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Insurers and Employers, Not Government, Limiting Choice of Doctors

July 18, 2010

During the heated debate over health care reform, President Obama repeatedly insisted that under his proposal, "you can keep your doctor." But the President was also careful to add the important caveat, "what I'm saying is the government is not going to make you change plans under health reform." Which is exactly right. But by shifting costs to employees or dropping coverage altogether, American employers for years have been limiting workers' ability to choose which doctor - if any - they can see. And now, as the New York Times reports, private insurers are increasingly making that choice for them.
In his September 2009 address to Congress, President Obama made this commitment:

"First, if you are among the hundreds of millions of Americans who already have health insurance through your job, Medicare, Medicaid, or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor you have. Let me repeat this: nothing in our plan requires you to change what you have."

Not the government. But as the Times reported Sunday, insurance companies and the employers who purchase coverage from them are another matter altogether. Initially targeting cost-conscious smaller businesses which already provide insurance to their employees, "the country's biggest insurers are promoting affordable plans with reduced premiums that require participants to use a narrower selection of doctors or hospitals."

But large employers, as well, are starting to show some interest, and insurers and consultants expect that, over time, businesses of all sizes will gravitate toward these plans in an effort to cut costs.

The tradeoff, they say, is that more Americans will be asked to pay higher prices for the privilege of choosing or keeping their own doctors if they are outside the new networks. That could come as a surprise to many who remember the repeated assurances from President Obama and other officials that consumers would retain a variety of health-care choices.

Of course, if this erroneous criticism sounds familiar, it should. Last summer, health insurance groups and their Republican front men trotted out industry-funded reports to warn of the chaos passage would bring, bogus claims dutifully reported by ABC News and others. As Karl Rove parroted the thoroughly debunked talking point, "The Lewin Group estimates 70% of people with private insurance -- 120 million Americans -- will quickly lose what they now get from private companies and be forced onto the government-run rolls as businesses decide it is more cost-effective for them to drop coverage."
Of course, dropping coverage and limiting choice of doctors has been underway for years, just not by the government.
A 2007 report from the Economic Policy Institute revealed the rapid - and dramatic - decline in employer-provided health care. The drop-off from 64.2% of Americans covered through workplace insurance in 2000 to just 59.7% in 2006 alone added 2.3 million more people to those without coverage. Census data since showed workplace coverage dipped further in 2007, down to an alarming 59.3%. A recent Thomson Reuters survey put the figure for 2009 at a stunning 54.6%. Other data from the U.S. Census revealed that it was only the expansion of government programs including SCHIP and Medicaid which offset the erosion of employer coverage in 2008.
A report last year from the consulting firm PricewaterhouseCoopers forecast employers will face a 9% increase in health insurance costs in 2010. 42% of those business surveyed will pass at least some the new burden on to their workers. As PWC's Michael Thompson concluded last June:

"If the underlying costs go up by 9%, employees' costs actually go up by double digits," he said, noting that will have a "major, major impact" when many employers also are freezing or cutting pay.

And recent surveys by the National Business Group on Health and the Kaiser Family Foundation found that the situation is quickly worsening. While the NBGH sampling of 507 firms each with over 1,000 employees revealed that 56% will hold workers responsible for a greater share of health care costs next year, the September Kaiser study was grimmer still:

Forty percent of employers surveyed said they are likely to increase the amount their workers pay out of pocket for doctor visits. Almost as many said they are likely to raise annual deductibles and the amount workers pay for prescription drugs.

Nine percent said they plan to tighten eligibility for health benefits; 8 percent said they plan to drop coverage entirely. Forty-one percent of employers said they were "somewhat" or "very" likely to increase the amount employees pay in premiums -- though that would not necessarily mean employees are paying a higher percentage of the premiums.

Which is exactly the case at one of the firms choosing one of the lower cost, more restrictive insurance plans cited by the New York Times today:

"What this does is eliminate the Gucci doctors," said Peter Skoda, the controller of the Haro Bicycle Corporation, a Vista, Calif., business that employs 30 people. Facing a possible 35 percent increase in its rates, Haro switched to an Aetna plan that prevents employees from seeing doctors at two medical groups affiliated with the Scripps Health system in San Diego. If employees go to one of the excluded doctors, they are responsible for paying the whole bill...

The company's premiums average $433 a month, Mr. Skoda said, with employees paying one-fourth of the expense. A few employees opted for more traditional coverage, enabling them to go where they please. But they are paying significantly higher deductibles and out-of-pocket costs that could add thousands of dollars to their medical bills.

Seizing on the New York Times article and another Boston Globe piece today, conservative bloggers were quick to pronounce "Obamacare, one big HMO" and wrongly conclude "no, you cannot keep your doctor." Of course, we've been here before. Long before she introduced the easily debunked "death panels" fraud, Betsy McCaughey almost single-handedly undid the Clinton health care reform effort with the false claim that "The law will prevent you from going outside the system to buy basic health coverage you think is better." Fifteen years later, GOP spinmeister Frank Luntz urged Republicans opposing Democrats on health care reform to "call for the 'protection of the personalized doctor-patient relationship.'"
Of course, Americans' choice of doctors and the "doctor-patient relationship" was never jeopardized by President Obama and his health care reform, the first provisions of which are just now starting to kick in. That threat comes - as it has for years - from the private insurance market.


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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