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.

Comments (7)

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  1. Devon Herrick says:

    Kathleen Sebelius is in the unenviable position to having to defend a law that she likely knows is deeply flawed. Having been insurance commissioner in Kansas, she undoubtedly understands that insurers are not benevolent associations that willingly lose money year-after-year so a few people can get huge cross-subsidies.

  2. Tom H. says:

    Sebelius is like a child with a machine gun. She has enormous power to do harm and she has no idea what she is doing.

  3. Ken says:

    I agree with Tom. Sebelius is dangerous.

  4. says:

    How did Sebelius become President of NAIC in 2001? Who elects these people? Certainly citizens don’t elect leaders in the powerful NAIC.

    Principal is throwing in the towel on health insurance today. There goes a bunch of jobs in Des Moines.

    Lucky ObamaCare is here to save the insurance industry.

  5. Vicki says:

    She has become the world’s most powerful woman.

  6. Linda Gorman says:

    According to Wikipedia, from 1977-1986 she was chief lobbyist for the Kansas Trial Lawyers Association. Then she was elected to the legislature. After eight years as an elected rep in Kansas she was elected insurance commissioner.

    She ran for governor in 2002 and was reelected in 2006. She has a degree in public administration and her father was governor of Ohio. She was not an insurance commissioner when she was appointed to HHS.

    She’s basically had a career in Democratic politics and was not a particularly good governor. Given that her public speeches don’t show that she’s done a lot of study, why would anyone expect that she has any expert knowledge of economics, economic growth, insurance or health care?

  7. Litan says:

    Hey babe, why dont you do tort reform? How about anliwolg people to buy coverage across state lines? How about tax credits when you pay out of pocket? How about not trying to take over the entire health of the country seeing that govt bankrupts everything it tries? How many private sector insurance compaines are there? yea a whole damn lot. There is enough compettion, Compettion with govt Obamacare will undercut the private sector and thus our 1 choice will be govt care. Not much choice there.