Here is how the Department of Health and Human Services put it in a press release on May 19:
Today, The Department of Health and Human Services (HHS) issued a final regulation to ensure that large health insurance premium increases will be thoroughly reviewed, and consumers will have access to clear information about those increases. Combined with other important protections from the Affordable Care Act, these new rules will help lower insurance costs by moderating premium hikes and provide consumers with greater value for their premium dollar. In 2011, this will mean rate increases of 10-percent or more must be reviewed by state or federal officials.
“Effective rate review works – it does so by protecting consumers from unreasonable rate increases and bringing needed transparency to the marketplace,” said HHS Secretary Kathleen Sebelius. “During the past year we have worked closely with states to strengthen their ability to review, revise or reject unreasonable rate hikes. This final rule helps build on that partnership to protect consumers.”
Kevin Williamson put it this way last week:
Today’s milepost on the road to serfdom: The Obama administration is beginning to impose price controls on the insurance industry. Henceforth, if a health-insurance premium is to be increased by more than 10 percent, the company will be obliged to go and beg the government for its blessing.
Incidentally, Congress has enacted no law regarding that 10 percent standard. Health and Human Services secretary Kathleen Sebelius simply issued a decree. She could have chosen 1 percent, 11 percent, or 0.01 percent. Why 10 percent? Because it sounds nice and won’t confuse dim voters who are not good with math.
In one important way, this move is even worse than it looks initially: The economics of price controls are well understood (usually the result is shortages), and the consumers the Obama administration alleges it is protecting here are the ones who will pay the highest price, in the form of degraded services and very probably, in some cases, loss of health insurance. That’s all obvious enough, and it serves the insurance industry right for allowing itself to be bought off with Obamacare’s individual mandate. But what the Obama administration really is up to is imposing undefined political mandates on insurance pricing. It hasn’t so much passed a regulation as inserted itself into the market as a subjective arbiter — a pattern it is following in other industries, too, and one that bears keeping a watchful eye on.
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The Affordable Care Act empowers [Sebelius] to collar insurance providers and demand an explanation for an increase in premiums. The act does not empower her to block such increases. But many states already have that power, and so Sebelius & Co. will be using them — and $250 million appropriated to bribe them — to impose what Washington cannot: regulatory federalism in reverse. In those states that do not have the authority to enact price controls, Sebelius intends to step in and browbeat insurers herself: Which is to say, states with strong regulatory authority will find themselves used by Washington as tools, and states with weaker regulatory authority — states whose citizens have chosen not to enact strong regulations — will be supplanted by Washington.
Here is how I would put it, quoting Abraham Lincoln: “Now, I ask you in all soberness if all these things, if indulged in, if ratified, if confirmed and endorsed, if taught to our children, and repeated to them, do not tend to rub out the sentiment of liberty in the country, and to transform this government into a government of some other form.”
JOHN adds: The path to socialized medicine is painfully obvious. The government (state and federal) can drive up the cost of health insurance through mandates and other requirements, and then refuse to allow private insurance companies to raise rates to levels that make the business profitable. As private carriers exit the health insurance market, government “insurance” will be offered as the only alternative. President Obama is on record as saying that his intention is to drive private insurance into extinction over a ten to twenty year period. This purpose is being advanced across a broad front.