Seema Verma: The Pence ally who could remake health care policy

When a group of health officials, including Seema Verma, made their first pitch to the Indiana governor on a health care plan, it didn’t go well.

“I threw them out the first time,” former Indiana Gov. Mitch Daniels told CNN. The proposal “looked too much like conventional health care.”

At the time of the first pitch in 2006, Verma was a low-level policy consultant on a team seeking to provide government-funded health insurance to the working poor – long before President Barack Obama pushed his signature health care law through Congress.

But when the group came back to Daniels for a second pitch, Verma – who has since become an ally of Vice President Mike Pence – was leading the effort. She crafted a Medicaid alternative featuring health savings accounts for poor people that required participants to contribute something toward their own health care, even if only a few dollars a month.

“When they came back, she was the one who had worked out the details of the plan,” Daniels said. “And the central tenets of that were some skin in the game.”

A decade later, Verma is poised to take on her biggest challenge yet – and one that underscores Pence’s influence in a signature policy area in President Donald Trump’s still-young administration.

Verma is Trump’s nominee for administrator of the Centers for Medicare and Medicaid Services, the federal agency that administers the programs. The agency’s responsibilities ballooned under Obama’s health care law, and Verma could play a pivotal role in developing an Obamacare replacement – an issue that is sure to dominate her Senate Finance Committee hearing Thursday.

If confirmed, she would take over CMS at a moment of particular uncertainty for the health care industry as Republicans seek to dismantle Obamacare but haven’t settled on a replacement plan. That makes Verma’s work in Indiana and other states especially notable since it could provide a roadmap for what she could do in Washington.

The program Verma developed for Daniels became the Healthy Indiana Plan, which conservatives have touted as an improvement on traditional Medicaid. Verma would later help Pence – then the Indiana governor – tweak the Healthy Indiana Plan, sell it to the Obama administration as the vehicle for Medicaid expansion, and then dramatically scale it upward. It became a program Pence championed as a conservative alternative to Obamacare’s main vehicle for expanded coverage.

Verma and Mitch Roob, then the head of the Indiana agency that administers Medicaid, touted the philosophy behind the program in a 2008 blog post, outlining a vision for health policy that “melds two themes of American society that typically collide in our health care system, rugged individualism, and the Judeo-Christian ethic.”

In other words, hard work and care for those who need assistance, Roob said in an interview.

“We were maybe the only place that was able to take those and, rather than having them constantly butt heads, getting them to work together,” he said.

The results, Daniels said, were clear. Participants in the plan, which covered just 40,000 Hoosiers in its early stages, were much more likely to use generic drugs and seek second opinions. They were less likely to go to the emergency rooms – enrollees were charged up to $25 for non-emergency visits.

“By introducing consumerism,” Daniels said, “they demonstrated that low-income people are very good consumers, too. The fatal mistake is to make everything completely free.”

Verma declined to be interviewed for this story.

She also shifted patients from poorly run state-owned hospitals to managed care and, in Daniels’ early years in office, helped reduce a 10% annual Medicaid spending growth rate to nearly flat levels.

The Indiana health insurance program is a small part of Verma’s consulting work across the Midwest through her firm SVC Inc.

She helped Kentucky Gov. Matt Bevin develop a Medicaid expansion proposal that included a work requirement – further elevating her profile among conservatives nationwide.

“Her conservative, data driven approach to finding viable health care solutions is exactly what America needs,” Bevin said.

The Obama administration had rejected requests to add work requirements, but it did not rule on the Kentucky application before leaving office. It’s more likely such requests will be approved if Verma is confirmed.

‘Bipartisan relationships’

Tom Scully, the CMS administrator during President George W. Bush’s first term who is working with Trump’s transition team on health policy, said he is convinced she is “likely to develop the solid bipartisan relationships” it will take to run the agency in what could be a period of major change.

“I had heard great things about Seema Verma from a number of state Medicaid directors who know her well. This was all confirmed when I spent some time speaking with her,” Scully said.

Daniels said he came to know Verma well through the Healthy Indiana Plan.

He said she “came to it as a technocrat” rather than a consultant focused on pushing conservative ideology.

“She was very smart, very sound technically, and I think has by virtue of that experience, has a great orientation toward consumerism in health care, which we should all hope they make progress on,” Daniels said.

Working with Pence

Verma helped Pence retool the Healthy Indiana Plan to win the Obama administration’s approval to use it as a vehicle to expand Medicaid coverage. It was Pence’s biggest political victory in office.

To encourage accountability, the revised program calls for low-income adults to contribute up to 2% of their income to a savings account, but also gives them enhanced medical benefits, such as dental coverage.

Those who don’t contribute either are put in a basic plan, which offers fewer benefits and requires co-pays for all services, or are dropped from coverage.

After developing the Healthy Indiana Plan, Verma played a central role in lobbying the state legislature to approve it. There, again, she faced an early setback: Cigarette companies managed to kill the tobacco tax that would have funded the program.

Verma was part of the conversations with lawmakers that eventually cleared the way for the Healthy Indiana Plan on a second vote – and stylistically, she was “as straightforward as you can get,” said Lawren Mills, who was the Daniels administration’s lobbyist at the time.

“She is poised, measured, and possesses a knowledge of the subject matter that no one can match,” Mills said. “She does not speak with flowery buzzwords or political jargon.”

Not everyone, however, sees the program as a success. Among the worries are that co-pays is deterring participants from going to the doctor or filling their prescriptions, said Judy Solomon, vice president at the left-leaning Center on Budget and Policy Priorities. Also, some low-income adults who apply for the enhanced program are not completing enrollment by paying their first month’s premium.

“Healthy Indiana should be judged on whether it is improving coverage for Medicaid beneficiaries,” Solomon said. “Research shows that premiums discourage low-income people from participating in health coverage programs and co-pays keep them from getting necessary care.”

Years later, Verma also negotiated with the Indiana Hospital Association to win its support for the program – trading reimbursement rates closer to the higher Medicare payments to service providers than traditional Medicaid for hospitals’ strong lobbying for the legislature to embrace the Healthy Indiana Plan as the state’s vehicle for Medicaid expansion.

“She is a strong believer that people should have ‘skin in the game’ – no matter how small – in terms of their own health care,” Mills said. “She believes this concept drives behavior.”

Indiana officials point to a 2016 study commissioned by the state that shows more 90% of participants made their contributions and remained in the enhanced program. Also, they were more likely to visit their primary care doctor, missed fewer appointments, went to the emergency room less frequently and took their medication.

CNN’s Tami Luhby contributed to this report.