Marilyn Tavenner's troubling leap from public to private sector

I suppose in these uncertain times it's a good thing when an American who's just a year from qualifying for Social Security is offered a job with a salary higher than what she had been taking home in her previous position. The job market for those in their 60s is troubling.

But it's far more troubling when the beneficiary in question is Marilyn Tavenner, who stepped down as administrator of the Centers for Medicare & Medicaid Services in January. She is now taking a job to head America's Health Insurance Plans (AHIP).

I say this because CMS has been one of the few voices of reason in healthcare finance. Its leverage as the largest payer to providers has helped keep healthcare inflation in check in recent years. Medicare and Medicaid pay a fraction to providers compared to commercial insurers or individual patients. And it is leading the way in the volume-to-value payment movement.

But its former chief basically said "the hell with all this" by accepting AHIP's job offer. Its members' systematic practice of cost-shifting to consumers has done more to lead to surprise medical bills--and related bankruptcies--than perhaps any other commercial sector in the United States. 

It should be made clear that 64-year-old Tavenner is no pauper. Prior to heading CMS, she had a long career as an executive with the Hospital Corporation of America. She is currently receiving an annual lifetime pension of $162,524 from HCA, which nicely supplemented her CMS pay of about $200,000 a year. Her husband Bob Tavenner, who is Virginia's director of legislative services, pulls down another $155,000 or so a year. If he is not yet drawing a nice pension for a long career as a state trooper and a state attorney, he will be in a few more years.

And if Tavenner waits until she was 70 to collect Social Security benefits--a fairly easy six years given her current pension--she would receive another $42,052 a year, the maximum permitted under law. That doesn't count any federal pension she might receive for her years at CMS, or any retirement accounts she and her husband may have accrued.

So, Tavenner's household is heading into golden years with a guaranteed income of at least $204,524--and given her husband's pension, probably more than $300,000--without having to work another day in their lives.

But that pales with an AHIP payday. The woman Tavenner is replacing, Karen Ignagni, pulled down more than $2 million in compensation in 2013, the most recent year for which data is available. Between 2011 and 2013, Ignagni was paid around $5 million in total. When AHIP's 990 tax return is released for Ignagni's final year, expect to see a golden parachute of at least another $5 million--not including any retirement plan she might continue to receive.

Of course, Tavenner can do whatever she wants. And she certainly is not the first person in Washington to leave public service to cash in. Leonard Schaeffer, who headed CMS' predecessor, the Health Care Financing Administration, leapt to the private sector and eventually Blue Cross of California in his early 40s, where he proceeded to make hundreds of millions of dollars for himself--while pushing mega mergers that in part led to huge increases in insurance premiums over the past 30 years.

Even when a highly successful public servant in this country is facing a plush retirement, it's hard to resist a leap onto the private sector gravy train. And when that leap is made from an organization that promoted relative fiscal probity in healthcare delivery to one that does the exact opposite, what does that spell for the rest of us? - Ron (@FierceHealth)

Related Articles:
Former CMS Administrator Marilyn Tavenner named CEO of AHIP 
AHIP turns attention to finding CEO to replace Karen Ignagni