08 June 2010

Sebelius Canutes Medicare Providers

(Does anyone use "Canute" as a verb? I am. Let's make it a thing.  Canute, v.: To attempt to change reality by proclamation.)
WSJ | Janet Adamy | HHS Warns Medicare Insurers on Rates

On Monday, insurers that sell Medicare Advantage plans must submit their 2011 bids to the government. In a letter to four insurance-industry executives, Health and Human Services Secretary Kathleen Sebelius warned the companies not to increase premiums and co-payments for seniors. [...]

Many insurance companies are planning to increase costs for a range of services for seniors next year, according to consultants who have helped prepare their bids. Dozens of Medicare Advantage providers plan to cut back vision, dental and prescription benefits. Some plans are eliminating free teeth cleanings and gym memberships, and raising fees for hearing aides, eye glasses and emergency-room visits.

Consultants cite two reasons for the cuts. The rate the government will pay private insurers to run the plans is frozen for 2011 at 2010 levels, while medical costs are expected to increase an average of at least 6%. Such price increases and benefit cuts will help them recoup that difference, the consultants say.

Meanwhile, the health overhaul will impose drastic payment cuts to insurers that run the plans, and consultants say insurance companies need to begin adapting now. Starting in 2012, the law calls for a gradual reduction in government payments to insurers, totaling $136 billion before the end of the decade.

The Obama administration and Senate Democrats say that passing those costs on as early as next year is unfair. In her letter, Ms. Sebelius warned insurers that she will deny insurers bids if they include excessive price increases, using new powers under the health law.
I won't comment about how stupid price caps are, or how destructive they are going to be. I won't comment on how many people predicted this is exactly what would happen simply by watching what happened in Massachusetts. I won't comment on how many times I was reassured this was never going to be necessary by ObamaCare supporters.  I won't comment on how arrogant and futile it is to think you can control economic reality by issuing stern letters.  I won't comment on how juvenile and foolish it is to think it's "unfair" to try and make profit now in anticipation of losing money next year.

I just want to pick on this one sentence of Sebelius' letter:
"Focus on price and quality rather than asking seniors who need health care the most to pay more for it," Ms. Sebelius wrote in a letter sent Friday and reviewed by The Wall Street Journal.
What the **** does that mean? You're supposed to "focus on price" without raising prices? Costs are going up but you can't ask customers to pay higher prices, because ... why? What's the dichotomy between that and focusing on price and quality?

Maybe the context of that sentence makes some sense, but my money is on it being informationless noise vomited out of the mind of some HHS appointee who knows nothing about business, logic, rhetoric, or the English language.

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