Wilson Administration Figure Named Health Agency Chief

Gov.-elect Arnold Schwarzenegger continued to fill out his government Friday, nominating a hardened veteran of the health policy battles of Gov. Pete Wilson’s administration as secretary of the state’s Health and Human Services Agency.

S. Kimberly Belshe, a Harvard- and Princeton-trained government expert who held two senior health posts under Wilson, was a lightning rod during his administration, accused by anti-tobacco groups of dragging her feet on some anti-smoking measures and rebuked by government watchdogs who said she should have done more to check massive Medi-Cal fraud.

Some of those same critics, including the American Lung Assn. and Democratic legislators, welcomed her appointment Friday, saying she was a smart, accessible administrator who was instrumental in establishing the state’s Healthy Families program and in advocating for the workplace ban on smoking.

In a statement, Schwarzenegger called Belshe a leader in the health-care field and said, “I am confident that her public sector and philanthropic experience with issues affecting the health and well-being of Californians will be an asset to my administration.”

Belshe, in an interview Friday, said she met with the governor-elect this week and discussed in detail issues related to children, obesity prevention and health coverage.

“It was a good exchange,” said Belshe, 43, who lives in Sacramento. “I was very excited and honored by the request to return to government.”

In his campaign and in recent internal budget discussions, Schwarzenegger has identified health care as an area he would target for cuts. Asked where she might look to trim, Belshe said she would “bring a very sharp focus” to increasing programs’ efficiency but added that discussion of specific cuts was premature.

Even with her appointment, Schwarzenegger has named just six of 11 Cabinet secretaries, and it’s not clear whether he will be able to complete the appointments by Monday morning, as his aides have pledged.

Former Secretary of State Bill Jones is still under consideration as resources secretary, two transition officials said, though he could forgo the post to challenge U.S. Sen. Barbara Boxer next year.

Schwarzenegger on Friday also named a Republican lawyer from Sacramento, Paul H. Dobson, who spent 23 years in the state attorney general’s office, to a less visible post, chief deputy legal affairs secretary.

But it was the appointment of Belshe that drew the most notice. Health and Human Services is the state’s largest agency, with 11 departments, 34,000 employees and $61 billion in state and federal funds to supervise. Thus the appointment of Belshe, who began working for Wilson as a policy aide when he was in the U.S. Senate, provided another example of the depth of his influence over the new administration.

Since leaving state government in 1999, Belshe has served as a program director for the James Irvine Foundation, working on projects that study how to make the government more efficient and accountable. Under Wilson, she was director of the Department of Health Services -- part of the agency she will now run -- and deputy secretary of the Health and Welfare Agency, the forerunner to Health and Human Services.

As secretary, Belshe must grapple with rising costs in California Medical Assistance (Medi-Cal), the health system for more than 6 million poor and disabled Californians.

As her appointment was announced, Legislative Analyst Elizabeth Hill’s fiscal forecast warned Friday that general fund spending on Medi-Cal during the current year would reach $10.7 billion, or $170 million more than appropriated. And, the analyst said, state spending is projected to rise steadily in coming years because of climbing health costs and expected reductions in federal support.

Exacerbating the budgetary squeeze is Medi-Cal fraud, which the state attorney general has described as a multibillion-dollar problem for the federal-state program. Hundreds of criminal cases have been prosecuted by state and federal authorities in recent years, many involving scams that began in the mid-1990s when Belshe was health department director.

For example, a Los Angeles man and his wife were indicted recently on charges that they used laboratories, clinics and pharmacies to defraud the program of $40 million from 1996 through mid-2000.

When the alleged fraud was disclosed, state Sen. Martha Escutia (D-Whittier) criticized Belshe and other state officials as being “asleep at the wheel.”

But Friday, Escutia said Democrats and Republican administrations alike have struggled with fraud, and she said of Belshe: “I look forward to working with her.”

Belshe said she would “encourage anyone to look at my record in positions of public responsibility. I think my record stands up very, very well.”

Even anti-tobacco activists, who had complained that she backed down from airing sharp-edged TV ads challenging the tobacco industry, praised her Friday.

“Certainly we had our concerns and our problems along the way,” said Paul Knepprath, a spokesman and lobbyist for the American Lung Assn. “But she was an ardent supporter of the state’s smoke-free workplace act, which included bars and taverns.... Generally speaking, this is a good appointment.”

For Belshe’s supporters, it was something of a pleasant surprise -- and an illustration of how quickly Schwarzenegger has had to put together a government.

Dr. Jack Lewin, chief executive of the California Medical Assn., said he had forwarded her name to Schwarzenegger’s transition committee. But Belshe had not been seeking the job, he said. In fact, she had left the Irvine Foundation in mid-October and started a new position with the California Endowment, a philanthropy headquartered in the San Fernando Valley, on Monday.

By Friday, she had agreed to change jobs once again.

“This happened very quickly,” Belshe said.

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Times staff writers Peter Nicholas and Evan Halper contributed to this report.