Reducing Provider Networks- Not All the Fault of Obamacare

With all the distractions concerning the appalling Obamacare marketplace roll-out taking center-stage it would be wise for the country to try to keep in mind the bigger picture. It would be wise to remember that the economic/business model of our current health care system is simply unsustainable for the future. This current model spends more, wastes more, and takes up a larger percentage of our economic output than any other country in the world. The model simply has to change or it is going to collapse under its own weight.

Obamacare can (and should) be justifiably criticized for many deficiencies. However, we also need to keep in mind there are many other culprits that have put us in the position we’re in today. Obamacare is not the only cause. There is enough blame to go around for everyone.

United Healthcare recently announced it would be cutting loose between 10 and 20% of its Medicare Advantage provider network across the country. As is the normal plan of action in health care today, there was little communication or dialogue between stakeholders and the action has already resulted in lawsuits, further mistrust, and confusion for seniors as to whether their doctor was going to be part of the Medicare Advantage network in 2014 (especially during the Medicare open enrollment currently underway). The timing sucked for the consumers but it was easy to place the blame on Obamacare with all the other media hype going on today. A spokesman for United Healthcare stated (from the Wall Street Journal),” It’s no secret we are under substantial funding pressure from the federal government.” The message? Blame Obamacare.

Yes, Obamacare did cut funding for the Medicare Advantage plans to the health plans providing them. Numerous studies point to the fact that these became a profit center for health insurance plans and cost 10-15% more than traditional Medicare- and these costs are being funded by the taxpayers. The reduced funding was justified to address the costs of the program.

And yes, in order to address the cost of health care health plans will need to focus on the significant cost differences existing between physicians and hospitals across the country. Remember the Atul Gawande article that showed some areas of the country spend twice the Medicare dollars on health care for no particular reason. Some doctors cost more depending on where they live (see the Dartmouth Atlas if you want proof)

So, while United Healthcare is justified in creating a more cost-effective and efficient provider network they are not justified in blaming Obamacare for the reason. Reducing the provider network is something that could have been done many months ago to avoid putting consumers in the middle. Obamacare simply provided good cover.

Consumers need to be prepared. This won't be the last health insurance organization to make some significant changes to their network. This isn't just about Obamacare- this how a primarily for-profit insurance system is going to react when they finally have to focus on reducing costs. And, that's the ultimate goal.