Tuesday, September 14, 2010

HHS Shecantbeserious Steps in it...

The reason that she's so dangerous is because she's so ignorant:

"There will be zero tolerance for this type of misinformation and unjustified rate increases," Health and Human Services Secretary Kathleen Sebelius said in a letter to the insurance lobby."

Now that may seem brave - after all, she's taking on the fierce and vicious health insurance industry - but it is, in fact, quite stupid. For one thing, she has no (zero, nada, zilch) power to enforce her little threat. For another, even if she was able to carry through, she would do far more harm than good in doing so.

Why's that, you ask?

It's pretty straightforward: insurance companies need to make a profit. It's how they (or any other business) stays in, well, business. Beyond that, though, there are statutory and regulatory regulations that require carriers to have a certain amount of reserves and liquidity. Under ObamaCare©, carriers are forced to cover an ever-expanding list of expenses; if they can't price for the increased risk, they'll lose money. That has the medium-term effect of draining reserves, but, as Moody's rating service reminds us, HHS Secretary Shecantbeserious' "warning to health insurers about “unwarranted” rate increases could raise questions about the insurers’ ratings." If a carrier's financial rating plummets, so does its ability to conduct business.

One begins to suspect that the folks in DC consider that a feature, not a bug.
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