The new insurance plan is to cut off doctors

Before health reform passed insurance companies had an easy way to game the system.

They managed risks.

If you were sick, or likely to become sick, you were a risk not worth taking. That's what the whole "pre-existing conditions" debate was about, limiting risks by only insuring those least likely to have claims.

As business policy it's hard to argue with. It's what carriers do in every other field. If you have a lot of car accidents you pay more. Same if your contracting company has a lot of accidents. The same thing is true in life insurance, as you age.

Insurance companies aren't banks. They're bookies.

But health insurers can't play that game any more. In exchange for forcing consumers to buy insurance, they can no longer refuse coverage to anyone. Their ability to manage risks on the income side is limited.

It is now clear how they plan to handle this. By cutting off doctors.

The most efficient medical plans in America have long been those offered by companies like Kaiser and Intermountain which also provide care, and which thus have an incentive to keep the costs of care low, and the power to enforce the policy.

So, in an effort to emulate such plans, UnitedHealth has been buying IT companies like mad.

Through its Ingenix subsidiary it has made a half-dozen acquisitions in the last 18 months, building a suite of systems that can monitor what doctors charge, and pushing their own health record system on community clinics, many of whom already charge low rates.

They have also been rolling out new plans which don't let patients go out-of-network, and limit the networks to those practices whose costs they consider reasonable.

The American Medical Association is angry over this. They call it "physician profiling." Knowing they are on shaky political ground, they insist they're not against the idea of cost control. They just don't like how the insurers are doing it.

Systems like the Mayo Clinic have proven there need not be a conflict between excellence and cost. But that's not why insurers are turning to cutting off doctors. They just want to manage risk, and if they can't manage it on the revenue side they will manage it on the cost side.

It's a long-term trend given new impetus by health reform, for which cost-cutting is an important feature.

The insurers' actions may even have a political benefit. Over the last few years many doctors and hospitals have cut themselves off from Medicare and Medicaid, insisting their reimbursement rates are too low. As insurance companies cut-off high-cost clinics and hospitals from their networks, some will have to rethink that position or go out of business.

This post was originally published on Smartplanet.com