Obama's Health Care Reform Gives Consumers Fewer Choices

The growing number of private health plans that are giving consumers fewer choices among doctors surprises proponents of Mr. Obama's health care reform.

The latest window into this growing phenomenon comes courtesy of a front page story by health care reporter Reed Abelson in the Sunday, July 17 edition of the New York Times, titled, "Insurers Push Plans Limiting Patient Choice of Doctors."

But consumers should expect more health plans to offer increasingly slim rosters of "in network" doctors and hospitals to choose from, with large co-pays for going "outside" to doctors that don't contract with a plan. Some insurers will demand patients pick up the full cost for seeing doctor outside a health plan's network.

If this sounds like a throwback to the managed care model of the late 1980s and early 1990s, it is. That was the approach to managing care that consumers despised and overturned. The revolt led, in part, to passage of the "Patients Bill of Rights."

Today's reversion to that old HMO model is direct consequence of the peculiar economics set in motion by the Obama health care plan.

The Obama law tightly regulates the health benefits that plans must offer, but also the premiums they can charge. At first premiums are fixed through political jawboning, but more direct controls are just around the legislative corner.

In so doing, the Obama health plan creates a market where insurers will have both their costs and their revenues controlled by the federal government.

In this kind of economic model, the only way to control expenses is to lower the cost of the product that's actually being delivered--in this case, the cost of insurance coverage. In turn, the most efficient way to cheapen the cost of health insurance is to maintain tight reigns on the doctors who are delivering the health care.

That means maintaining tight networks so that insurers can provide close supervision (leverage) over the decisions physicians make. Health plans will employ this control to cut down on excessive use of costly services like radiology scans. In many cases, keeping networks small won't provide enough leverage. Health plans will go one step further and purchase provider groups outright, owning the doctors.

This model will also bleed into the large group market for employer sponsored health coverage. As Ms. Abelson writes in today's New York Times: "Even large employers, worried that the new law will result in higher prices for care as government programs pay less, are reconsidering their earlier stance. When Cigna informally asked some of its clients about their interest in these plans before the legislation passed, very few were receptive. But that has changed"

Indeed, health plans with very tight networks of providers to choose amongst will be the mainstay of the health "exchanges" that the Obama plan stands up in 2014.

The Obama health care czar Nancy-Ann DeParle warns that "any plan sold in the exchanges will have to meet standards developed to make sure patients have enough choice of doctors and hospitals." Good luck enforcing the threat. Having set in motion these economic forces, the Obama team will have to live with the result.

Scott Gottlieb, M.D., is a resident fellow at AEI.

Photo Credit: Bigstock/Andre Blais

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Scott
Gottlieb

What's new on AEI

To secure southern border, US must lead international effort to stabilize Central America
image The Ryan pro-work, anti-poverty plan: Thomas Aquinas 1, Ayn Rand 0
image Does SNAP support work? Yes and no
image Obama Democrats lose their big bet on health exchanges
AEI on Facebook
Events Calendar
  • 21
    MON
  • 22
    TUE
  • 23
    WED
  • 24
    THU
  • 25
    FRI
Monday, July 21, 2014 | 9:15 a.m. – 11:30 a.m.
Closing the gaps in health outcomes: Alternative paths forward

Please join us for a broader exploration of targeted interventions that provide real promise for reducing health disparities, limiting or delaying the onset of chronic health conditions, and improving the performance of the US health care system.

Monday, July 21, 2014 | 4:00 p.m. – 5:30 p.m.
Comprehending comprehensive universities

Join us for a panel discussion that seeks to comprehend the comprehensives and to determine the role these schools play in the nation’s college completion agenda.

Tuesday, July 22, 2014 | 8:50 a.m. – 12:00 p.m.
Who governs the Internet? A conversation on securing the multistakeholder process

Please join AEI’s Center for Internet, Communications, and Technology Policy for a conference to address key steps we can take, as members of the global community, to maintain a free Internet.

Thursday, July 24, 2014 | 9:00 a.m. – 10:00 a.m.
Expanding opportunity in America: A conversation with House Budget Committee Chairman Paul Ryan

Please join us as House Budget Committee Chairman Paul Ryan (R-WI) unveils a new set of policy reforms aimed at reducing poverty and increasing upward mobility throughout America.

Thursday, July 24, 2014 | 6:00 p.m. – 7:15 p.m.
Is it time to end the Export-Import Bank?

We welcome you to join us at AEI as POLITICO’s Ben White moderates a lively debate between Tim Carney, one of the bank’s fiercest critics, and Tony Fratto, one of the agency’s staunchest defenders.

Event Registration is Closed
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.