NCPA - National Center for Policy Analysis


May 12, 2009

At the heart of President Barack Obama's health-care plan is an insurance program funded by taxpayers, administered by Washington, and open to everyone.  Modeled on Medicare, this "public option" will soon become the single dominant health plan, which is its political purpose. It will restructure the practice of medicine in the process, says Dr. Scott Gottlieb, a former official at the Centers for Medicare and Medicaid Services, is a fellow at the American Enterprise Institute and a practicing internist.

Republicans and Democrats agree that the government's Medicare scheme for compensating doctors is deeply flawed.  Yet Obama's plan for a centrally managed government insurance program exacerbates Medicare's problems by redistributing even more income away from lower-paid primary care providers and misaligning doctors' financial incentives, says Gottlieb:

  • Like Medicare, the "public option" will control spending by using its purchasing clout and political leverage to dictate low prices to doctors (Medicare pays doctors 20 percent to 30 percent less than private plans, on average).
  • While the public option is meant for the uninsured, employers will realize it's easier -- and cheaper -- to move employees into the government plan than continue workplace coverage.

According to the Lewin Group, a health-care policy research and consulting firm:

  • Enrollment in the public option will reach 131 million people if it's open to everyone and pays Medicare rates, as many expect.
  • Fully two-thirds of the privately insured will move out of or lose coverage.
  • As patients shift to a lower-paying government plan, doctors' incomes will decline by as much as 15 percent to 20 percent depending on their specialty.

Physician income declines will be accompanied by regulations that will make practicing medicine more costly, creating a double whammy of lower revenue and higher practice costs, especially for primary-care doctors who generally operate busy practices and work on thinner margins.  For example, doctors will face expenses to deploy pricey electronic prescribing tools and computerized health records that are mandated under the Obama plan.  For most doctors these capital costs won't be fully covered by the subsidies provided by the plan, says Gottlieb.

Source: Dr. Scott Gottlieb, "How ObamaCare Will Affect Your Doctor; Expect longer waits for appointments as physicians get pinched on reimbursements," Wall Street Journal, May 12, 2009.

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