Disingenuous

We all knew President Obama was disingenuous when he guaranteed that everyone could keep their insurance plans and their doctors with the healthcare takeover. But it is now crystal clear that this promise cannot be kept.

Insurers and physicians are already changing their practices as a result of Obama's plan. The reason behind the changes are because the health reform law caps how much insurers can spend on expenses and take for profits.

• Starting next year, health plans will have a regulated "floor" on their medical-loss ratios, which is the amount of revenue they spend on medical claims
• Insurers can only spend 20 percent of their premiums on running their plans if they offer policies directly to consumers or to small employers
• The spending cap is 15 percent for policies sold to large employers

These regulations are going to have their largest impact on the policies sold directly to consumers. These policies typically cost more to market and have higher medical costs, owing partly to selection by less healthy consumers.

These policies also have high start up costs and if insurers cannot spend more of their revenue getting plans on track, it will lead to fewer new policies being offered and existing ones being eliminated; therefore, patients will not be keeping their insurance.

Other problems created by this takeover are the constraints on how insurance companies can manage their costs:

• Beginning in 2014, a new federal agency will standardize insurance benefits, placing minimum actuarial values on medical policies
• There are also mandates forcing insurers to cover a lot of expensive primary-care services in full
• At the same time, insurers are being blocked from raising premiums -- for now by political jawboning, but the threat of legislative restrictions looms

All of these things will force insurers out of business leading to what was the original plan; a single government entity to offer insurance and dictate care.