In a rare break with President Joe Biden, Democrats on the Senate Finance Committee on Thursday quietly voted to reject one of his nominees to a key board overseeing the finances of Social Security and Medicare.
Democratic Sens. Elizabeth Warren (Mass.), Ben Cardin (Md.), Sheldon Whitehouse (R.I.) and Bob Menendez (N.J.) voted against advancing Demetrios Kouzoukas’ nomination to be a public trustee on the Board of Trustees for Medicare and Social Security Programs, which oversees the financial operations of both of the social safety net programs.
His nomination still advanced to the Senate floor though, in a 23 to 4 vote, with the help of other Democrats and all Republicans on the committee.
Kouzoukas hasn’t gotten much media attention. Thursday’s committee vote wasn’t livestreamed. He’s not a nominee for a particularly flashy role.
But Warren has been railing against his nomination for weeks, calling out his “egregious conflict of interest” for this position. Kouzoukas, if confirmed to the public trustee role, would simultaneously be on the board of directors for Clover Health, a for-profit company that makes its money through Medicare Advantage.
The concern is that Kouzoukas has a financial incentive to put Clover Health’s interests first, at the same time that he would have influence over how the U.S. government oversees Medicare Advantage. If confirmed, he would shape the annual reports released by the Board of Trustees for Medicare and Social Security Programs, which have mentioned risk score-related overpayments several times since 2011. He could affect government decisions on whether or not to focus on fraud in Medicare Advantage.
Meanwhile, privately run, government-funded Medicare Advantage plans have been overcharging taxpayers by as much as $140 billion per year, per one September report.
“There has never been a public trustee who served on the board of a private insurer at the same time that they were a public trustee,” Warren said in Thursday’s hearing, noting that Kouzoukas has repeatedly refused to answer questions about his salary at Clover Health.
“This is a terrible precedent for us to establish,” she said.
Demetrios Kouzoukas testifies before the Senate Finance Committee in his nomination hearing on Sept. 28.
The Massachusetts Democrat shared a new letter with the committee that she sent to Kouzoukas on Wednesday, highlighting “another disturbing revelation” about his conflicts of interest. She said she discovered that he received $200,000 in stock this year from Clover Health, which is nearly 10 times as much stock as he got in 2021 or in 2022. This stock will vest in 2024, when Kouzoukas, if confirmed, will be a sitting public trustee.
“I am deeply concerned that Clover Health appears to have offered Mr. Kouzoukas this massive increase in compensation after he and other company officials became aware that Mr. Kouzoukas would be in the public trustee position,” she said.
Sen. Ron Wyden (D-Ore.), the committee chairman, said he shared Warren’s concerns about stopping Medicare fraud. But with regard to Kouzoukas, Wyden said the Office of Government Ethics reviewed his nomination and concluded he didn’t need to resign from Clover Health.
“That is the current law,” he said. “I happen to share your view that we ought to be reviewing it. But that is the law today.”
Warren said she thinks the Office of Government Ethics is wrong and disagrees with their interpretation of law.
“But that isn’t the point,” she said. “We’re not in here to vote on the least possible standard. We’re the ones who have to make a recommendation to the rest of the Senate about whether or not to confirm this person. These conflicts are real. And it matters.”
“Do we think this is good enough for the public?” Warren continued. “It’s not whether or not … the Office of Government Ethics says, well, we think he squeaks by the legal standards. The question is whether we think it is right. I think it is fundamentally wrong.”
Sen. Elizabeth Warren (D-Mass.) said it would be "fundamentally wrong" to confirm Demetrios Kouzoukas to serve as a public trustee with oversight of Medicare programs while also serving on the board of a private insurer.
Thursday’s hearing revealed, for the first time, that the Massachusetts senator isn’t the only Democrat with concerns about Kouzoukas.
“Public service requires public trust,” Cardin said in a statement. “The individuals charged with solvency projections for Medicare and Social Security, which includes solvency of the growth of Medicare Advantage, must abide by a high standard of ethics and avoid even the appearance of a conflict of interest.”
He added, “Mr. Kouzoukas’ refusal to step down from a for-profit entity engaged in the very business he would have oversight for is troubling and was the reason I voted against his nomination in the Senate Finance Committee.”
Aides to Sens. Whitehouse and Menendez did not respond to requests for comment on why they opposed his nomination.
Beyond Congress, two progressive advocacy groups, Be A Hero and Social Security Works, are circulating a petition urging Kouzoukas’ defeat.
The rub with Kouzoukas is that while he is officially a Biden nominee, he was recommended to the White House by Senate Minority Leader Mitch McConnell (R-Ky.). The Board of Trustees of the Social Security and Medicare Trust Fund has slots for two public trustees, one filled by Democrats and one by Republicans.
Kouzoukas puts Biden in the uncomfortable position of having to defend a nominee he may not like, but is trying to slip through. It also means that Republicans will almost certainly line up in support of him, considering he was put forward by their party leader.
A White House spokesperson did not respond to a request for comment.