Obama to Insurers: Stop Telling the Truth

by Michelle Minton on September 13, 2010 · 4 comments

in Insurance, Odds & Ends

During the fight for health insurance reform earlier this year, opponents of the bill (aka Obamacare) claimed that the proposal would increase the cost of insurance in the U.S. The bill passed and low and behold premiums are on the rise. Rather than own up to the fact that their policies are going to cost Americans more money, the Obama administration is threatening insurers who raise premiums and blame Obamacare.

Late last week the The Wall Street Journal reported that Health and Human Services Secretary Kathleen Sebelius sent a letter warning  insurers that the federal government wouldn’t sit “idly by”  while insurance companies raised premiums and blamed the hikes on new regulations:

She warned that bad actors may be excluded from new health insurance markets that will open in 2014 under the law. They’d lose out on a big pool of customers, as many as 30 million people nationwide.

Though some insurers are raising rates by as much as 9 percent in a year, the insurance lobby claims the hikes are justified by the new costs associated with the requirements of Obamacare, as well as increasing costs due to other factors such as a poor economy and increasing medical care costs.

Although the law’s big expansion of coverage under the law won’t take place until 2014, several new benefits go into effect starting later this month. Lifetime dollar caps on coverage are abolished, and plans must allow parents to keep their children on the policy up to age 26. Many plans will also have to guarantee coverage for children regardless of a medical condition, and provide preventive care with no cost-sharing for the patient.

Really, the Obama administration doesn’t seem to take offense at the increasing costs, but they are angry that insurance companies are blaming the increasing premiums on, among other things, Obamacare — what Sebelius calls “misinformation.” This opinion piece in The Wall Street Journal hit the nail on the head calling the Obama administration’s admonition of the insurance industry an attempt to distance their policies from the real-world results.

This method of reality denial has been employed in several other scenarios around the country with almost exclusively disastrous results. In Florida, politicians prevented insurance companies from charging adequate rates as well as creating a government property insurer to compete. The result was a mass exodus of private insurance companies from the Florida property insurance market (which put more pressure on the state insurer). In Michigan auto insurance companies are required to sell unlimited personal insurance protection with each policy; the result is Michigan having the second highest premium rates in the nation.

The Obama administration can deny it and even force insurance companies to cover it up, but the reality is that increasing services will necessarily increase costs. It could also result in increased premiums unless the government prevents companies from charging the rates they need to in order to provide the services they are contracted for… but that will simply result in fewer insurance companies. Eventually, we could be left with only one insurance company; the government-run health insurance company, which will not be cost effective.

If we want more services at a lower cost we need to get government out of the way and let insurance companies operate at their highest efficiency level while customers can choose the options that fit their lives and budgets.

PECB September 13, 2010 at 11:43 pm

"Obama administration is threatening insurers who raise premiums and blame Obamacare."

It's an Obama-Tantrum! :-)

Jim September 14, 2010 at 3:33 am

"There will be zero tolerance for this type of misinformation and unjustified rate increases."

"I want AHIP’s members to be put on notice: the Administration, in partnership with states, will not tolerate unjustified rate hikes in the name of consumer protections."

"According to our analysis and those of some industry and academic experts, any potential premium impact from the new consumer protections and increased quality provisions under the Affordable Care Act will be minimal," she writes. "We estimate that that the effect will be no more than one to two percent."

"We will also keep track of insurers with a record of unjustified rate increases: those plans may be excluded from health insurance Exchanges in 2014. Simply stated, we will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections."

When last I checked, free speech was still the law of the land and a government that uses threats such as these to squash free speech is no better than a banana republic. It would seem Ms Sebelius has been taking lessons from Hugo Chavez, the Venezuela dictator who in his "democracy" threatens business owners with the National Guard if they raise prices.

This is called tyranny.

You can fix this in November.

The Carpathian September 14, 2010 at 8:07 am

The arrogance of the Obama administration. If these insurance companies are telling lies, then sue them in court to force them — and any others — to stop the misrepresentations of increased costs.

But if they are speaking the truth, then the Obama Administration must be made to explain why, when the mantra was that ObamaCare and increased regulation would REDUCE costs, the exact opposite happened — just as the opposition Democrats and the Republicans said it would.

When will the people have enough of an Administration that seeks to run everything with an iron fist that places people in the position of certain punishment for exercising 1st amendment rights protected by the constitution.

Kory Chermak September 26, 2010 at 1:14 pm

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