In the 50 years prior to Kathleen Sebelius' election as Kansas Insurance Commissioner, only three people held the post. Each had served decades as assistant commissioner before taking over. So when Sebelius won the office in 1994, she became not only the first woman and, in a sense, the first politician to run the department, she also became the first outsider to do so in half a century.
The agency needed a fresh outlook. It was essentially invisible to Kansas insurance consumers, the people it was supposed to serve. In a business that depends heavily on processing lots of numbers, it limped along with a handful of desktop computers and a mainframe whose operations were understood by just one employee. And it ran according to a hodge-podge of encrusted rules and regulations that no one--not even the industry--seemed much interested in rethinking.
For Sebelius, 53, the need for change demanded a tricky balancing act. On the one hand, she had run as a consumer advocate--she is a Democrat and worked for the state trial lawyers association before serving four terms in the state House. On the other hand, she did not want to throw the insurance companies off course. "The question was, how do you make changes institutionally and yet not alarm people to the point of having a detrimental effect on the industry?" she says. "Competitive markets and solvent businesses and having people feel good about doing business in the state is not only good for industry, but for consumers, since it leads to better rates and services."
In her two terms, Sebelius has managed to walk a careful line. She has revamped her department's technological capabilities, making it far more efficient. She has slashed regulations that were duplicative, irrelevant or particularly quirky. And she has worked with the legislature to deregulate commercial insurance lines and to boost tax credits for businesses that buy health insurance for their employees.
At the same time, Sebelius has raised the department's profile as a source of reliable consumer information on companies and their products, and promoted a raft of consumer-oriented bills in the legislature: a patients' bill of rights; mandated maternity coverage; a requirement that companies pay their bills promptly; an initiative to protect consumers' privacy. She has created "market conduct" and anti-fraud units aimed at monitoring companies' and agents' behavior.
At the moment, Sebelius finds herself trying--with more difficulty-- to pull off a similar act on a national stage. As the president of the National Association of Insurance Commissioners, she is faced with an industry that is determined to loosen state regulation, mostly by threatening to press for removing oversight from the states and placing it in the hands of the federal government. She agrees with the need for streamlining state oversight of the industry, but she also worries about consumers losing out in the process. "Some companies are being a bit disingenuous when they suggest they want regulatory reform," she says. "What they really want is no regulation at all in many areas."
Although consumer groups contend that the deck is stacked against her--"She's a little like the Dutch boy with the thumb in the dike," says the Consumer Federation of America's Bob Hunter--Sebelius has done what she could with a difficult situation. In the face of heavy lobbying from the industry, she helped persuade the NAIC to take a strong stand on protecting the privacy of consumer health data. And she created a Consumer Protection Committee, designed in part to balance the attention the commissioners have paid to industry concerns. "What we're trying to pull off," she says, "is a balancing act between being effective protectors for the consumers of this country and not having lots of regulations and laws in place that impede the market."