Sebelius Versus Wall Street Journal (and the truth)

Apparently, The Wall Street Journal enjoys sacrificing valuable real estate on its editorial page to serve as bait for politicians who traffic in misinformation about ObamaCare. Witness yesterday’s op-ed by Kathleen Sebelius, U.S. Secretary of Health & Human Services. We know that the WSJ accepted her op-ed to trap her, because it rebutted her claims in today’s editorial, which makes entirely valid criticisms — but there’s more.

Both Secretary Sebelius and President Obama have been claiming that a “rebate” that Blue Cross & Blue Shield of North Carolina refunded to beneficiaries in the state was the direct result of crusading ObamaCrats successfully indicting the not-for-profit insurer for “greed.” Yet, nothing could be further from the truth.

First, the rebate was actually a return of reserves no longer required to fund the insurers’ longer term liabilities. The reason? These individual policies will cease to exist after ObamaCare is fully implemented, so North Carolina Blue’s reserves have become excessive, and it must return some of the money to policyholders. This is hardly something to be celebrated. Imagine if the federal government decided to interfere in the life-insurance industry such that the policy I hold today will become illegal on December 31, 2013. I have a policy that I bought five years ago, for which the premiums are guaranteed never to increase. Obviously, the premiums are front-loaded: In a very narrow (i.e. non-actuarial) sense, I pay “too much” in the early years, and “too little” as I age. However, the front-loading insures that the carrier can pay my survivor’s claim even if I live to a very old age. If the government ordered the insurer to wind up its business three years from now, it would rebate the reserves to me. However, I’d also be stuck without the life-insurance policy that I had chosen, forcing me to change my plans in accordance with the government’s preferences.

Second, North Carolina’s Insurance Commissioner has had the power of “prior approval” over rate increases since 1941, as do over half of states’ Insurance Commissioners today.  If they do not exercise this power to Secretary Sebelius’ satisfaction, that is simply because her political agenda differs from their judgment.

Secretary Sebelius’ role in the Administration’s disinformation campaign is especially appalling because she should know better. While President Obama is simply executing an ideological agenda which he has internalized without understanding, Secretary Sebelius was Insurance Commissioner of Kansas for eight years, chaired the National Association of Insurance Commissioners’ Health Insurance Committee, and was President of the NAIC in 2001. It is simply not plausible that she does not understand ObamaCare’s catastrophic consequences to the availability of private health insurance in this country.

Furthermore, the WSJ editorial did not note that the federal government has also enjoyed regulatory power over health insurance since 1997, as discussed in this blog over a year ago.  The Health Insurance Portability and Accountability Act (HIPAA) is a significant cause of the federal regulatory burden on health care increasing by 56 percent between 1998-1999 and 2008-2009.  At risk of belaboring the point, Secretary Sebelius was responsible for bringing Kansas’ insurance regulations in line with HIPAA regulations and enforcing them until 2003, when she became governor.  And yet, she insists that insurers had “free rein” when she was Insurance Commissioner.

Back when Secretary Sebelius was nominated for her current position, a colleague enthused that, “An insurance commissioner is a great choice for Secretary of HHS, because his or her direct contact with consumers provides unique insight into the challenges…..”  Unfortunately, Secretary Sebelius’ current direct contact with the Beltway political class and its ideological agenda obviously have far more significance than her previous direct contact with consumers, whose suffering under ObamaCare has only just begun.

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