Tuesday, September 14, 2010

US vs. Health Insurers: Why It's Tough To Analyze Sectors/Companies Now

Wisconsin Republican House member Paul Ryan co-wrote an editorial in the Wall Street Journal yesterday contending,

"Every day, more see that the road to serfdom in America does not involve a knock in the night or a jack-booted thug. It starts with smooth-talking politicians offering seemingly innocuous compromises....."

Yet, on the opposite page that morning, in the lead staff editorial, entitled Sebelius Has a List, the Journal's own countered Ryan's contention.

Moreover, that lead staff editorial offers yet another example to explain, again, why my own posts of the past few years have become less strategy-focused, and much more politically- and macroeconomically-focused.

The editorial suggested,

"Witness Kathleen Sebelius's Thursday letter to America's Health Insurance Plans, the industry trade group- a thuggish message even by her standards. The Health and Human Services secretary wrote that some insurers have been attributing part of their 2011 premium increases to ObamaCare and warned that "there will be zero tolerance for this type of misinformation and unjustified rate increases."

Zero tolerance for expressing an opinion, or offering an explanation to policyholders? They're more subtle than this in Caracas."

And that, dear readers, provides the example. Look at how much qualified judgment is evident in Sebelius' letter? She and her minions deny that ObamaCare is putting pressure on insurers' costs, despite prior admissions of same by the president. Further, she finds, a priori, that any attempt by insurers to communicate these truths to customers or investors will be judged as "misinformation," the accompanying rate increases "unjustified."

As I wrote here recently in my companion political blog, Massachusetts' own insurance commissioner was against similar moves by that state's governor. It seems that many senior bureaucrats forget that when they move to cap and/or control insurers' rates and revenues, they unwittingly threaten the solvency of same, and their ability to actually pay legitimate claims.


But you can see how Paul Ryan may be a bit myopic, or simply optimistic.

It seems that the jack-booted state is alive and well at HHS. And this type of capricious regulatory punishment of private sector firms is why strategy matters so much less today than it used to, while perceived political correctness, singing the party line, and generally avoiding political persecution and prosecution is the new order of the day for American business.

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