NCPA - National Center for Policy Analysis


December 11, 2008

Doctors, hospitals and insurers are watching and waiting to see what the future of health care will be during the presidency of Barack Obama.

Obama's proposal has three main facets:

  • A key component is guaranteed eligibility for coverage, regardless of health status and history.
  • Efficiencies could stem from mandated investments in information technology for medical and insurance records.
  • The delivery of health care would emphasize wellness and prevention as much as treatment.

Major reform will likely be limited until the nation's economy improves, however, politics could push reform to the forefront earlier than Obama intends, says Devon Herrick, senior fellow and health economist at the National Center for Policy Analysis. 

"Whether he was ready for it or not, he might find himself engaged in the fight the first day or so," Herrick says.  "You could end up with a hodgepodge of what may or may not go together very well."

Estimates to cover the uninsured and subsidize health care are already as high as $1.6 trillion over 10 years, says Herrick.  Furthermore, the Obama plan could have mixed results for health-care providers and insurers:

Hospitals could see increased revenue because of an increase in the number of patients with coverage.

  • Doctors will likely be split, with some winners and some losers.
  • And the insurance industry will likely lose profitability.

Insurers "would be competing with expanded public coverage," explains Herrick.  "If it's a federally sponsored or chartered plan, they could have their fees squeezed way down and face increased regulations."

Private insurers could be crowded out of the marketplace, losing much of their bargaining power when it comes to negotiating rates.  Efforts to increase premiums could see more regulation.

"If I were an insurance company, I would be concerned," says Herrick. "My fear is his proposal would not really allow for much choice in the marketplace."

Source: Jennifer Thomas, "Change is coming -- to your health plan: What the Obama presidency may mean for patients, hospitals, physicians and insurers," Charlotte Business Journal, December 10, 2008.

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