All presidential assurances to the contrary, you can’t keep what no longer exists—not even health coverage you like.
Millions of people like Health Savings Accounts (HSAs) paired with high-deductible insurance plans. The approach is so popular, in fact, that it’s the fastest growing type of coverage in the country. But this coverage may not be able to survive Obamacare.
Consider the case of nHealth, a relatively new insurance provider based in Richmond, Va. nHealth recently announced it will close its doors due to the combination of stringent new regulations and future uncertainty—both the product of the new health care law.
Named one of “Greater Richmond Companies to Watch” in 2008, nHealth specialized in high-deductible plan, combined with HSAs.
When paired with high-deductible coverage plans, HSAs provide consumer-managed health care. The combination gives patients greater flexibility in deciding what health treatments to pursue, at the same creating incentives to reduce overall health spending. The popularity of these plans has soared since their inception in 2005, when approximately 1 million Americans enrolled. Today, that number has climbed to about 10 million.
nHealth’s exit means less choice and competition in the insurance market. And many other insurers are expected to follow suit due to new regulations created by Obamacare, especially its federally-imposed medical loss ratio.
On January 1, 2011, insurers will be required to maintain an 80 percent medical loss ratio (MLR) in the individual market. This means that 80 percent of revenue from premiums must be spent on medical claims, not on administrative costs or profits. The National Association of Insurance Commissioners recently held a teleconference on the MLR’s impact, as several insurers begin to consider exiting the individual market in certain states where meeting the new MLR requirement would be not be viable. Decision time is now, as insurers must give policyholders six months notice before terminating a contract.
According to Dowling and Partners, an insurance research firm, major players such as Aetna, Assurant, Mega Life, and United Health are likely to bail out of the individual market in at least some states. As a result, 1 to 2 million Americans could lose their current coverage. So much for promises.