The Obama administration on Thursday told health insurers that it will track those who enact “unjustified” rate increases linked to the health overhaul and may block those companies from a new marketplace for insurance coverage.

Kathleen Sebelius, secretary of Health and Human Services, issued the warning in a letter to Karen Ignagni, the insurance industry’s top lobbyist.

Ms. Ignagni, president of America’s Health Insurance Plans, said: “It’s a basic law of economics that additional benefits incur additional costs, and the impact on premiums depends on the type and amount of coverage policyholders had before.” She attributed rising premiums to the higher price of medical services and the impact of younger and healthier people dropping their insurance during the weak economy, as well as the additional benefits required under the new law.

Sebelius acknowledges that the new law will cause an increase in premiums, albeit “minimal.”

So what we have here is the health insurance industry reacting the the new coverages that addressed in the Health Care Reform. Whe the Gov. forces health carries to cover additional benefits that were not covered before you have a price increase. If the plan is paying for more coverages how can there is no way for the carriers not to increase rates if they want to stay in business.

The White House now wants to make threats to the health insurance companies stating if they raise premiums they do not get to participate in the future health insurance exchange. The White House might be faced with carriers choosing not to participate in the exchanges in the first place. If the White House is upset about the rate increase coming at the end of this month then they are really going to be up set when the cost of the exchange plans. The exchange is going to operate with guaranteed Issue meaning no one can be declined. This is going to increase premiums significantly.

From a broker standpoint I feel that the White House has no clue of what they are doing with health care reform.