Sebelius Threatens

Last week Health and Human Services Secretary Kathleen Sebelius took the health insurance to task for not only raising premiums but for intimating that the Affordable Care Act was one of the reasons for the rate increase.

It has come to my attention that several health insurer carriers are sending letters to their enrollees falsely blaming premium increases for 2011 on the patient protections in the Affordable Care Act. I urge you to inform your members that there will be zero tolerance for this type of misinformation and unjustified rate increases.

That is the opening paragraph of her letter in which she rather bluntly puts the industry on notice that both their pricing and exercise of free expression will be monitored by the Obama administration. Tyler Cowen had this to say about her choice of words:

Nowhere is it stated that these rate hikes are against the law (even if you think they should be), nor can this “misinformation” be against the law.

Well, he’s probably right that the “misinformation” can be against the law but shortly the rate hikes will be, or more precisely the government will have the power to brand them as unreasonable and exact revenge a few years down the road. The Wall Street Journal pointed out in an opinion piece today that ObamaCare allows regulators to define unreasonable rate hikes and exact payback albeit a few years from now.

ObamaCare gives Ms. Sebelius’s regulators the power to define “unreasonable” premium hikes, which will mean whatever they decide it will mean later this fall. She promised to keep a list of insurers “with a record of unjustified rate increases” and then to bar them from ObamaCare’s subsidized “exchanges” when they come on line in 2014. In other words, insurers must accept price controls now or face the retribution of a de facto ban on selling their products to consumers four years from now.

If you shuddered a bit as you read the Sebelius letter, join the crowd. You can put her payback threats down to politics or regulatory hubris, but it’s hard to excuse the attempt to intimidate anyone into silence. But it’s east to miss another point if you concentrate too much on her thugish behavior.

Specifically, the attempt to use averages to impugn all rate increases tells us volumes about the approach we can likely expect to cost control under ObamaCare. You have no doubt already recognized that the blather in her letter about the various studies suggesting that premium increases should “average” no more than one or two percent is of no logical consequence. Whatever the averages might suggest, each individual plan’s rate hike is going to be determined by factors unique to it. One percent might be an excessive increase for Plan A while nine percent is woefully thin for Plan B. Unfortunately, the bureaucracy is not accustomed to such granular analysis, nor will it probably suit their larger intentions.

ObamaCare will eventually morph into a program administered by technocrats with their own view of the shape of health care in the US. The sheer size and complexity of the industry combined with the delegation of power encompassed in the bill will afford them the opportunity to pick winners and losers, administer the level of profitability in the deliverance of health care, and even eliminate entire companies or sectors of the industry. The game Sebelius plays with numbers here is simply a foretaste of what’s to come.

You can leave a response, or trackback from your own site.

Leave a Reply