Obamacare

ObamaCare's First Victim? "The rules changed in the middle of the game."

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On my Twitter account last week, I noted the story of a Richmond, VA health insurance start-up that specializes in consumer-driven health care plans—or did, anyway, until it shut down. The top execs are now claiming the company was put out of business by regulatory uncertainty created by the passage of ObamaCare. Today, Politico's Sarah Kliff has a nice follow-up:

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.

The firm, nHealth, appears to be the first to claim that the new law has driven it out of business. "We don't know what the rules are going to be and, as a start-up, our investors need certainty," nHealth CEO and president, Paul Kitchen, told POLITICO. "The law created so much uncertainty that is beyond our control."

…In an interview with POLITICO, Kitchen explained the impact of health reform on his business as two-fold. First, it created an uncertain future. With regulations yet to be written and rules constantly forthcoming, he said "everything felt beyond our control."

Second, Kitchen is apprehensive about a more-heavily regulated insurance market. The new health reform law requires insurance companies to spend a certain amount of premium dollars on medical costs and, in many cases, bans lifetime limits on medical coverage. Kitchen said he was uncertain whether nHealth would be able to comply.

"The rules changed in the middle of the game," says Kitchen. "We're not willing to wander into that environment." The White House aide agreed that the rules will indeed change, but in a way that benefits consumers. Stricter regulations will ultimately guarantee better coverage for subscribers. The medical loss ratio regulation, for example, will ensure that insurers spend a certain percent of subscriber dollars on medical costs rather than administrative expenses.

The fact that there are losers in a market is not by itself proof that a law is problematic (I can imagine any number of deregulatory moves, especially in the energy sector, that might kill some business models). And start-ups with short track records are inherently less stable than existing successful businesses, which means they're the most likely to get pushed out when rules change. But it does suggest the tough road health insurers are going to have ahead of them, and, in particular, the difficulties that companies that aim to innovate with CDHC-flavored plans are likely to face.

I took a longer look at how ObamaCare threatens consumer-driven health care plans here.

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  1. “The law created so much uncertainty that is beyond our control.”

    Kitchen should have explained to his investors that he needed an extra $1billion for lobbying. Problem solved.

  2. “The law created so much uncertainty that is beyond our control.”

    Everything is falling into place.

    1. Since beginning of time, mankind has yearned to destroy the healthcare system.

  3. There are those who will say that this is an unintended consequence of the law.

    To them I say, “Ya gotta break some eggs to make an omelet, bitches.”

    1. No good comrade, eventually someone will want to eat that omelet but all you will have is broken eggs and a big stain.

  4. There are those who will say that this is an unintended consequence of the law.

    To them I say, “Ya gotta break some eggs to make an omelet, bitches.”

  5. What a crock of shit. The “considerable uncertainty” ius actually the possibility that new regulations will remove oppoortunities to gouge and defraud. Don’t worry, the con artists will always find new scams.

    1. I like the way you described your comment at the beginning.

      1. At least he up front about it.

        1. Max still comes here? That’s one sick narcissist.

    2. I’ll remember that Max if you ever need both your appendix removed and you have MRSA. I’ll have to balance which one is priority so the other won’t be counted as fraud. No PX meds or anesthesia for you so I’m not gouging the system. Your subsequent expiration will save the system a pretty penny.

      Or you could just save us the trouble yourself….

      1. I’ll remember that Max if you ever need both your appendix removed and you have MRSA.

        Isn’t MRSA complimentary with most hospital visits these days?

        1. You’re catching on, sage. Not most visits though. If a hospital is meeting or exceeding aseptic protocols, then the risk of transmission should be low. As it stands now, insurance will not pay for a “never event” (a nosocomial infection deemed preventable). You should always check the rate of such infections if possible, and if you require surgery ALWAYS ask about the rate of his or her SSI (surgical site infection) frequency.

          1. Is that publicly available information (the rate of infections)? I know people in the business locally, so I could always find out that way, I guess.

            1. As per community rating standards, yes, and should be freely available on a provider’s website.

              1. Thanks, Mr. M.D.

                1. Don’t thank him, turn the shock collar to “maximum” if he fails to thoroughly wash his hands.

                  1. You’d be suprised what the numero uno fomite is for disease within a hospital.

                    It’s not MNG. Or even Max/Lefiti/Edwin/Hobie (we haven’t ruled out Dan T).

                    It’s not even Episiarch raiding the morgue for companionship.

                    Physician’s ties rank in the top five, as is computer keyboards, and doorknobs.

                    The nurse’s station is numero dos due to the aggregation of people there and touching the surface after patient care.

                    Think folks, what is always near the patient and when a patient is transferred anywhere in the hospital it goes with them? What is something everyone touches? The answer is at the bottom…

                    Provided aseptic protocols are followed [diligent handwashing, use of PPE (personal protective equipment)], disinfecting stethoscopes and other equipment after an exam, observing isolation precautions) risk, ideally, should be low.

                    Another health tip: ALWAYS ask if your nurse or doctor washed their hands. If they get huffy, fuck ’em, it is your health at risk. Ask them to repeat while you witness.
                    .
                    .
                    .
                    .
                    .
                    Answer: The patient’s chart.

                    1. Good stuff. Not the diseases, mind you…

                    2. Yeah, right. They’d probably write “difficult” on my chart, if they haven’t already.

                    3. That’s not all that’s there Tulpa Washington Carver….yours is a cornucopia of disorders.

                      And don’t expect any peanut butter the next time you are admitted.

                    4. No surprise there. I knew I was in trouble when during my rectal exam, the doctor said it reminded her of her scuba diving trip to the Great Barrier Reef last year.

                    5. Answer: The patient’s chart.

                      Now with electronic charting, the last thing touched is the tablet PC which can’t be disinfected.

                    6. Guess that’s where that federally mandated computerized charting will help! Oh, wait…then the computer will be the MRSA reservoir. But at least it’s a legible MRSA reservoir!

    3. Max seems to have forgotten that his beloved Lord has forced everyone to submit to those he believe gouge and defraud us.

  6. Wait until one of the big boys closes shop. NLT 2013.

    1. I’d take that bet . . . depending on how you define the “big boys”.

    2. I disagree. The Big Boys are, by definition, too big to fail. That’s when the Feds will swoop in and start subsidizing the big carriers.

      Remember how this works:

      If it moves, tax it.
      If it keeps moving, regulate it.
      If it stops moving, subsidize it.

  7. Obamacare’s first victim?

    We know it won’t be the last.

  8. The fact that there are losers in a market is not by itself proof that a law is problematic (I can imagine any number of deregulatory moves, especially in the energy sector, that might kill some business models).

    Yes it is proof that the law is bad. Deregulation removes the unfair perks that some companies got. If those companies can’t survive in the free market, they shouldn’t exist at all. A law that forces a company out of business, on the other hand, is doing the opposite.

    1. Reason can’t exist in the market, hence to dunning gullible true believers for donations. Not enough people buy this crap the keep the whole enterprise afloat. Don’t you find that ironic?

      1. What I find ironic is that a griefer twat with no life spends his waking hours trolling this site to tell libertarians how irrelevant they are.

      2. Surviving on donations is surviving in the market, since donations are voluntary.

        1. It isn’t the market though, just the consensual economy (sometimes called the private sector, though the line is blurry since it also includes government contractors).

      3. I find it surprising that you haven’t broken your neck trying to tongue your own asshole.

        1. Thanks for the visual.

      4. How many newspapers and magazines are closing these days, genius? In every country, not just the USA.

      5. How is asking for private donations not part of the free market?

      6. Max, your ignorance is showing again.

      7. And what, exactly, is non-market about surviving on voluntary donations?

  9. Dennis ‘Cutty’ Wise: The game done changed…
    Slim Charles: Game’s the same, just got more fierce.

    1. Omar: I got the shotgun, you got the briefcase. It’s all in the game though, right?

    2. Yes, more Wire references.

  10. Public schools, public parks, public transport, public bathrooms…
    What’s not to love about public healthcare?

    1. I can’t count the number of public toilets I have seen that were packed with layers of festering turds, overflowing with shitty water, contained aborted fetuses, and were just plain broken. I finally get it now. It’s a METAPHOR of the system that birthed it!

      P.S. Layers of Festering Turds would be an awesome punk band name. Or Album. Or song. Or all of the above.

  11. Uncertainty is startup death, because you can’t get investors. Thanks, Obama!

    1. Startups contribute to instability in the financial markets, so nothing wrong with that consequence. Government planning gets thrown hopelessly out of wack by money being lent and spent by all these little startup buggers. It’s easier for central planning, and therefore better for the people, if you have just a few big, accountable employers, not some Wild West law of the jungle thing going on.

      1. C+

        Not bad, but you gave yourself away by actually saying “central planning.” Back to square one with you.

        1. Gee, I thought I was having a serious conversation here, but it looks like you guys want to play “Sorry” instead. I need to recalibrate for the maturity level around here. Sorry for the confusion.

          1. Dan, the only one serious about your conversation is you.

      2. For this to work, employers have to actually be held accountable. Fannie and Freddy screwed around with other people’s money, and the only accountability they faced was being bailed out, only to be told they would again be bailed out in the future, should they fail again.

        They way you bring about accountability is to have transparent rules that apply equally to all businesses, big or small. It’s not to have gov’t and big business in bed together, guaranteeing big companies never have to face bankruptcy, and can make deals anytime the gov’t is unhappy with them.

        1. And who holds these angels of accountability accountable, J? Last I checked, Fannie and Freddie got so involved in subprime lending because those who were supposed to be regulating them demanded that they do so for reasons of political expediency. Sorry, I don’t trust D.C. to manage a broom closet as long as there’s potential for vote buying or personal graft.

          1. Then, what do you suggest?

      3. Captain Rudy Smith reflected on the irony of it all. He’d survived countless battles as a fighter pilot in the first three Solartine Wars – in some cases surviving when he had no business surviving ? and yet now he was about to die at the helm of a commercial cargo transport making a routine intergalactic run with nothing more than a mundane shipment of industrial chemicals and communications equipment. Only his third assignment since leaving the military for the more lucrative corporate world, and he was already in a more precarious position than he’d ever found himself in before.

      4. Government planning gets thrown hopelessly out of wack by money being lent and spent by all these little startup buggers.

        Wha?

  12. This can’t be true. Tony assured us yesterday that his employer has not had any worries about regulatory overreach.

    If we can’t trust Tony, we’re doomed.

    1. Cue Warren.

  13. +100 J sub D

  14. Not surprising. Big insurance companies are having to get rid of low cost plans too. My brother, fit and in his late twenties, recently discovered that the catastrophic plan he had been carrying is no longer available and the nearest thing costs almost twice as much.

  15. This is the canary in the coal mine.

    Insurance is particularly vulnerable to regulatory uncertainty, by the way, because it is predicated on being able to project out what the risks are likely to be.

    Strip away, say, lifetime caps, and you have just dramatically increased the (financial) risk for the insurer’s existing population, and rendered their existing reserves inadequate.

    1. DR. BERNANKE: This canary died of … natural causes.

      OBAMA: Back into the mine!

      1. DR. BERNANKE: This canary died of … natural causes.

        Because he lacked preventive care.

        1. No it’s cause of death was a heavily government-subsidized corn product diet.

  16. The medical loss ratio regulation, for example, will ensure that insurers spend a certain percent of subscriber dollars on medical costs rather than administrative expenses.

    I love how these guys are trying to drive fraud and abuse out of the system, while simultaneously gutting the budget for fighting fraud and abuse.

  17. In the true spirit of our mixed-economy fascism, guess who will take the blame when private medicine is destroyed?

    1. Carrot Top?

        1. Can we tar and feather him anyway? It’d be the funniest performance he ever gave.

  18. The new health reform law requires insurance companies to spend a certain amount of premium dollars on medical costs and, in many cases, bans lifetime limits on medical coverage. Kitchen said he was uncertain whether nHealth would be able to comply.

    Shorter Kitchen:

    We aren’t going into this business if we actually have to pay people’s claims and spend the money we take in on medical and provide a product that would actually benefit our consumers.

    Cry me a fucking river.

    This is the libertarian example of the “failure” of Health Insurance reform?

    We’re supposed to feel sorry for the company and it’s execs who publicly lament that premiums have to pay for medical care and they can’t limit/deny coverage to patients who need it??

    Please Please PLEASE keep pointing out examples like this. PLEASE.

    1. I too am not impressed by this company’s predicament. I spoke to a small player in the health insurance industry a few months ago about their plans in light of upcoming legislation. They were not happy about the proposals that were on the table, but as a small business they were happy to be nimble enough to look for a niche no matter what happened.

    2. I take it you would support a law requiring restaurants to spend at least 50% of their revenues on food and to have all their dishes be all-you-can-eat.

      1. I take it you would support a law requiring restaurants to spend at least 50% of their revenues on food and to have all their dishes be all-you-can-eat.

        And still be liable for obesity lawsuits… I’d be on board with this.

      2. Well, the former provision should be easy enough to meet given the latter.

      3. Of course he would. Just going into the health insurance biz is proof positive you’re a moral degenerate and suitable for plundering only. Only that great, frictionless machine, that fountain of all that is good – the Central State – can possibly get into that dirty, corrupt field and remain utterly pristine.

    3. “We’re supposed to feel sorry for the company and it’s execs who publicly lament that premiums have to pay for medical care and they can’t limit/deny coverage to patients who need it??”

      I don’t think that was their point at all. What they said was that the investors who are risking their capital want to be reasonably sure that the business in which they are risking it will actually likely turn a profit. After all, why risk your money on a business that will lose money? Since the government has generated a great amount of uncertainty, the investors now do not believe they can make back their money with enough return to justify the risk therefore they pull their investment.

      All businesses exist to turn a profit. Otherwise, there would be no point in risking one’s capital to start one. Your idiotic idea that somehow having an expectation of being rewarded for taking risks amounts to an intent to defraud defies belief. Perhaps you should start a non-profit insurance company yourself.

      1. Contraian, you forget that these mongoloids think that being rewarded in any capacity = fraud, abuse, murder, baby rape, etc. It’s why they hate us so. It’s also why we have this bullshit now where every kid in a soccer league gets a trophy because we can’t the losers know they are losers. It’d be UNFAAAAAAIIIIIIRRRRR.

  19. Wasn’t Obamacare’s first victim the truth?

  20. all busiineses face uncertainty. The severfal insursance companies that claim they must shut down are remaking a political statement, not reflecting a business judgment.

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