By Josh Nathan-Kazis
President-elect Donald Trump's announcement late Tuesday that he would appoint Dr. Mehmet Oz as administrator of the Centers for Medicare and Medicaid Services puts a man best known for hosting a television talk show into what might be the most important job in the U.S. healthcare system.
The CMS administrator is not the most high-profile health official in any presidential administration. The current administrator, Chiquita Brooks-LaSure, is far from a household name. The post is, however, enormously consequential. It touches nearly every healthcare provider, healthcare institution, and healthcare company in the country. It has a direct hand in the care of nearly half of all Americans through the insurance programs it funds or operates.
Oz, a surgeon with an MD and an M.B.A. from the University of Pennsylvania, is best known for hosting "The Dr. Oz Show," a daytime television program where for years presented health cures that were often not backed by evidence.
He ran unsuccessfully for U.S. Senate in 2022 from Pennsylvania as a Republican.
Oz has proposed offering universal healthcare to all Americans through a vastly expanded Medicare Advantage program, which currently offers government-funded, privately-operated health plans to seniors.
That onetime support for expanding Medicare Advantage seemed to send managed care stocks up on Wednesday. UnitedHealth Group shares were up 2.8%, while shares of Humana, a Medicare Advantage pure play, were up 4.5%.
The rally in those stocks may be premature -- it's impossible to know what impact Oz's years-old policy proposals may have on the incoming Trump administration.
Oz is likely, though, to become one of the most influential people in healthcare policy. Here's a short guide on CMS and why its administrator holds significant power.
What is CMS?
The Centers for Medicare and Medicaid Services is the agency within the U.S. Department of Health and Human Services responsible for the Medicare program, which pays for the healthcare of older Americans.
Working with state governments, CMS also funds and sets guidelines for Medicaid, the insurance program for low-income Americans, and for the Children's Health Insurance Program, which insures children in low-income families.
Through those and other programs, CMS says it provides health coverage to more than 160 million people.
That sounds like a big number.
Indeed. While the agency's staff numbers under 7,000 people, it spent $1.5 trillion in the 2024 fiscal year. That's 22% of all federal spending. The agency provided coverage to 68 million people through Medicare, and 73 million through Medicaid.
What's the job of a CMS administrator like?
"There's an unending amount of detailed Medicare policy problems and political problems and 50 states and six territories and very complicated Medicaid issues," says Thomas Scully, who was CMS administrator from 2001 to 2004 under President George W. Bush. "It's a bottomless pit of healthcare fun."
That sounds sardonic, but Scully means it. "If you're into the weeds of healthcare policy, CMS is the best job there is," he says. "CMS affects every corner of every payment policy there is for every provider."
For Scully, now a general partner at the private-equity firm WCAS, a lot of the job involved working with Congress.
Part of that was working on legislation, including the 2003 law that created the Medicare Part D prescription drug benefit and the modern Medicare Advantage plans. But part of it was more routine work. "Day to day, every member has an issue with physician payments to their hospitals, a million issues about how their hospitals are getting reimbursed," he said.
Has any prior CMS administrator won an Emmy?
Not that we know of! Former CMS administrators come from a variety of backgrounds. While many people have held the job in an acting capacity, only a few have been Senate-confirmed. Some are health policy experts, some have medical backgrounds, and some came from the healthcare industry.
Brooks-LaSure, the current administrator, was a longtime federal health official who had previously worked in senior policy jobs at CMS and Health and Human Services. Her predecessor during Trump's first administration was Seema Verma, a health policy consultant. Andy Slavitt, acting administrator for nearly two years during the Obama administration, had previously been head of Optum, a large division within UnitedHealth Group. An earlier Obama appointee, Marilyn Tavenner, was a former nurse who been an executive at HCA Healthcare, a hospital company, before going to work first as Secretary of Health and Human Resources for the commonwealth of Virginia, and then as a senior official at CMS.
What do former CMS administrators think of Oz?
Barron's spoke with two former Republican appointees. Scully was optimistic, saying Oz was "a pretty rational pick."
"I can think of a hell of a lot worse picks than him," he said.
"It's drinking from the fire hose," Scully said of the job. "I hope he'll be smart enough to figure out who the best career people are, and use them."
Dr. Mark McClellan, who succeeded Scully as administrator of CMS under President Bush, and before that served as commissioner of the Food and Drug Administration, also had a positive take on Oz.
"Dr. Oz has shown he can inspire Americans to stay as healthy as possible, both through better prevention and through more affordable, convenient, up-to-date care when they need it," McClellan wrote in an email. "He can help inspire CMS to build on its important steps in this direction, through coverage and payment reforms that pay for innovative care that works, not just more medical services."
McClellan, a professor of business, medicine and policy at Duke University, and director of Duke's Margolis Institute for Health Policy, now serves on the boards of Johnson & Johnson and Cigna Group, among other companies.
Oz will need Senate confirmation to take the post, which seems achievable given the Republican's majority in the chamber.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 20, 2024 14:09 ET (19:09 GMT)
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