Color me skeptical: An InsureBlog Investigative Report (Conclusion)

Did ObamaCare© kill nHealth?

In Part 1, we learned that group health carrier nHealth believes itself to be the first corporate casualty of ObamaCare©, but that this may not be accurate. We also learned that there are more issues here than may be obvious to the casual reader, and attempted to identify them.

On the other hand, we were left with a number of unanswered questions, and we hate unanswered questions:

First up, I did hear back from the nice lady at the Virginia Department of Insurance [ed: actually, they call it the Bureau of Insurance, but we're sticking with "Department"], who had more insights into both the Guaranty Fund and the nature of the "wind down" of nHealth. For openers, the specific process here is called a "solvent runoff" (as opposed to what normally happens when a carrier hits the financial skids). The Department has been (or will be, it wasn't clear) in contact with the policyholders and agents. One thing that I was able to confirm is that nHealth's policyholders will not have recourse to the Guaranty Fund (that's important: we'll discuss why in a moment).

Second, my contact told me that a copy of "the order" would be sent to policyholders and agents, but I could find no such "order" anywhere on the Department's web page. I had also asked whether there were any "financial issues" that might be the cause of the shut-down (as opposed to anxiety over ObamaCare©), and was told that this was "confidential." That's bothersome: it seems to me that, although nHealth is (was?) a privately-held company, the actions of the Department of Insurance in this case are, by definition, a matter of public record.

Which brings us to the issue of the (non-)Guaranty Fund. In "normal" circumstances (e.g. bankruptcy), policyholders of the defunct carrier can access the state's life and health guarantee fund much as savers access the FDIC safety net. But that's not the case here: after 11:59PM on December 31st, any insureds on claim, and still covered by nHealth, will see their benefits closed off, with no recourse to, well, anything. The Guaranty Fund won't help, and the company will no longer exist. That has nothing to do with ObamaCare©, and everything to do with the apparently feckless folks who decided to voluntarily "shut it down."

Perhaps the most telling piece comes from this article in the Richmond (VA) Biz Sense:

"[nHealth co-founder Paul] Nezi and other investors helped fund the company out of the gate with a $12 million investment."

The article goes on the tell us that the nascent company has been unable to up that initial capitalization. The problem is that, given the existing marketplace, and the increasingly growing footprints of "the big boys," that $12 million proved woefully inadequate. Couple that with what appears to be a top-heavy administrative function (50 employees to service just 100 groups?), and you have a recipe for failure.

On the one hand, kudos to Nezi and company for at least trying to increase competition, and especially for focusing on consumer-centric health plans. But it seems to me that this attempt was doomed from the git-go; ObamaCare© may have been the final nail in the coffin, but that grave's been dug for quite a while.

Final answer: I call BS.

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New York Squeeze Play

The boys of summer are back and in New York the squeeze play is on. Only this involves state regulators and insurance carriers, not baseball teams.

Lame duck coach David Paterson is in the dugout and with two strikes on his constituents has signaled for a suicide squeeze play.

New York already has some of the highest health insurance premiums in the country, thanks to extreme regulation which stifles competition. Health insurance premiums are community rated (strike one) and guaranteed issue (strike two) . . . a deadly combination.

Community rating has variations but basically it boils down to charging healthy people more, a LOT more, to subsidize the high cost associated with extending coverage to those with expensive medical conditions. New York is also a guaranteed issue state. Health insurance carriers are therefore required to issue coverage to anyone who can fog a mirror.

This is like telling banks they must make a loan to anyone who walks in the door and charge the guy with "A" credit the same rate as the fellow with a string of loan defaults and is out of work.

So what is NY doing to make it harder for residents to find health insurance at any price?

Gov. David A. Paterson has signed legislation that gives the state the power to block what it deems unreasonably high health insurance premium increases for millions of New Yorkers.

The new law, which covers about three million people enrolled in small-employer or individually purchased plans, requires insurance companies to apply to the state Insurance Department before they can raise premiums. The state then has 60 days to determine whether the rates are justified.

To the casual observer this may seem like a victory for consumers. In reality, it is even more justification for the handful of carriers offering health insurance in NY to exit the market.

The governor and consumer advocates said the law would slow down rampant premium increases, which they said had forced many small businesses and individual policyholders to drop their insurance, driving prices higher as costs were spread over a smaller pool of customers who tended to have high health care needs.

The governor is an idiot and so are the "consumer groups" that support this measure.

This is like the state telling hospitals and doctors they cannot raise their rates without prior approval. Wonder how many medical practitioners would close their doors and move to another state if that happened?

This is an incredibly stupid move by Coach Paterson. What he has done is call for a suicide squeeze when his team is trailing in the bottom of the 9th and there are two outs.

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Health Wonk Review, Boston style

Over at Boston Health News, Tinker Ready serves up chowdah garnished with wonkery. Good to the last drop!

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FREELANCE INSURANCE

An professional indemnity insurance cover that provides financial protection to all those professionals who work as freelancers is known as the freelance insurance. With this kind of indemnity insurance, freelancers, just like other professionals, also get all the protection benefits which cover them from all sorts of claims made by their clients. In present times, a lot of people are choosing to work as freelancers. Some of them even make small teams of a few freelancers and make good profits.

Some of the freelancers that are covered by the freelance insurance are the marketing people, new media professionals, interior designers, web designers, PR, Graphic designers, editors, all kind of photographers, illustrators, copywriters and many more. Like all the other professions, freelancing is also prone to a lot of legal and financial responsibilities which means that if the client does not like your work, you can be easily sued and a claim can be filed against you which can cost you a lot of money. So freelance insurance helps you to meet all the cost for defending the claim made against you which includes the legal fee and also the claims money. Buying a freelance insurance is surely a way to get you peace of mind required to do your work smoothly and tension free.

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Are Mini-Meds on the Chopping Block?

The lies that comprise ObamaCare© continue to pile up. As we've noted before, one of the first to go is the promise that one can keep one's current plan:

"As with so much of ObamaCare©, this one's going under the bus, as well ... savvy folks will avoid buying major medical insurance altogether, opting instead for the much less expensive "penalty" (i.e. "tax"), secure in the knowledge that they can easily pick up coverage later."

Now comes word that folks on limited benefit (aka "mini-med") plans may also see their plans tossed under the bus:

"If you have a low premium, low cost insurance plan, you are going to lose your coverage and be forced into a much higher-cost plan. The Politico piece specifically finds this problem in the mini-med market, where as many as 1 million people will lose their coverage under Obamacare."

The problem is that under the new law, the internal benefit caps inherent in the mini-med product will become illegal. So the plans will have to either adjust (meaning: delete the caps and increase premiums dramatically) or bail. If the latter, a lot of folks who either can't qualify for or can't afford "regular" major medical insurance will find themselves in dire straits:

It's estimated that some 1 million people currently own one of these plans; many of them have no other choice. ObamaCare©'s guaranteed issue provision doesn't kick in for another three-and-a-half years, and - as Bob has pointed out - the ObamaPools are (at least so far) non-starters. If and/or when they actually do become available, a lot of people on the low-end of the economic spectrum may find them unaffordable (especially as compared to their current premiums), thus adding to the ranks of the uninsured.

But, as with the nHealth kerfluffle, there may be less here than meets the eye:

According to John Ferguson, an expert on limited-benefit plans (and whose company has been marketing them for a number of years), the folks playing Chicken Little may be premature. John points out that, as far as mini-meds are concerned, "everything is an opinion now ... [and we] believe we are filed in all the right ways to stay in the market."

How can he be so sure?

Glad you asked:

John explains that "[w]ithin the limited medical industry there are two styles of limited medical benefit plans: co-insurance (sometimes referred to as co-pay-based or expense-incurred) and indemnity-based (sometimes called fixed indemnity) insurance. Fixed-indemnity-style limited medical plans that do not issue creditable coverage letters or represent themselves as a “true group health insurance plan” are exempt from the new regulations because they are considered supplemental-insurance-based limited medical plans." The plans based on the co-insurance model, however, will most likely be the ones headed out the door. At this point, of course, no one knows how many of each type are in force, so there's no way to gauge the ultimate impact.

[Full disclosure: I use John's company for my mini-med clients]

Regardless, I have no doubt that at least a few folks, and perhaps many, will lose their existing coverage as a result of these changes. And so another ObamaCare© promise bites the dust, but that's hardly a surprise.

[Hat Tip: FoIB Brian D]

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Color me skeptical: An InsureBlog Investigative Report (Part 1)

[UPDATE: Part 2 is here]

As an ardent opponent of ObamaCare©, I would like nothing better than to say "I told you so:"

"A Virginia-based insurance company says “considerable uncertainties” created by the Democrats’ health care overhaul will force it to close its doors by the end of the year."

nHealth, in business for just over two years, specialized in High Deductible Health Plans, and employed about 50 people to service its 100 insured groups. They've stopped writing new groups, and "will terminate all business by Dec. 31."

Which raises a couple of questions:

First, since when does a carrier just voluntarily shutter its doors? We've all heard about companies going belly-up, at which point the state's Department of Insurance steps in and takes over. And the various Life and Health Guaranty Funds help insure that claims continue to be paid. But what happens when the company just decides to throw in the towel altogether?

I figured it would be easy to find information on Virginia's Guaranty Fund, but came up blank. So I called the Virginia DOI, which directed me to the appropriate site. The problem was that this particular issue wasn't addressed. Time to put on the deerstalker and cape.

I asked the nice lady at the Department of Insurance if there was someone who could help me noodle this through, and she directed me to one of the examiners who work in the appropriate department. I asked two questions:

First, if a company voluntarily shuts down, would any of its (now former) policyholders have recourse to the Guaranty Fund? Second, was the stated reason (ObamaCare©) the real reason? The impetus for the second question was that one of the folks I spoke with mentioned that nHealth was being "monitored." This led me to wonder whether this was less a question of "reform" and more a question of "oops!" Unfortunately, this information was outside my contact's ken; she's promised to investigate this and let me know.

My next call was to the folks at nHealth itself, where I spoke with a charming young lady named Tiffany. In response to my questions, she told me that they hope to transition their policyholders to other carriers before the end-of-year deadline. They're taking a two-pronged approach: at the corporate level, they're negotiating with other carriers to sell the entire block of business. At the other end, some of their more conscientious agents are looking to move their nHealth groups to their other carriers.

But what if the corporate-level efforts don't bear fruit, and a particular group is unable to move to a new carrier? As far as she's been told, that group's coverage ends when Dick Clark wishes us all a Happy New Year. She also didn't know whether or not the Guaranty Find would come into play, but that's not really her area of expertise, so no harm or foul.

I did ask if there was any outside pressure to make this move, but she reiterated that this was a decision voluntarily undertaken by the board.

Next, I emailed Sarah Kliff (who wrote the original Politico article) to ask for clarification; I'm patiently awaiting a response.

There are bigger stakes in this story than might appear at first blush. If - and it's a big if - ObamaCare© really is the culprit, then we can expect to see more of the smaller, regional carriers fold up their tents. But I'm not convinced that this is truly the case here, which means that someone's not being entirely forthright.

We'll let you know either way. [Update: Part 2 is here]

[Hat Tip: RWN]

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