September 10, 2010

Sebelius to Health Insurers: Shut Up Or Else About ObamaCare Increasing Premiums; To AP, It’s Mere ‘War of Words’

sebeliusAdopting language and tactics more typical of tyrants, Health and Human Services Secretary Kathleen Sebelius yesterday sent a public letter to the head of a health insurance industry group demanding that carriers stop “falsely blaming premium increases for 2011 on the patient protections in the Affordable Care Act,” and that “that there will be zero tolerance for this type of misinformation and unjustified rate increases.”

She reinforced her short-term threat with a longer-term one:

We will also keep track of insurers with a record of unjustified rate increases: those plans may be excluded from health insurance Exchanges in 2014. Simply stated, we will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections.

Thus, when Sebelius threatens exclusion from the “Exchanges,” she is really saying: “Shut up and eat your costs, or you’ll be out of business in a few years.”

Keep in mind that three months ago (noted at NewsBusters; at BizzyBlog), leaked government documents estimated that, depending on the assumption sets used, anywhere from 49%-80% of small employer health plans and 34%-64% of large employer plans would be forced financially or otherwise to “relinquish” their “grandfathered” status by 2013 (a table showing the percentages is here). This necessarily means that the market for private plans will decrease, while the market for those who would be forced to buy coverage through the “Exchanges” (what’s with the uppercase?) will necessarily expand.

If you didn’t expect that the Associated Press’s coverage of Sebelius’s threats by Ricardo Alonso-Zaldivar wouldn’t make this linkage, you’re right — even though he covered that story (weakly) when it broke.. In fact, the AP writer characterized them as “warnings” and part of a “war of words” in his coverage (HT Hot Air):

HHS to insurers: Don’t blame us for your rates

President Barack Obama’s top health official on Thursday warned the insurance industry that the administration won’t tolerate blaming premium hikes on the new health overhaul law.

“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.

“Simply stated, we will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections,” Sebelius said. She warned that bad actors may be excluded from new health insurance markets that will open in 2014 under the law. They’d lose out on a big pool of customers, as many as 30 million people nationwide.

The letter to America’s Health Insurance Plans was the latest volley in a war of words over who gets the blame for rising premiums. Polls show that many people expect their costs to go up as a result of the law, but there’s also widespread mistrust of the insurance industry.

Note how helpful the AP writer is to Sebelius’s cause with his reference to “bad actors,” as if a company passing on otherwise legitimate cost increases is presumptively so. It’s also a complete whitewash to describe what’s going on as a “war of words,” when the government is browbeating carriers into reducing otherwise presumably justifiable increases, while brazenly brandishing denial of access to the “Exchanges” and other sanctions as weapons.

Though I can’t be sure, it appears that Alonso-Zaldivar got his 30 million figure from estimates of “the uninsured” — really those who don’t have insurance for a brief period during a given year — who would become covered under ObamaCare. If that’s the case, he has totally ignored Treasury’s preliminary estimates of those who would have to flee to the “Exchanges” as a result of employer plan terminations. Even at the low end of Treasury’s estimates (a blended 39% of small and larger employers, assuming that terminated plans have similar average numbers as those which remain), as many as 48 million Americans (39% x roughly 190 million Americans under age 65 x roughly 65% who currently have private plan coverage) would be herded into the exchanges by the end of 2013.

Now there’s a threat, namely that the “Exchanges” will be so overwhelmed by new applicants that they will fail to function properly and disrupt the entire system of medical care delivery.

Cross-posted at



  1. Ugh, from the name of the bill being the “Affordable Care Act” to her invocation of “protections” (more like heavy-handed political manipulations and market distortions I would call them) and to her self-righteous attitude that her fellow bureaucrats are saints and know best and that insurers are evil and know nothing the whole screed makes me want to vomit.

    Is this how the White House operates these days? Instead of dialogue and civil disagreements, we have nasty accusations, demonizing, and name calling. Wonderful.

    And if Seb really thought adding tons of mandates and regulations would not raise the cost of coverage than she is an even bigger idiot than Barack “this will reduce the deficit” Obama. I love how elitist bureaucrats pretend to know something about economics and mathematics, I swear these guys have to have someone else balance their personal checkbooks for them. Know what you’re actually talking Kathleen before you lecture others on what you think a “unjustified” premium increase is.

    Comment by zf — September 11, 2010 @ 12:11 am

  2. Once again, Conservatives were right on the money–literally and figuratively–continuing our prescience streak from 1913 to present. When will people learn?

    Comment by Joe C. — September 11, 2010 @ 8:29 am

  3. According to AARP [which sells Part D insurance through its partners] at

    “… starting in January 2011, Part D premiums will also
    vary with income. If your individual income is above $85,000 or greater
    than $170,000 for couples, expect to pay more for your Part D premium”.

    According to California Health Advocates web page “What Does Health Reform Mean for Medicare Beneficiaries? Summary of Key Provisions” at

    “…effective January 1, 2011, people with higher incomes ($85,000/individual and $170,000/couple) will also have to pay a higher portion of their Part D premium …”

    I wrote & called Medicare about the income adjusted Part D premium beginning in 2011. No less than
    5 different Medicare representatives insisted that the Part D premium is not based on income.

    Is Secretary Sebelius calling out AARP as spreading disinformation about the Affordable Care Act?

    To solve this difference of opinion, let’s look at the law itself, specifically Sec. 3308 of H.R. 3590:

    “(a) Income-Related Increase in Part D Premium-
    (1) IN GENERAL- Section 1860D-13(a) of the Social Security Act (42 U.S.C. 1395w-113(a)) is amended by adding at the end the following new paragraph:
    `(A) IN GENERAL- In the case of an individual whose modified adjusted gross income exceeds the threshold amount applicable under paragraph (2) of section 1839(i) (including application of paragraph (5) of such section) for the calendar year, the monthly amount of the beneficiary premium applicable under this section for a month after December 2010 shall be increased by the monthly adjustment amount specified in subparagraph (B).”

    Clearly the Affordable Care Act is causing premiums to increase in 2011. Fortunately there is an out
    for higher income participants in Part D because, unlike Part B, premiums for Part D are paid to a
    private insurer rather than to Social Security which deducts Part B premiums from Social Security
    benefits. There are several non-insurance prescription plans which do not base their fees on income.

    Comment by LilyS — September 11, 2010 @ 2:17 pm

  4. #3, thx for that info.

    Extending the logic, Sebelius et al should be allowed to set up their exchanges if they can’t tell the truth about what ObamaCare is and isn’t doing.

    Comment by TBlumer — September 11, 2010 @ 9:08 pm

  5. Looks like these ‘exchanges’ will be another wonderful massive government cluster(censored) creation.

    Comment by zf — September 12, 2010 @ 10:44 pm

  6. [...] The Associated Press’s Ricardo Alonso-Zaldivar can only bring himself to call all of this a “war of words.” Horse [...]

    Pingback by BizzyBlog — September 13, 2010 @ 12:27 pm

  7. [...] “Sebelius to Health Insurers: Shut Up Or Else About ObamaCare Increasing Premiums; To AP, It&#… ( [...]

    Pingback by 4 FAQs About Premium Increases « TIB Tips — September 14, 2010 @ 9:38 am

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