Kiss Your Health Plan Goodbye

WASHINGTON-As the Senate votes this morning on a revised health "reform" bill from the Democratic leadership, it's worth recalling President Obama's repeated promise that "if you've got health insurance, you like your doctors, you like your plan, you can keep your doctor, you can keep your plan."

Would that it were true.

Democrats brag that 30 million people would supposedly get insurance for the first time; that annual and lifetime limits on benefits would be prohibited; and that insurance coverage could not be denied because of personal health history.

Nevertheless, the bill's $800 billion plus price tag is funded by tax increases and supposed Medicare savings that, if the past is any guide, will never materialize. Mandatory insurance would be overly generous and expensive. Premiums would rise, bending the health care cost curve up rather than down.

Most important for people's ability to keep their current plans and doctors, wholesale regulations on insurance companies would turn health insurers into "de facto public utilities," writes University of Chicago law professor Richard Epstein, changing the types of services they offer and putting some out of business.

This means that although polls show that the majority of Americans are content with their health care, many would not be able to keep their plans. Anyone willing to read through the manager's amendment, the final version of the Senate Democratic bill presented to senators only last weekend can find a myriad of examples why.

Medicare. Take senior citizens, for example, who are mostly satisfied with their chosen Medicare doctors. In 2019, when the bill is fully phased in, home health care will be cut by $10 billion; Medicare Advantage, a plan now chosen by 11 million seniors, will be slashed by $22 billion; and payments for most Medicare services will be cut by $46 billion. In addition, Section 10406 of the bill states that Medicare beneficiaries will not have to make co-payments or satisfy deductibles for any preventive services.

All these provisions will reduce doctors' incomes. What patients avoid paying will be taken out of physicians' reimbursements, and with payments for Medicare services whittled down, it's likely that fewer doctors will accept Medicare patients. You might want your doctor-but will he want you?

Multi-State Plans. The public insurance plan sought by Mr. Obama and dear to liberals may have vanished, but it has been replaced in the Senate bill by multi-state plans to be directed by the government's Office of Personnel Management (see Section 1334). OPM is directed to set up at least two plans per state, without regard to federal laws requiring competitive bidding.

Multi-state plans would be public plans in all but name. They would deliver a package of essential health benefits, they would be able to charge the oldest enrollees not more than three times as much as the youngest, and their profit margins would be restricted.

Companies would be able to apply to OPM for the contract if they offered plans in every one of the 50 states. That would create a bias in favor of the biggest underwriters. It's not hard to see that if these plans fell upon hard times because of the new regulations, then the federal government would bail them out.

Many employers would find it advantageous to stop offering insurance, forcing their employees into the new multi-state plans.

Free Choice Vouchers. The bill before the Senate this morning encourages employers to drop health insurance altogether with the introduction of so-called "free choice vouchers" that employers would give to certain employees to purchase health insurance in the health exchange (Section 10108). The value of the voucher must equal the sum that the employer would pay towards an employee's premium.

Vouchers, a favorite free-market idea, could provide a way for workers to pick their own health insurance plans without mandatory ties to employer health plans. But the vouchers in the Democratic bill are anything but free choice, because they can be used only in the health exchanges, and the health exchanges offer only the generous, expensive, qualified benefit plans.

Employers must offer these "free choice vouchers" to workers whose premium contributions fall between 8% and 9.8% of their incomes-not higher, not lower-and who are under 400% of the poverty line (approximately $88,000 for a family of four).

Flexible Spending Accounts and High-Deductible Plans. Many employers administer flexible spending accounts, tax-free accounts using funds deposited by employees out of pretax earnings to be used for medical expenses, often in combination with high-deductible plans that charge lower premiums. The current maximum allowed in the FSA is $5,000. The health "reform" bill would prohibit these high deductible plans in the health exchanges and limit the amount allowed deposited annually in a flexible spending account to $2,500 beginning in 2011.

These are just four of the many complex provisions in a bill that makes changes from earlier iterations of the Senate bill, and would also change existing law. It is doubtful that senators understand most of the provisions of the bill and their effects on existing insurance plans.

But one thing is clear-despite Mr. Obama's optimistic promise, the odds are that you won't be able to keep your current plan as it is now, even if you like it.