During the fight for health insurance reform earlier this year, opponents of the bill (aka Obamacare) claimed that the proposal would increase the cost of insurance in the U.S. The bill passed and low and behold premiums are on the rise. Rather than own up to the fact that their policies are going to cost Americans more money, the Obama administration is threatening insurers who raise premiums and blame Obamacare.
Late last week the The Wall Street Journal reported that Health and Human Services Secretary Kathleen Sebelius sent a letter warning insurers that the federal government wouldn't sit "idly by" while insurance companies raised premiums and blamed the hikes on new regulations:
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.
Though some insurers are raising rates by as much as 9 percent in a year, the insurance lobby claims the hikes are justified by the new costs associated with the requirements of Obamacare, as well as increasing costs due to other factors such as a poor economy and increasing medical care costs.
Really, the Obama administration doesn't seem to take offense at the increasing costs, but they are angry that insurance companies are blaming the increasing premiums on, among other things, Obamacare -- what Sebelius calls "misinformation." This opinion piece in The Wall Street Journal hit the nail on the head calling the Obama administration's admonition of the insurance industry an attempt to distance their policies from the real-world results.
This method of reality denial has been employed in several other scenarios around the country with almost exclusively disastrous results. In Florida, politicians prevented insurance companies from charging adequate rates as well as creating a government property insurer to compete. The result was a mass exodus of private insurance companies from the Florida property insurance market (which put more pressure on the state insurer). In Michigan auto insurance companies are required to sell unlimited personal insurance protection with each policy; the result is Michigan having the second highest premium rates in the nation.
The Obama administration can deny it and even force insurance companies to cover it up, but the reality is that increasing services will necessarily increase costs. It could also result in increased premiums unless the government prevents companies from charging the rates they need to in order to provide the services they are contracted for... but that will simply result in fewer insurance companies. Eventually, we could be left with only one insurance company; the government-run health insurance company, which will not be cost effective.
If we want more services at a lower cost we need to get government out of the way and let insurance companies operate at their highest efficiency level while customers can choose the options that fit their lives and budgets.