No, You Can't Keep Your Health Plan

Side Note: In this article from the Wall Street Journal, Scott Gottlieb, a practicing physician, anticipates changes that will need to be made by physicians and insurance companies as a result of President Obama’s health plan. In Gottlieb’s view, the Obama plan puts undue economic burden on doctors, who already must deal with increasing medical malpractice insurance premiums and decreasing reimbursement payments from Medicare. Doctors should consider how they will adapt their practices to the new requirements of the health bill.

by Scott Gottlieb
Wall Street Journal

President Obama guaranteed Americans that after health reform became law they could keep their insurance plans and their doctors. It’s clear that this promise cannot be kept. Insurers and physicians are already reshaping their businesses as a result of Mr. Obama’s plan.

The health-reform law caps how much insurers can spend on expenses and take for profits. Starting next year, health plans will have a regulated “floor” on their medical-loss ratios, which is the amount of revenue they spend on medical claims. Insurers can only spend 20% of their premiums on running their plans if they offer policies directly to consumers or to small employers. The spending cap is 15% for policies sold to large employers.

This regulation is going to have its biggest impact on insurance sold directly to consumers—what’s referred to as the “individual market.” These policies cost more to market. They also have higher medical costs, owing partly to selection by less healthy consumers.

Finally, individual policies have high start-up costs. If insurers cannot spend more of their revenue getting plans on track, fewer new policies will be offered.

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