Sebelius defends healthcare law's flexibility during budget testimony

Sen. Olympia Snowe (R-Maine) wanted to know about the status of her state's request for an exemption from the medical loss ratio (The department is still collecting data, Sebelius answered).

And Sen. Charles Grassley (R-Iowa) said the department should consider allowing states to pare down their Medicaid rolls.

Sebelius said the department does not have that authority, however.

"Our lawyers say there is no blanket authority," she told reporters. "The (Medicaid) Maintenance of Effort is part of the law, and typically an administrative agency can't just waive the law."

Sebelius' testimony before the Senate Finance Committee came a week after 21 Republican governors demanded greater flexibility in running health insurance exchanges that are scheduled to begin operating in 2014. Earlier this month, Sebelius responded to state concerns about their exploding Medicaid budgets by suggesting they limit benefits and impose more cost-sharing.

Governors "have a lot of flexibility frankly that a number of states are not taking advantage of," Sebelius said. "So, we're sending teams around the country, we're helping to analyze the budget, we're looking at ways that Medicaid can certainly serve more people at lower cost."

Sebelius also reiterated the administration's commitment not to launch a new long-term care insurance program created by the reform law unless it's sustainable. The changes being contemplated to the CLASS Act include shutting out workers who make less than $12,000 per year, instead of the $1,200 called for in the law.

"The program," Sebelius said, "will not start unless we can absolutely be certain that it will be solvent and self-sustaining into the future."