Tuesday, June 08, 2010

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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