Where Private Health Insurance Is Headed

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.


  1. Reed Abelson, “Insurers Push Plans That Limit Choice of Doctor,” New ­York ­Times, July 18, 2010.

[Cross-posted at Psychology Today]

John C. Goodman is a Research Fellow at the Independent Institute, President of the Goodman Institute for Public Policy Research, and author of the Independent books, Priceless: Curing the Healthcare Crisis and A Better Choice: Healthcare Solutions for America.
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