Kathleen Sebellius Blames Insurance Companies For The Effects of Obama’s Stimulus Program

Like her ideological forebears from the last century, U.S. Health and Human Services Secretary Kathleen Sebelius is angry that businessmen who are eager to avoid a loss are raising prices.

From the LA Times, Anthem Blue Cross asked to justify controversial rate hikes :

The Obama administration called on Anthem Blue Cross on Monday to justify its controversial new rate hikes of as much as 39% for individual policyholders, saying the increases were alarming at a time when subscribers are facing skyrocketing healthcare costs.

In a letter to the company’s president, Health and Human Services Secretary Kathleen Sebelius voiced serious concern over the rates, which go into effect March 1 for many of the insurer’s estimated 800,000 individual policyholders.

The increases have triggered widespread criticism from Anthem members and brokers, who say the premium hikes will put health coverage out of reach for some and very costly for others.

“With so many families already affected by rising costs, I was very disturbed to learn through media accounts that Anthem Blue Cross plans to raise premiums for its California customers by as much as 39%,” Sebelius wrote to company President Leslie Margolin.

“These extraordinary increases are up to 15 times faster than inflation and threaten to make healthcare unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet in a difficult economy.”

Let’s get one thing straight;  these increases are entirely due to inflation, and they are likely largely caused by the Obama administration’s stimulus plan. Anthem executives didn’t wake up one morning and say “Hey! Let’s jack up prices so that our customers can no longer afford our product!”  Rather they are increasing prices to deal with the increased costs they anticipate for the coverage they provide.  Now why would they do that?

It turns out that while California has been receiving large amounts of bailout and stimulus funds, the supply of medical service providers has stayed steady.  That new money has largely gone to the California State government’s payroll and to cover their administrative overhead costs.  One of the largest discretionary expense most government employees have is the cost of medical insurance, and the demand for the insurance is relatively inelastic.  This insurance is used to pay for a multitude of doctor’s visits etc.  Thus you have a large pool of people with freshly printed money in their pockets engaged in a bidding war trying to consume an essentially static supply.The winners pay higher prices for the scarce goods, and the losers are left out in the cold.

This phenomenon is precisely how prices increase when whoever controls the money supply engages in inflation.  It’s not mysterious.  It’s not greed.  It is merely a predictable outcome counterfeiting.

This is one favorite method used by totalitarians to justify their seizures of power.  They engage in reckless government spending financed using the printing press.  Then, when these newly printed funds lead to a bidding war between buyers that drives prices up, they use the price increases as a justification for even greater usurpations of power.

If Kathleen Sebelius is serious about reducing prices for health care in California, she should be penning angry letters to the head of the California Medical Licensing Board.  This bullying of a company trying to stay solvent despite an economic storm created by government intervention – while making for very nice populist theater – will contributed nothing positive to the problem.

I am an anarcho-capitalist living just west of Boston Massachussetts. I am married, have two children, and am trying to start my own computer consulting company.
  • Don Lloyd


    I remain unconvinced that the premium hikes are strongly related to the stimulus plan or monetary inflation. If they were, there would be a much broader range of goods with large price increases.

    More likely, Anthem is looking ahead to the cost increases that will result from almost any and every Congressional action. If Anthem does nothing, its rational future action will likely be to go out of business. With this alternative, reducing its current size by raising prices doesn’t look so bad, if that’s what it takes.

    Also, we have no judgement standard as to whether its current prices are too high or too low. But it seems likely that its prices have failed to keep up with past cost increases, likely due to regulation, and, now may be a time in which the political strength of regulators may be temporarily weak.

    Regards, Don

  • http://www.impeach--obama.com Impeach Obama

    Hello Taran,

    This is one favorite method used by totalitarians to justify their seizures of power. They engage in reckless government spending financed using the printing press. Then, when these newly printed funds lead to a bidding war between buyers that drives prices up, they use the price increases as a justification for even greater usurpations of power.

    You are absolutely correct! You should have heard all my critics when the moment Barack Obama’s name came up as a possible Presidential candidate, I told everyone that he would indeed take this election because socialism had now blossomed and Obama was the fruit of all their misguided labor.

    I was even told by some that if he won it would be evidence that I hear from God! No, I wasn’t hearing voices, just smart enough to paint a picture from all the available pieces of information.

    Your point about the elite socialists’ manipulation of the medical system for the ultimate goal of controlling it really hit home for me, I have been watching other areas of the medical industry that are also being used as pawns in the hands of the Federal Government.

    This came to my attention when a friend of mine who gets her medical coverage through a share of cost with a Government agency that supplies medical for the less fortunate in our society.

    She is not rich and her share of cost was $200.00 per month. One week after the Obama Health Care bill hit the floor her share of cost was raised to $800.00 per month. In other words, no more medical unless Obama’s planned socialist medical coverage passes.

    It was obvious to me that this is all a part of the plan to justify the need for the Governments Universal Health Care.

    This Administration will not stop until they have destroyed and control all private business and industry.

    Robert Lee

  • http://www.thelibertypapers.org/2010/02/08/kathleen-sebellius-blames-insurance-companies-for-the-effects-of-obamas-stimulus-program/trackback/ Hemi

    You’re crazy! Inflation looks pretty in check to me. And I know for a fact, Obama’s stimulus alone would not be enough to create rapid inflation. In fact – without that stimulus millions more would be unemployed, forcing even more to drop coverage. This sounds like another Obama witch-hunt to me. Like FOX news, they’re blaming the job market, and it’s Obama’s fault the job market isn’t fixed already. And the way they say to fix the job market is by giving tax cuts to the rich. If demand was there the rich wouldn’t have any problem hiring people. And those multi-national companies are making record profits right now – money is not the reason they’re not hiring. And how do you give people that aren’t working a tax cut? The Republicans are always putting themselves above the country. What they want will sink us even further in debt and create nothing. You want across the board tax cuts – stop spending. Get us out of these wars. You don’t need to be in Afghanistan & Iraq to protect this country. They’re there because it fills a lot of pockets.

  • TerryP


    I agree that if we want across the board tax cuts we need to stop spending, but that includes not only Afghanistan and Iraq, but the stimulus, the healthcare bill, the federal education dept., and the list goes on and on.