of an economic meltdown and an environment where the federal government is not looking to spend money, Massachusetts' waiver stands out as truly unusual," said Drew Altman, president and CEO of the Kaiser Family Foundation, a nonprofit that researches and analyzes health policies.
Several other states are cutting back their programs to reform healthcare, Altman said, because of a lack of funding.
"That's the reason Massachusetts, from a national perspective, is so significant," he said. The new waiver "allows the most sweeping health reform plan in the country to continue."
Go to:
http://www.boston.com/news/health/articles/2008/10/07/kennedy_ties_helped_secure_waiver/?page=full
