Medicare chief to resign after political standoff

WASHINGTON (Reuters) - A senior U.S. official who helped lead President Barack Obama's healthcare overhaul will step down from the helm of the Medicare program after Republicans blocked his Senate confirmation for the job.

Obama appointed Dr. Donald Berwick as U.S. government insurance chief in July 2010 during a Congressional recess to bypass the Senate, where Republicans held up his confirmation.

Obama resubmitted Berwick's candidacy to the Senate two months later, but the administration will now nominate his deputy, Marilyn Tavenner, to head the Centers for Medicare and Medicaid Services (CMS), the White House said on Wednesday.

"It's unfortunate that a small group of Senators obstructed his nomination, putting political interests above the best interests of the American people," said Jamie Smith, White House deputy press secretary.

Medicare and Medicaid, government health programs that cover millions of elderly and poor Americans, are focal points of a heated battle in Congress to control the nation's ballooning deficit.

Berwick helped lead savings efforts through Obama's signature 2010 healthcare law, the Affordable Care Act, but had become a target of Republicans, who expressed worries he would ration healthcare to reduce costs.

"(Politicization) has been always been a problem with healthcare and even more so in the last two or three years and he was victimized by it," said Chris Jennings, former healthcare adviser to Democratic President Bill Clinton and co-director of the Bipartisan Policy Center's health project.

"As a consequence, you have one of the most important positions in the government being held by a person not confirmed by the Senate."

Berwick's appointment was set to expire at the end of the year, but he plans to resign effective December 2, according to an email sent to staff at the U.S. Department of Health and Human Services. His future plans remain unclear.

"Our work has been challenging, and the journey is not complete, but we are now well on our way to achieving a whole new level of security and quality for health care in America," Berwick, a pediatrician and Harvard professor, wrote.

Tavenner is a former Virginia health secretary and hospital chief executive. A nurse by training, she has been with CMS since February 2010, first as acting administrator and currently as principal deputy administrator.

Senator Orrin Hatch, a ranking Republican on the Senate committee that oversees Medicare, led the opposition to Berwick's nomination. He said on Wednesday that the Senate must "carefully scrutinize" Tavenner's nomination.

Republicans opposed to Berwick cited his favorable statements about the publicly-funded British healthcare system as evidence he wanted to implement similar policies that would create a government-run system in the United States.

Tavenner has maintained a lower political profile with her statements and commentary and has years of industry experience, so she is unlikely to walk into a similar ring of fire in Congress, Jennings said.

(Additional reporting by Jeff Mason, Caren Bohan and Anna Yukhananov; Editing by Anthony Boadle and Paul Simao)