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Choice and Competition Death Watch

On the campaign trail and all through the first year of his administration, President Obama touted the benefits of his health care plan. One of the often repeated phrases that his legislation sought to increase choice and competition in the health market. Across the right it was widely predicted that the kind of legislation that the President was seeking would provide for just the opposite effect. We would in fact see a decrease in choice and competition.

We were right.

One doesn’t have to look much farther than a few key events of the past two weeks to see that the President’s pet legislation is having disastrous effects in the health care market.

It was just two weeks ago that many of the nation’s largest health insurer announced (albeit quitely) that they would no longer be issuing child only policies. This was a direct response to the portion of the legislation that required insurance companies to make all child policies guaranteed issue (meaning that coverage cannot be denied for preexisting conditions).

Last week, McDonald’s requested a waiver from the federal government from a provision of the new law that requires a certain percentage of premiums that must be spent on benefits. Many companies like McDonald’s only offer “mini-med” coverage which has capped annual benefits. Without the waiver, McDonald’s and many other businesses will no longer be able to offer affordable health benefits to all of their employees.

On Thursday, the Association of American Medical Colleges released estimates that the current legislation will increase the shortage of physicians in 2015. Their figures say that the shortage will be 50% worse than it was before this legislation. This owes to the fact that while increasing health insurance coverage for millions of Americans was the primary goal of this legislation, little was done to address the supply issues that come with that dramatic of an increase in demand.

Finally, just yesterday the Wall Street Journal reported that 3M would be making changes to it’s retiree health plan options as a result of the legislation. Instead of offering a company sponsored health plan, retirees will now receive a reimbursement to purchase health insurance on their own. Anyone who has ever purchased health care in the individual market will tell you that there is definitely going to be a huge amount of sticker shock as the reimbursement will likely never be as generous as the subsidy the company was paying for their health plan.

What should be clear by now is that this is just the beginning of the highly anticipated (for those of us who were paying attention and knew how the health insurance market worked) and probably hoped for repercussions of the new legislation (because what better way to get a bigger piece of the pie for the government than to make the government the only player in major parts of the market).

Choice and Competition Death Watch will be a semi-regular feature.

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