Where Private Health Insurance Is Headed
By John C. Goodman • Monday January 28, 2013 10:35 AM PDT • 7 Comments
Even if you are not enrolled in a traditional Health Maintenance Organization or an Accountable Care Organization (ACO), you can expect a return to some of the heavy-handed health insurance industry practices that were so unpopular in the 1990s and gave rise to the “patient bill of rights” proposals.
The reason? The new healthcare reform takes away just about every other tool insurers have to control costs. In response to the Affordable Care Act, for example, health insurers are already trying to keep premiums down by offering policies that cover, say, only half the doctors in the area where you live.[1] In some of these plans, you get no reimbursement whatsoever if you see a doctor outside the insurer’s network.
Will the federal government be able to tell doctors how to practice medicine? An undisguised goal of health reform is to change what most doctors do. The Medicare payment system will be used to push doctors to use electronic medical records, join group practices, and ultimately join ACOs. Doctors who do these things will be paid more. Doctors who don’t will be paid less.
A federal Coordinating Council for Comparative Effectiveness Research will study alternative ways to treat various conditions, and Medicare could refuse to pay doctors and hospitals that refuse to follow the guidelines. National guidelines will almost certainly govern who will get diagnostic tests, under what conditions, and how often. Medicare doctors are likely to have much less discretion about such diagnostic tests as mammograms, Pap smears, PSA tests, colonoscopies, and so on. Medicare doctors are also likely to have much less freedom to order CAT scans, MRI scans, PET scans, and sonograms.
The government will have less control over the way in which doctors practice medicine for patients who are privately insured. However, health plans in the exchange will face competitive pressure to limit what they spend on people with expensive health problems. Undoubtedly, federal guidelines for Medicare will give these plans permission to adopt the same payment strategies for physicians seeing the privately insured. Ultimately, whatever happens under Medicare is likely to spread to the entire private sector.
For more on the consequences of the Affordable Care Act, please see my book Priceless: Curing the Healthcare Crisis.
Notes:
- Reed Abelson, “Insurers Push Plans That Limit Choice of Doctor,” New York Times, July 18, 2010.
[Cross-posted at Psychology Today]
Tags: Healthcare, Insurance, Medicare, Regulation 
This post seems a little out of date. The Federal Coordinating Council was ended by the Affordable Care Act.
Source: http://www.hhs.gov/recovery/programs/os/cerbios.html
Pat | Jan 28, 2013 | Reply
“Will the federal government be able to tell doctors how to practice medicine?”
It’s already happened. For years clinicians had to report any _suspected_ child abuse or neglect.
Physicians who want to maximize revenue from Medicare have to participate in the Physician Quality Reporting System. It’s definitions of quality care may not be optimal, so following the recommendations could worsen patient care.
The federal government continually increases efforts to make clinicians use electronic medical records (from which it can easily extract patient medical data). Many clinicians, especially psychiatrists and clinical psychologists, do not want to switch to an electronic record system. Even clinicians who have EMRs may discover that their systems don’t meet federal standards.
MingoV | Jan 28, 2013 | Reply
My major fear of Obamacare is that it may lead to a reduction in the incomes of healthcare and Big Pharma CEO’s and their top execs.
Imagine the abject squalor to which Obama might be consigning people like John Hammergren, chief executive of McKesson Corporation, a pharmaceutical distribution corporation, who took home only $145,266,971.oo in 2010.
Or Joel Gemunder, outgoing president of Omnicare, a pharmacy company that dispenses drugs in nursing homes, whose 2010 total pay package was worth $98,283,242.oo.
Or CVS Caremark chief executive Thomas Ryan, who worked his ass off to earn $68,079,823.oo in 2010.
Or Ronald Williams, boss of the health insurance giant Aetna, whose toil earned him $57,787,786.oo in 2010.
Etc. http://www.commondreams.org/headline/2011/12/23-10
By the way, I used to think that 45,000 people die in America/year because they lack health insurance. I was wrong. We’re much better than that; 82,000 people die every year.
As I’m sure you’d agree, all life is precious and these lost lives are tragic. But as sad as they may be, they’re a small price to pay to maintain a system that permits hard working men to earn what they deserve, more than $100,000,000.oo/year for a really, really hard worker like Mr. Hammergren. As we all rightly fear, Obamacare risks putting an end to all this prosperity, to ending reward for hard work.
None of those socialistic hellholes, such as Canada, Australia, Austria, Japan, Germany, Switzerland, Norway, France, Sweden, Denmark, etc., permit this sort of hard work to be so justly rewarded. This sort of REAL prosperity. And that’s partly why no one dies in those places due to lack of health insurance. And also why no one is bankrupted by unaffordable health care bills the way tens of thousands are every year here in America, the country with the best health care system in the world (Bloomberg/Business Week.)
That’s why, in other words, foreigners, many fewer of whom, it goes without saying, are Christians than we Americans are, don’t understand that, in dying prematurely or going bankrupt from health bills, Americans are doing The Lord’s work as Christian Capitalists – sacrificing the wretched of the earth to preserve the freedom of American CEO’s to work really, really hard and earn tens of millions of dollars, plus, plus. It’s all about freedom: we’ve got it, the socialists don’t.
Free the poor, battered CEOs – Kill Obamacare!
GaryA | Jan 28, 2013 | Reply
The Affordable Care Act is also playing politics with pre-existing conditions. The Act will penalize smokers while protecting the obese. This provision of the Act was included (I am convinced by donations from the insurance companies) when it was known that the health care cost of the obese had surpassed that of smokers. Research indicates the 2030 projected obesity health care cost will surpass smoking, alcoholism and drug abuse combined.
I have submitted a petition (http://wh.gov/V0du) to President Obama asking the punishment of smokers be removed from the Act.
Ron M | Jan 29, 2013 | Reply
What does Obamacare do? The “Patient Protection, Affordable Care Act” doesn’t protect patients, and it isn’t “affordable” either. Nor does it offer much of a “choice” either. There are of course many things that could be done to reduce the cost of health care here in the USA. Obamacare does none of these. It also makes the shortage of primary care physicians far worse. If you hate having to wait to see your doctor, be ready for much longer waits when Obamacare kicks in. All in all, Obamacare makes things “worse” for most people instead of better. It is also going to cost a lot more than claimed. Where do you think the money is going to come from to help people pay for insurance? Higher taxes or higher deficits. Hundreds of billions of dollars of higher taxes or higher deficits!
Mr. Goodman has a very excellent book on health care that everyone should read. With a lot of better ideas than what we’re getting with Obamacare!
Jerome Bigge | Jan 29, 2013 | Reply
1.Reed Abelson, “Insurers Push Plans That Limit Choice of Doctor,” New York Times, July 18, 2010.
It is a tenant of economics that anytime a resource (i.e. a good or service) is scarce, a rationing mechanism to determine the allocation of goods must occur to avoid shortages. The way this is done in most markets is through price rationing. So it follows that if goods and services are free (or heavily subsidized) at the point of service, some type of rationing other than price necessarily must occur. In other words, if consumers abdicate the responsibility of rationing their own health care utilization, they should not be surprised when insurers do it for them. I would argue this is especially important in health care because all three of the primary parties to a health care transaction have perverse incentives.
Doctors and hospital have an incentive to push unneeded medical services and conceal the price. Insurers and health plans have an incentive to deny necessary care and conceal the need. Patients have an incentive to consume medical services until the last dollar of care is only as valuable to them as the marginal cost of their co-payment for (e.g. maybe $0.10 cents on the dollar).
The “narrow” or limited networks discussed in the New York Times article is something that we will increasingly see. There’s nothing inherently wrong with this; it gives health plans more bargaining power against providers and helps insurers control wasteful care. But we should recognize why it’s being done. It’s done this way because consumers threw up their arms and abdicated the responsibility for making prudent decisions about which care they needed; and which are they were willing to do without.
Devon Herrick, NCPA | Jan 30, 2013 | Reply
This article is so true and so depressing . . . As I have said so many times, “those who pay the bills make the decisions.” Hard to believe so many people see government decision making as so well executed they want them having so much control over our health care.
There is although one last hope to end not just the Obamacare assault on the health care industry, but also to end the ominous and definite effects the Roberts’ decision will have on future generations as government and corporations combine to force American citizens to do just about anything by way of the taxation.
It is called the Mandate Amendment to the US Constitution – short, simple, and common sense:
“Congress shall make no law mandating the purchase of a product or service from a private entity”
This is a bold and courageous effort to strike at the heart of this precedent now while much of our country is appalled by the decision and the infrastructure and dependence upon the law is not sewn into the fabric of our country. If we build a coalition now, we will be poised to have candidates pledge support as they run against incumbents next midterm election. We believe in the next election the Democrats will be out of excuses for a failing economy and the country will be well positioned for candidates that favor American principles and therefore this Amendment.
Please join us, this is our last hope. Just Google Mandate Amendment for more information or find us on Facebook and Twitter.
MandateAmendment | Feb 3, 2013 | Reply