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Thursday, August 19, 2010


While some of the most dangerous rationing elements of Obamacare are not slated to occur until 2014, other provision are coming on line sooner – ones that may lead to the denial of treatment.

Earlier this week, the Department of Health and Human Services (HHS) announced that 45 states had applied for money set aside in the new health care law which they can use to set up or, in some cases strengthen existing laws surrounding “premium review.” Why should we be concerned?

One of the provisions of Obamacare that took effect immediately requires health insurance companies to file proposed premium increases and to justify (any yet to be defined) “unreasonable” increases to the government. The states are meant to be the first line of enforcement, with HHS acting as a fallback enforcer.

But how the term “unreasonable” is used may prove to be a dangerous thing. HHS Secretary Kathleen Sebelius told reporters in a conference call that officials are still crafting a definition of the term “unreasonable” with the assistance of industry and consumer advocates and other stakeholders.

That means that this fall, when nearly everyone enrols for next year’s benefits, any rate increases an insurer might need to make, must now be justified and be what HHS considers reasonable.

This ramped up review authority, (purported to be aimed at shielding the insured from being gouged by their insurers) is merely one of many tools built into Obamacare aimed at limiting what people can spend to save their own lives.

When the government limits by law what can be charged for health insurance, it limits what people are allowed to pay for medical treatment. While everyone would prefer to pay less – or nothing – for health care (as for anything else), government price controls in fact prevent access to lifesaving medical treatment that costs more to supply than the price set by the government.

Many states already review insurance increases. But now many states will receive money to beef up that effort, or to create new regulations to give them more power to reject premium increases. In other words the funding these 45 states will receive is merely the first round.

Most importantly, in 2014, under ObamaCare the states will actually become empowered to block insurers from participating in the state based “exchanges if they are judged to show a pattern of excessive or unjustified increases.”

Under this new authority, exchanges will be able, in effect, to limit the value of the insurance policies that Americans using the exchanges may purchase. Here’s how.

Not only will the exchanges be allowed to exclude policies when government authorities do not agree with the size of the premiums, they will also be able to look at any proposed increases plans charge that are outside the exchange . The states and ultimately HHS have the power to say that “particular health insurance issuers should be excluded from participation in the Exchange based on a pattern or practice of excessive or unjustified premium increases” [42 USCS § 300gg-94]

This will create a “chilling effect,” deterring insurers who hope to be able to compete within the exchange. Moreover, this innocuous little provision also says that “we will look at what insurers do in all their plans, not just ones in the Exchange.” This means that all insurers can be prevented from offering adequately funded plans to their regular customers if they have even one plan in that exchange. And the less money available for plans, the less care they will be able to provide.

As health insurance companies are squeezed more and more tightly each year by the declining “real” (that is, adjusted for health care inflation ) value of the premiums they take in, they will ration lifesaving medical treatment. Under a scheme of premium price controls, these day-to-day rationing decisions will have the most direct and visible impact on the lives – and deaths – of people with a poor “quality of life.”

This dangerous provision is one among many that we will continue to highlight as the rationing elements of Obamacare come online.

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