October 26, 2010

The Specter of An Unconstrained Administration

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The refrain often thrown around now is that the Obama administration is unfriendly towards the business community.  That this complaint may be tiring to some does not make it untrue.  In September the Health and Human Services Secretary Kathleen Sebelius, who is one of those charged with implementing healthcare reform, put insurance companies on notice for, “falsely blaming premium increases for 2011 on the patient protections in the Affordable Care Act.”  According to Ms. Sebelius, health insurance rate increases in excess of what was projected are unreasonable, unfair, and thus must be challenged by the government.

The Administration has chosen the route of unnecessary intervention.  Insurance companies must now comply with a slew of regulations, including no lifetime limits, severely limited medical underwriting, and minimum medical loss ratios (percent of premium dollars spent on medical services for enrollees).  These provisions all come with costs, namely increased premiums.  Premium increases not in line with projections have now drawn the ire and fist of the federal government.  Insurers along with the rest of the private sector need a degree of regulation and consumers need a degree of protection.  Yet the accusations levied were not ones of refusal to comply.  For private firms to be threatened by charges that they have not achieved the goals of a government policy, despite compliance, is unwarranted.

This very act by Ms. Sebelius demonstrates a misguided ideology that cannot be dismissed with rhetoric.  If only the Administration applied this to their own expectations, then those who estimated the stimulus bill would result in 8 percent unemployment should be fired.  So much for fairness.  Admittedly the sympathy for Fortune 500 insurers is minimal, but it is the ideology that is deeply troublesome.  The federal government is wielding its authority to ensure that private sector firms disobey their own interests in order to prove the government right.

This expansion and assertion of government authority is alarming.  Yes, the public and private sector must operate together and certain goals can only be achieved when they do so.  And yes, the government must keep private firms in check so as to ensure a level playing field for both consumers and competitors.  When the government controls the market rather than protects it though, uncertainty, instability, and fear set in.

President Obama can continue to say he is pro-business and that he wants to see private firms, large and small, succeed.  He may very well be sincere.  But speeches only go so far, and when private firms are threatened for failing to please federal bureaucrats, the President’s sincerity should be doubted.  As the President likes to say, the issue is not more or less government, but effective government.  When government policy does not achieve its goals despite adherence to its commands, there is certainly something ineffective about it.

Original Author: Lee Blum