Tuesday, November 22, 2011

Obamacare nightmare

This is yet another example of why government run health care will be a nightmare.  The government picks on small corporations who don't have the wherewithall to fight Washington, and big corporate firms  hire lobbyists to make sweetheart deals with the government.  The result:  big government/big corporate monopolies which  mean less freedom, higher costs, and government/private company corruption. 

(From the Opinion Journal Newletter --of the Wall Street Journal)

The Obama administration promised that the Affordable Care Act would protect the public from "unreasonable" premium increases, and now our guardians at Health and Human Services are finally bringing one of those scofflaws to heel. Perhaps the first HHS target would be, say, WellPoint, the giant for-profit corporation that was President Obama's bête noire during the health-care debate?
Nope. HHS has smaller fish to fry. In the first federal rate review case, announced yesterday, the department is targeting . . . Everence Insurance Co., which is run by the Mennonite Church and covers 4,846 people in rural Pennsylvania. The carrier is raising its small-business rates there by 11.58% on average next year, and HHS Secretary Kathleen Sebelius said that her agency's enforcement action "sends a message to insurers around the country that the days of unchecked and unfair doubt-digit rate increases are over."
It won't, and they aren't. For the past three years Everence's claims have exceeded its premiums, meaning the company has been operating at a loss. Its technical "underwriting gain/loss" measure for this book of business is currently minus-41%, so for every dollar of revenue it receives it spends $1.41. This company is not exactly the paragon of corporate greed that the likes of Ms. Sebelius so often invoke.
HHS's vague rule of thumb is that any premium increase over 10% is probably "unreasonable," though not unless the agency says it is. Currently HHS doesn't have the regulatory powers to revoke such increases, but the program is a prelude to such price controls on private insurance. Ms. Sebelius and HHS are keeping a registry of offenders who will then be handicapped when selling their products once the rest of ObamaCare comes on line in 2014.
What the Everence case study really shows is that the main factor driving premiums is the underlying cost of medical care, not insurer profits or malfeasance. As for that supposed scourge, why couldn't HHS find a more unsympathetic villain for one of its signature programs than a small Mennonite health plan that no one has ever heard of and is hanging on for dear life?

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