The problem is that the DSM has become the de facto authority on what exactly constitutes an illness -- i.e is coverable by insurance. If your problem isn't in the DSM, insurers can in many cases safely deny coverage.

So now we have the situation where an unelected, private body (the American Psychiatric Association) wields immense power over people's daily lives.

This is the problem the author is alluding to in this passage:

On some level we’re to imagine that the American Psychiatric Association is a body with real powers, that the “Diagnostic and Statistical Manual” is something that might actually be used, and that its caricature of our inner lives could have serious consequences. Sections like those on the personality disorders offer a terrifying glimpse of a futuristic system of repression, one in which deviance isn’t furiously stamped out like it is in Orwell’s unsubtle Oceania, but pathologized instead.