As a result of President Obama’s health care reform law, some Americans are already losing their health insurance coverage before the law’s regulations even go into effect, according to a new report.

A study conducted by McKinsey & Company on behalf of the Galen Institute, an advocacy group promoting free-market health care reform, found that many health insurance providers are already getting rid of plans they offer, especially small businesses.

For instance, American Enterprise Group “announced in October 2011 that it would stop offering non-group health insurance in more than 20 states,” which would affect 35,000 people. The reasons the company gave, according to the report, was “regulatory burdens, including the ‘medical loss ratio.’”

The rule has the largest effect on companies that offer individual policies, and by necessity, therefore, “have higher marketing costs and higher customer service expenses, and… their administrative costs are necessarily higher.” Some companies have had to take severe measures to cut costs, “but this is also slashing customer services.”

Other states have seen similar problems with insurance companies decreasing their coverage. The end result is severely decreased competition in the health insurance market, something which will ultimately drive prices up.

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