Sebelius Now Mandating How Insurance Companies Must Spend Money

Sebelius Now Mandating How Insurance Companies Must Spend Money
By Guy Benson
11/22/2010

Check out this doozy of a follow-up to my previous health care post. Simply put, we now have a federal agency (HHS) issuing edicts to an entire private industry, detailing exactly how it can, and cannot, spend its own money:

The regulation unveiled by the Health and Human Services department calls for insurance companies to spend at least 80 cents of the premium dollar on medical care and quality. For employer plans covering more than 50 people, the requirement is 85 cents. Insurers that fall short of the mark will have to issue their customers a rebate.

Part of the new health care law, the rule is meant to give consumers a better deal. Administration officials said it will prevent insurers from wasting valuable premiums on administration, marketing and executive bonuses. "While some level of overhead costs is certainly necessary, we believe they have gotten out of hand," said Health and Human Services Secretary Kathleen Sebelius.

Some insurers have complained the approach is heavy handed, and doesn't take into account costs of marketing to individuals and small employers. Indeed, some are threatening to pull out of the individual market, and four states have already asked the federal government for an exemption from the rule, fearing it could lead to loss of coverage.

This is incredible. By its own actuary's admission, the federal government's new healthcare overhaul fails to curb spiraling costs -- which was a prime raison detre for the new legislation in the first place. Not satisfied with missing the mark on Obamacare, and racking up tens of trillions in unfunded government-run healthcare liabilities, the federal government is now insisting that private insurers accede to its proven incompetence infinite wisdom on cost-reduction -- under penalty of law.

We've seen how this works in Massachusetts. The state micromanages insurers' business practices, which leads to to costly legal disputes, drives insurers out of the state, and still fails to achieve affordable care. The Boston Herald reports that Massachusetts has morphed into a "legal pit bull," persecuting residents who cannot afford to comply with the state's expensive government-imposed mandates.

The federal government is now expanding this broken model nationwide. As the AP story says, insurers are already warning they'll be forced out of the individual market, or out of business altogether, which will lead to fewer choices for consumers. (But remember, folks, "if you like your plan, you can keep it!")

This madness only makes sense when viewed through the following prism: The Democratic Party is committed to destroying the private health insurance industry. Why? Its carefully planned demise will serve as a pretext to rush through a fully government-run "single payer" system to alleviate the coverage "crisis." The solution to the shortcomings of more government (Obamacare), they'll argue, is most government (single payer). If you think that statement amounts to apocalyptic Right-wing alarmism, I'll just turn things over to prominent Democrats, including the president: