“If you like your health care plan you can keep it.” This was a mantra from President Obama throughout the health care debate. The President also promised that his health care overhaul would not affect seniors’ benefits.

But, despite all the promises, a new report from Avalere Health shows that, in addition to the upheaval caused by Obamacare, the Medicare bureaucracy is taking administrative steps to change the Medicare drug program that will have adverse impact on seniors’ choices. Millions of seniors will have to switch their prescription drug plans due to changes within Medicare. Avalere is a private research firm founded by a former budget official from the Clinton Administration.

Its analysis shows that more than 3 million seniors—roughly 20 percent of those enrolled in stand-alone drug plans—won’t be able to keep their current plan. According to the AP’s Ricardo Alonso-Zaldivar, some of seniors’ drug plans will be eliminated as “Medicare tries to winnow down duplicative and confusing coverage, in order to offer consumers more meaningful choices.”

But what ‘more meaningful choice’ really means is fewer choices. And for many seniors who like their current prescription drug coverage, it will mean making a new choice altogether, whether they want to or not.

According to Bonnie Washington, one of Avalere’s senior analysts, “those who have to change plans could experience some disruption and inconvenience.”

Medicare officials tried to pooh-pooh the study. Said Deputy Administrator Jonathan Blum: “Anybody who is producing that kind of analysis is simply guessing.” However, Avalere claims that it used Medicare’s own specifications to produce its findings.

The extent to which the change will disrupt seniors’ drug benefits will depend on Medicare’s strategy for implementing the transition. But what is crystal clear is that a transition will be necessary. If Medicare eliminates coverage options, seniors will inevitably have to change their drug plans—not withstanding presidential promises to the contrary.

This post was co-authored by Margot Crouch.

Obamacare requires insurers to meet a federally-specified medical loss ratio. That is, they must spend a certain percentage of premiums on medical expenses. The remainder can be used to cover administrative costs and, if there’s anything left, profits. But if insurers don’t shell out enough in medical losses to meet the requirement, they’ll have to rebate the difference to policyholders

The idea is to limit insurers’ profits and create incentives to reduce administrative costs. But it’s not as clear cut as it sounds. After all, what exactly counts as a medical expense?

“Is giving patients access to a team of nurses to discuss and monitor their health really an administrative function?” Newt Gingrich and David Merritt ask. “What about a fraud-prevention program that targets criminal providers who endanger patient care?” How Obamacare answers these kinds of questions is vitally important. If it labels many initiatives like these “administrative costs,” insurers will find it increasingly difficult to stay in business.

The National Association of Insurance Commissioners (NAIC) has been tasked with defining what is and is not a medical cost. Jennifer Haberkorn reports for Politico that “top House and Senate chairmen want to include as many items as possible on the administrative side of the ledger, which would make the quota harder to reach.” But “The NAIC has signaled that it’s not likely to side with the Democrats over where to count federal taxes in the calculation, among other issues.”

The decision ultimately rests with Health and Human Services Secretary Kathleen Sebelius. If she adheres to the recommendations from NAIC, she could face the discontent of congressional leadership. But following them loosely would risk being seen as “playing politics on a highly controversial piece of legislation.”

A broad definition of administrative expenses could be disastrous for private insurance. Heritage’s Robert Book writes, “By putting an inflexible ceiling on how much insurers can spend on medical costs and how much they can charge in premiums—without any limit on what cost they could be required to incur—this legislation opens the door to the complete elimination of people’s ability to choose private health plans.”

If private insurers are forced out of the market, what would be left? The answer should come as no surprise. Obamacare includes a placeholder for a public option: health plans offered through the exchanges by private insurers, but ultimately defined by the federal Office of Personnel Management. It appears that these plans won’t be held to the same rules applied to other :”private” plans—including the rules governing medical loss ratios.

There’s a lot riding on NAIC’s recommendations and the extent to which Secretary Sebelius follows them. To learn more, click here.

Editor’s Note: On the right, please watch our exclusive interview with Indiana Governor Mitch Daniels, and then below, please read an original guest blog to The Foundry from the Governor himself.

We’ve been through a global recession. Now we’re fighting through a stalled recovery. Revenues are the lowest they’ve been in half a century. Their finances a wreck, many states have effectively sunk into bankruptcy.

Indiana is still afloat. In fact, we’ve fared better than most. We continue to meet our obligations without raising taxes, and the reserves we carefully built and protected will get us through the downturn.

But as if we did not already have enough on our plates, the passage and implementation of Obamacare presents us with a whole new set of challenges and a costly to-do list.

I note with special sadness that first and foremost amongst the bill’s consequences will be the probable demise of the Healthy Indiana Plan (HIP). This program is currently providing health insurance to 50,000 low-income Hoosiers. With its Health Savings Account-style personal accounts and numerous incentives for healthy lifestyle choices, it has been enormously popular and successful.

Obamacare’s expansion of Medicaid, soon to cover one in every four citizens, will not only scoop up most of HIP’s participants, but will also cost the state between $3.1 and $3.9 billion over the next decade. It is hard to see how my successors as governor will be able to avoid a steep state tax increase to pay for it. Meanwhile, our medical device companies and small businesses will shed jobs as they wrestle with the taxes and penalties levied to help finance Washington’s “reforms.”

Of course, it’s a misnomer to even refer to this as “reform.” It doesn’t reform anything. Instead, it perpetuates and magnifies all the worst aspects of our current system: fee for service reimbursement, “free” to the purchaser consumption, and an irrationally expensive medical liability tort system. It’s a sure recipe for yet more overconsumption and overspending.

There were better options.

Since my election, my state coworkers have had the choice of Health Savings Accounts in lieu of traditional health care plans. The first year this option was made available, some 4 percent of us signed up for it. Six years later, more than 70 percent of our 30,000 state workers have opted for the personal account.

This trend has had a startlingly positive effect on costs for both employees and the state. State employees enrolled in the consumer-driven plan saved more than $8 million in 2010 compared to their coworkers in the old-fashioned preferred provider organization (PPO) alternative. Indiana will save at least $20 million in 2010 because of our high HSA enrollment.

It has also been the source of significant changes in behavior, as state workers with the HSA visit emergency rooms less frequently and are more likely to use generic drugs than co-workers with traditional health care. Hoosiers enrolled in HIP have experienced similar changes in behavior with generic drugs now accounting for 84 percent of all prescriptions used by enrollees.

This is a sharp contrast to the prevalent model of health plans in this country that encourage individuals to buy health care on someone else’s credit card. What seems free will always be overconsumed, compared to the choices a normal consumer would make. Hence our plan’s immense savings.

The condescension of the “reformers” is misplaced. It turns out that typical Americans are neither too dense nor too intimidated to make sound decisions about their own health. This is, of course, a fact that national policy makers sadly ignored during their overhaul of our health are system. Now the rest of us are left to pick up the pieces.

It’s not just the majority of American voters who are itching from the rash of regulations, taxes and government bureaucracy that has stemmed from Obamacare. Small physician groups aren’t ecstatic with the White House’s latest effort to cajole them into swallowing some bitter pills regarding their day-to-day operations.

This week, several Obama administration officials, including a former member of the National Economic Council, published an article in the Annals of Internal Medicine that urged doctors to “embrace rather than resist change” coming from the new health reform law, which passed in March. These changes include the likely demise of many small physician practices as part of “vertical organization” approaches that would promote more hospitals and large-group practices.

“Physicians who embrace these changes and opportunities are likely to deliver the greatest benefits to their patients, the health system, and themselves,” according to the article, which was written by Nancy-Ann DeParle, Dr. Ezekiel Emmanuel and Dr. Robert Kocher.

But doctors are not buying the Obamacare agenda. Robert Lowes, writing for Medscape Medical News, reported that leaders of several physician groups, including the American College of Physicians, believe small practices should still be a viable delivery method in America’s health care system.

Health policy expert Robert Moffit detailed in a new Web Memo that regulation in Obamacare regarding Medicare payments irrevocably changes the doctor-patient relationship, undercuts physicians’ freedom to remain in smaller private practices, and threatens the continuation of fee-for-service medicine.

Not only will doctors likely be “coerced into standardizing patient care,” Moffit said they’ll also face pressure to participate in an Accountable Care Organization (ACO), a voluntary grouping of health care providers that agree to be accountable for the overall care of Medicare fee-for-service patients they are assigned to.

“In other words, the ACO will provide the bulk of [Medicare] beneficiaries’ primary care services…While consortia of health care providers (including university hospitals and large clinics) have experimented with the concept, ACOs are still a work in progress.”

Health officials in the Medscape article expressed concern that such regulation would prompt more doctors in small-group practices to leave medicine altogether. “If a physician’s only choice is to join a large corporation, we’re going down the wrong path,” former Heritage visiting fellow Dennis Smith said in the article. “We have the greatest health care system in the world because physicians have been independent.”

Approximately 32 percent of American doctors practiced in solo or two-physician offices in 2008, while 15 percent practiced in group offices of three to five physicians, according to a recent physician survey by the Center for Studying Health System Change.

Health care isn’t something most students worry about. Government stats show about 80 percent of college students are covered under a parents’ plan. For them, Obamacare may mean they can keep the insurance they already have for a few years beyond college, but it won’t affect the coverage they carry during school.

But what about kids without parental coverage? The new law’s requirement that insurance cover children up to age 26 won’t make any difference for them.

Currently, college students without coverage can enroll in low-cost student health plans offered through universities. These plans may include limits to keep costs down, but are often designed around to complement university health services to provide comprehensive coverage. Affordability is further achieved by rating student health plans on a campus-wide basis rather than according to the whole individual market.

Seven percent of students currently receive coverage from their school, but that could change under Obamacare, a concern that the American Council on Education expressed in a recent letter to Health and Human Services Secretary Kathleen Sebelius.

“The application of several provisions under the Patient Protection and Affordable Care Act (ACA), including certain insurance market reforms and the individual mandate, could make it impossible for colleges and universities to continue to offer student health plans,” the Council warns.

As the new law currently stands, it’s unclear whether student health plans would meet federal requirements to qualify as minimum essential coverage. If they don’t, students would have to find coverage elsewhere or pay the individual mandate in addition to the premiums of their student health plan.

Though the law includes a rule that institutes of higher education will not be prohibited from offering student insurance plans, the Council explains that problems arise because, “Short-term limited duration insurance, including many student health plans, does not qualify as either group health insurance coverage or individual health insurance coverage under the existing Public Health Service Act (PHSA) definitions. As a result, a student with comprehensive SHP coverage would not satisfy the minimum essential coverage requirement due to a definitional technicality.”

Schools may also find that some provisions of Obamacare might forbid them from offering coverage solely to their student populations, rather than the individual market at large.

Critics of student health pans, who see these low-cost options as inadequate, would prefer to apply Obamacare’s rules to student coverage. But, as Julie Appleby writes for Kaiser Health News, colleges fear that “requiring them to meet even some of the new rules could drive up premiums.”

Removing affordable options would likely discourage many students from carrying insurance altogether—yet another example of how Obamacare, which was supposed to improve insurance coverage, may end up making it worse.

A new messaging strategy, based on public polling results from top Democratic pollsters, suggests that congressional lawmakers should wave the white flag when discussing Obamacare in their election campaigns. The PowerPoint presentation, released in a conference call organized by Families USA, encouraged officials to “keep claims small and credible: don’t overpromise or ‘spin’ what the law delivers.”

In other words, abandon ship on claims that lawmakers made for months during the health reform debate—that the legislation would in any way reduce the nation’s deficit or lower health care costs (in fact, this was a recommendation in the presentation’s “not-to-do” list).

But wait, weren’t those the main reasons why President Barack Obama in July 2009 pressed for a fast-track passage of a massive overhaul to our health care system? At a prime-time press conference during a contentious summer when many Americans expressed uncertainty, here’s how the President justified the urgency:

“If we do not control these [health care] costs, we will not be able to control our deficit,” Obama said. “If we do not reform health care, your premiums and out-of-pocket costs will continue to skyrocket.”

Well, the Obama Administration got its “reform,” and the public was left with revised projections of higher deficits. Plus, workers can expect smaller paychecks next year as many businesses plan to pass higher health care costs onto their employees.

The new findings highlight what many pollsters have been reporting for months following the passage of the new health law:

– Many don’t believe this health reform will help the economy.

– Voters are concerned about rising health care costs and believe costs will continue to rise.

– Women in particular are concerned that health law will mean less provider availability—scarcity an issue.

But that’s okay, because Obamacare proponents can use “transition” or “bridge” language to let the public know that “the health care law is not perfect,” Still, since it supposedly does “good things and helps many people,” all the liberals have to do is “improve it.”

Heritage’s newly released “Solutions for America” counters that the nation doesn’t need any more liberal “improvements.” Instead, we need to get our country back on track with a full repeal of ObamaCare along with free-market policies that promote tax equity in health insurance, fix our broken government health programs and encourage states to take the lead.

Nothing is more important to Larry Patterson than his family. His four kids, who range from a 2-year-old to a college graduate, shape his outlook on life. They’re one of the primary reasons he’s concerned about the devastating consequences of Obamacare.

Patterson has good reason to be worried. The Patient Protection and Affordable Care Act diminishes family choice of coverage, limits parental involvement and strikes a blow for family values in health care.

Even with many of the new provisions years from implementation, Patterson is already bracing for the harsh realities of life under Obamacare.

The North Dallas businessman operates a franchise called the Glass Doctor, which repairs auto glass, windshields, windows and shower doors. He’s fortunate to offer health insurance to his employees and enjoys good coverage for his family. But with uncertainties about rising health care costs and the outsize impact on small businesses, the future is bleak.

“I don’t know so much that I’m afraid Obamacare would interfere with my doctor and our relationship, as much as I am certain that it will,” Patterson said. “At some point, the doctor is going to have to decide whether he wants to follow the Hippocratic oath or the Obamacratic oath. When the interest of the patient and the doctor are not in alignment, how is he going to make a decision as to what is the right thing to do when faced with the realities of federal law that says something different?”

The question weighs on Patterson’s mind. He wonders what it means for his own health care and the life facing his four children, Ashley, Jamie, Tatum and Willy.

At the heart of Obamacare is more government regulation. While it’s true that more families will be covered under the law, the new entitlement comes with strings attached. Families that take advantage of the affordability tax credits won’t have the option to purchase cheaper insurance plans across state lines and aren’t allowed to buy family-friendly plans.

Patterson said the likely result means inferior care to what he and his family receive today.

“It’s going to reduce choice because now we have politicians deciding upon who are the winners and the losers, what treatments doctors can perform and get paid for, and what treatments the government says, ‘No, this is not a valid treatment and we’re not going to pay for this,’” he said. “That’s absolutely going to reduce choice — not just in the quantity of doctors, but in the available treatments.”

He’s seen the impact firsthand. His cousin, who is in his 50s, decided to retire early from the medical profession rather than face more government regulation. Patterson said the additional bureaucratic burden for him and his staff was just too much to take — even though his cousin had planned to work 15 more years.

Patterson’s concerns extend beyond a reduced choice of doctors and treatments. He also fears the government will expand its role in the lives of his children, forcing him out of the equation.

“When I was growing up, my parents had absolute control over what I did, when I did it, and how I did it, until I reached the age of 18 and left the house and started taking care of myself,” Patterson said. “If my daughter were 17 years old and became pregnant, the last thing I need is a government consultant telling her what to do.”

Under the new health care law, that’s exactly what could happen. Obamacare undermines the role of parents by encouraging contraception and abortion without respecting parental consent. School-based health centers will receive $50 million per year to promote such options as contraception and abortion. An additional $75 million per year funds Personal Responsibility Education grants to help states reduce pregnancies.

With the government taking on a greater role, where does that leave a parent like Patterson? He talks frequently about the law’s consequences with his family and employees so they are fully aware of what it means. At home, it might result in less choice and greater regulation. At work, it could cause higher premiums and co-pays.

Policy issues aside, Patterson said he worries about how his children will view America differently under Obamacare. It’s one of the reasons he’s rooting for Texas Attorney General Greg Abbott to succeed in his lawsuit against Obamacare’s individual mandate.

“This law sends a message to my children and future Americans that they’re not competent, they can’t take care of themselves, government has to step in to take care of them,” Patterson said. “I look at this legislation as we are delegating basic moral responsibilities we have in our communities to take care of our aging parents, to take care of those that are less privileged in our communities. We’re taking these basic moral obligations away from ourselves, from our churches, our synagogues, our civic organizations, and we’re delegating these responsibilities to government. I don’t understand that.”

Patterson called himself the “most optimistic pessimist you’ll find.” It’s one reason he’s hopeful about the repeal of Obamacare and why he harbors a faith that his children’s generation might be able to put the country back on track — restoring the principles of limited government, individual freedom and traditional values when it comes to health care.

This story originally appeared in The Washington Examiner.

Obamacare creates a host of new federal requirements billed as consumer protections. But enacting these policies falls not on the feds, but on the states.

Some of these provisions were among the more popular components of Obamacare: guaranteed issue for children; letting individuals remain on their parents’ health plan up to age 26; requiring insurers to cover federally-defined preventive services, etc.

The goals behind these mandates are worthy. But they could be achieved in better ways. The approach taken here is virtually guaranteed to accelerate insurance costs. Ironically, Obamacare also requires states to review “unreasonable” rate increases.

What authors of the health care takeover failed to consider was whether states actually have the authority to enforce these standards. Robert Pear and Kevin Sack report in a recent New York Times article:

“Insurance commissioners in about half the states say they do not have clear authority to enforce consumer protection standards that take effect next month. Federal and state officials are searching for ways to plug the gap. Otherwise, they say, the ability of consumers to secure the benefits of the new law could vary widely, depending on where they live.”

Several states don’t have authority to enforce the federal standards. How will regulators in these states respond to the new law? Pear and Sack write, “Some state regulators said they would ask state legislators to expand their authority by putting the federal standards into state law next year. Others said they would rely on their powers of persuasion, the good will of insurers or general state laws that ban unfair or deceptive trade practices.”

Good will? This isn’t the first time Obamacare has had to rely on the industry’s “good will” to cover up the legislation’s many flubs.

In Arizona, the likelihood of passing legislation to enforce federal standards is low, due to the state’s lawsuit against Obamacare’s individual mandate. In Florida, if insurers fail to revise their contracts, the state claims no “has no legal authority to do so.”

These headaches are the inevitable result of jamming Obamacare through Congress without sufficient thought. Moreover, they are the expected natural byproducts of central planning. The states are an after thought here, but the situation reveals Obamacare to be yet another example of federal encroachment into state authority. If states can’t find a way to enforce the new standards, Washington will do it for them. Yet implementing these policies will needlessly drive up premiums, putting states in a very awkward position.