San Francisco Chronicle
There is profound disagreement about healthcare reform's overall impact on jobs. One study conducted by the Center for American Progress indicates that four million new jobs will be created by health care reform in the next 10 years. However, a study conducted by the Heritage Foundation predicts the loss of 690,000 jobs. How could two estimates be so different?
While the net effect on jobs remains uncertain, it is clear that certain professions will do better than others under healthcare reform. Three jobs likely to get a boost are presented below, along with a discussion of likely pitfalls to look out for in each profession.
Insurance Agents
Insurance agents may get a boost since approximately 32 million uninsured Americans will be required to buy health insurance starting in 2014. Those who do not possess any form of health insurance will pay a $695 fine (or 2.5% on their income), providing a strong incentive to secure at least a minimum form of coverage.
On the other hand, insurance agents may lose out in some ways. First, new rules require health insurance companies to pay out at least 80% of their premiums (known as a loss ratio or combined ratio) for claims on individual and family insurance plans (and 85% in the employer/large group market). For example, if a company took in $100 million but only paid out $77 million as medical expenses, they would be required to reimburse $3 million to holders. This means that only 20% is left over to fund all other insurance company operating costs, including agent commissions. While agent commission can vary considerably, they generally run in the neighborhood of 10% to 15% of the first year's premiums, and then a reduced commission in the years to follow. With the new restriction, only 5-10% would be left for all other administrative costs including profit margins. Thus it appears likely that agent commissions may shrink as a result of the health reform law.
Second, new insurance exchanges will be set up to facilitate purchasing individual and family health insurance. While details are still murky, it appears that companies will be required to sell certain "minimum benefit" plans through these exchanges. The exchanges are meant to allow greater transparency of coverage, and facilitate consumer comparisons between plans. Thus, it might become easier for individuals to buy insurance without the help of an agent.
Doctors
Certain doctors can look forward to increases in Medicare payments under the health reform law. According to the American Medical Association, family medicine, internal medicine, geriatric and pediatric physicians will be eligible for 10% incentive payments from 2011-2016 if they meet certain requirements. General surgeons operating in "health professional shortage" areas will also get the 10% incentive. In addition, Medicare payments for psychotherapy increased 5%. Under related legislation, certain payments under Medicaid were also increased.
While any increase in payments is likely to be well received, critics of these programs claim that payments remain far too low considering both the cost and the market value of many procedures. Often the amount paid to doctors by private insurance companies is far higher. In a growing trend, the Mayo Clinic branch in Glendale, Arizona stopped accepting Medicare patients as of January 1, 2010. The Mayo Clinic lost $840 million in 2009 on Medicare patients, spokeswoman Lynn Closway told Bloomberg News. Therefore, despite this payment increase, the fact that more Americans will become eligible for Medicare and Medicaid in Michigan under the health reform law may be bad news for doctors' pocketbooks.
Entrepreneurs/Self-employed
The somewhat unlikely winners in the health reform law may be entrepreneurs and other self-employed persons. Prior to the health reform law, larger group insurance plans provided by employers had a number of advantages over individuals attempting to buy health insurance on their own. Thus, the benefits of obtaining high quality health insurance through one's job could sometimes act as a considerable barrier for those who would consider entrepreneurship or other forms of self-employment.
Since many of the provisions in the health reform law aim towards leveling the playing field, allowing entrepreneurs to buy plans with greater transparency, and (in theory) at better rates through insurance exchanges. Entrepreneurs may be worse off, however, if they would have opted for low-cost "catastrophic" health insurance plans in order to minimize overhead in new ventures. Since the health reform law will require a minimum level of benefits from insurance plans sold through insurance exchanges, these types of plans may no longer be sold.
While the net effect on jobs remains uncertain, it is clear that certain professions will do better than others under healthcare reform. Three jobs likely to get a boost are presented below, along with a discussion of likely pitfalls to look out for in each profession.
Insurance Agents
Insurance agents may get a boost since approximately 32 million uninsured Americans will be required to buy health insurance starting in 2014. Those who do not possess any form of health insurance will pay a $695 fine (or 2.5% on their income), providing a strong incentive to secure at least a minimum form of coverage.
On the other hand, insurance agents may lose out in some ways. First, new rules require health insurance companies to pay out at least 80% of their premiums (known as a loss ratio or combined ratio) for claims on individual and family insurance plans (and 85% in the employer/large group market). For example, if a company took in $100 million but only paid out $77 million as medical expenses, they would be required to reimburse $3 million to holders. This means that only 20% is left over to fund all other insurance company operating costs, including agent commissions. While agent commission can vary considerably, they generally run in the neighborhood of 10% to 15% of the first year's premiums, and then a reduced commission in the years to follow. With the new restriction, only 5-10% would be left for all other administrative costs including profit margins. Thus it appears likely that agent commissions may shrink as a result of the health reform law.
Second, new insurance exchanges will be set up to facilitate purchasing individual and family health insurance. While details are still murky, it appears that companies will be required to sell certain "minimum benefit" plans through these exchanges. The exchanges are meant to allow greater transparency of coverage, and facilitate consumer comparisons between plans. Thus, it might become easier for individuals to buy insurance without the help of an agent.
Doctors
Certain doctors can look forward to increases in Medicare payments under the health reform law. According to the American Medical Association, family medicine, internal medicine, geriatric and pediatric physicians will be eligible for 10% incentive payments from 2011-2016 if they meet certain requirements. General surgeons operating in "health professional shortage" areas will also get the 10% incentive. In addition, Medicare payments for psychotherapy increased 5%. Under related legislation, certain payments under Medicaid were also increased.
While any increase in payments is likely to be well received, critics of these programs claim that payments remain far too low considering both the cost and the market value of many procedures. Often the amount paid to doctors by private insurance companies is far higher. In a growing trend, the Mayo Clinic branch in Glendale, Arizona stopped accepting Medicare patients as of January 1, 2010. The Mayo Clinic lost $840 million in 2009 on Medicare patients, spokeswoman Lynn Closway told Bloomberg News. Therefore, despite this payment increase, the fact that more Americans will become eligible for Medicare and Medicaid in Michigan under the health reform law may be bad news for doctors' pocketbooks.
Entrepreneurs/Self-employed
The somewhat unlikely winners in the health reform law may be entrepreneurs and other self-employed persons. Prior to the health reform law, larger group insurance plans provided by employers had a number of advantages over individuals attempting to buy health insurance on their own. Thus, the benefits of obtaining high quality health insurance through one's job could sometimes act as a considerable barrier for those who would consider entrepreneurship or other forms of self-employment.
Since many of the provisions in the health reform law aim towards leveling the playing field, allowing entrepreneurs to buy plans with greater transparency, and (in theory) at better rates through insurance exchanges. Entrepreneurs may be worse off, however, if they would have opted for low-cost "catastrophic" health insurance plans in order to minimize overhead in new ventures. Since the health reform law will require a minimum level of benefits from insurance plans sold through insurance exchanges, these types of plans may no longer be sold.
The Bottom Line
It is clear that due to a law that will spend $928 billion over the next decade some professions will fare better than others. Since there is so little agreement regarding this bill, you'll have to judge the debate for yourself. The net effect on many jobs will depend on how fine details of the new law are put into action. Things will change, but if you are in the right industry you could get more that just health benefits.
