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Forbes.com

 

Obamacare Drives UnitedHealth To Downsize Its Medicare Physician Networks

November 18, 2013

By Avik Roy

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Over the past two weeks, there’s been a lot of coverage of the President’s misleading promise that "If you like your plan, you can keep your plan. No matter what. Period." But we mustn’t forget that there was a second part to that promise: "If you like your doctor, you will be able to keep your doctor. Period." It turns out that isn’t necessarily true, either. On Saturday, the Wall Street Journal reported that, due to Obamacare’s cuts to Medicare Advantage, among other factors, UnitedHealth expects its network of physicians "to be 85 percent to 90 percent of its current size by the end of 2014." The result? Some retirees enrolled in Medicare Advantage will need to find new doctors. And it’s a trend that could accelerate in future years.

Obamacare cuts Medicare to fund coverage expansion

First, some background. Over the next ten years, Obamacare was designed to spend around $1.9 trillion on expanding health coverage to the uninsured. The law pays for this new spending with $1.2 trillion in new taxes, and $716 billion in cuts to Medicare, relative to prior law. Of the $716 billion in Medicare cuts, more than one-fifth—$156 billion—comes from cuts to the market-oriented Medicare Advantage program. Medicare Advantage, also known as Medicare Part C, allows private insurers to administer the Medicare benefit; more than one-quarter of all seniors are enrolled in this program.

The logic for cutting Medicare Advantage—and it’s not an unreasonable one—is that prior to Obamacare, taxpayers paid $1.14 to cover a Medicare Advantage enrollee for every dollar they paid to fund someone in the traditional, single-payer Medicare program. The Affordable Care Act cuts 14 cents from the Medicare Advantage reimbursements in order to bring the two programs in line.

‘Doctors in at least 10 states have received termination letters’

The private insurers who supply Medicare Advantage plans, like UnitedHealth and Humana, have been responding to the cuts by squeezing out inefficiencies in the way they deliver care. One obvious way to do that is to pay doctors and hospitals less—or kick out the providers who refuse to accept lower reimbursement rates. And that’s what United has done, according to the WSJ report from Melinda Beck.

"Doctors in at least 10 states have received termination letters, some citing ‘significant changes and pressures in the health-care environment,’" writes Beck. "The notices also tell doctors they can appeal within 30 days. That means many physicians and patients won’t know for sure who is in or out of UnitedHealth’s Medicare Advantage networks before the open-enrollment period to switch Medicare plans ends on Dec. 7."

According to Beck, "Among the practices UnitedHealth has dropped are Moffitt Cancer Center in Tampa, Fla., and the Yale Medical Group in New Haven, Conn., which includes 1,200 faculty physicians." Yale physicians are not the most sympathetic group; the Yale-New Haven Health System exerts near-monopoly power in Connecticut, and uses that power to keep prices high. It’s not surprising that UnitedHealth would drop them in an effort to keep costs down.

Notably, Beck reports that United’s competitors are not shrinking their networks as aggressively. "Other Medicare Advantage [plan] providers, including Humana Inc., Aetna Inc., and WellPoint Inc., said they are always evaluating their provider networks, but doctor groups say none appear to be shrinking them to the extent of UnitedHealth." But United is the nation’s largest supplier of Medicare Advantage plans, due in part to their marketing deal with the AARP.

Another unrealistic—and misleading—Obama promise

Given the fiscal unsustainability of the Medicare program, it’s a good thing that insurers are doing everything they can to keep costs down. But keeping costs down will involve shutting thousands of doctors out of the physician networks that private insurers use. And these Medicare cuts aren’t being used to make Medicare more solvent or to reduce the deficit. They’re being used to offset increased spending elsewhere.

The President made a categorical promise: "If you like your doctor, you will be able to keep your doctor. Period." It’s another promise without which Obamacare would have never become law. And it’s a promise the President could never have sincerely intended to keep.

Original Source: http://www.forbes.com/sites/theapothecary/2013/11/18/do-you-like-your-doctor-obamacare-drives-unitedhealth-to-downsize-its-medicare-physician-networks/

 

 
 
 

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