ObamaCare nails its first “villain”

posted at 2:20 pm on June 8, 2010 by Ed Morrissey

Nancy Pelosi called insurance companies “villains” last year, and in that sense, ObamaCare scores its first success today.  The Virginia firm nHealth announced that it will close its doors by the end of the year, thanks to the costs associated with insuring people under the mandates imposed by Congress:

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.”

Sarah Kliff warns at Politico to take Kitchen’s missive with a grain of salt, but in doing so, underscores the idiocy of casting health insurers as profiteering villains in the first place:

The company’s finger-pointing — first reported by the newspaper Richmond BizSense — must be read with caution: For years, employers and health insurance brokers have struggled to keep pace with steeply rising health care costs.

Asked about nHealth’s decision to shut down, a White House aide said, “It’s difficult to comment on this case without fully evaluating the company in question.”

The blame game — whether health reform can be held responsible for the continuing woes of an already struggling system — will very likely become a familiar plotline as the health overhaul takes effect and political parties vie for control of the narrative.

But Pelosi and the Democrats blamed the steep rise in health care costs on insurers like nHealth while drumming up support for ObamaCare.  They repeatedly demonized the supposedly rich insurance companies in order to play class warfare with health care.  They and the media mainly ignored the fact that health insurers have very thin profit margins, averaging somewhere between 2-6% depending on the year.  They didn’t have much room to meet the new coverage mandates while keeping costs at an affordable price, and nHealth merely felt the pain first.

Instead, this exercise shows where the actual cost drivers are — in government mandates.  The intervention of governments in demanding certain coverages distorts prices.  The intervention of courts in casino-like malpractice actions creates both higher insurance costs and tremendous incentives for a great deal of unnecessary care — by the CBO’s estimate, over $11 billion a year in defensive medicine.   Democrats were well aware of these costs, but chose not to make malpractice tort reform a part of the ObamaCare package, despite many calls from Republicans to include it.

And what kind of insurance plans did nHealth offer?  The kind of high-deductible, HSA-driven plans that put patients in charge of routine care and leaves insurance to cover the crises instead.  They saved money while offering better pricing signals to hold down overuse of provider networks.  In other words, nHealth was part of the real solution to “steeply rising health care costs,” and ObamaCare drove them out of business.  That serves as an example of how badly this government intervention will work out in the long term — and as a harbinger of what will eventually happen with other insurers.


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Obooba wants health insurance companies to go out of business, but apparently wants to subsidize newspapers.

Huh.

Akzed on June 8, 2010 at 2:23 PM

Job destroyer.

RedNewEnglander on June 8, 2010 at 2:24 PM

But I can keep my doctor and current health plan, right?

dirtseller on June 8, 2010 at 2:24 PM

The whole point is to drive these guys out of business and insert a government institution in its place. The business of America is now… government, and lots of it.

WitchDoctor on June 8, 2010 at 2:24 PM

I do not believe that ObamaCare will end up being fully implemented. This is just the beginning and there is much more of this to come. This POS will be repealed, if not in whole, in large chunks.

bopbottle on June 8, 2010 at 2:25 PM

Obama – putting more people out of work than the recession of 2008.

therightscoop on June 8, 2010 at 2:26 PM

. . . and the best parts of Obama’s health care hasn’t even started yet. All those regulatory boards, oversight boards, all the regulations yet to be written, all the bureaucrats, czars, and support staff yet to be hired.

Skandia Recluse on June 8, 2010 at 2:26 PM

How many jobs did dear leader lose today?

cmsinaz on June 8, 2010 at 2:26 PM

Barack: Oh, no!

More people on unemployement.

I know. Hire them as census workers.

This presidenting is hard work.

DuctTapeMyBrain on June 8, 2010 at 2:26 PM

One down. Many more to go. But the endgame for the Dems has always been single payer.

I’ve never understood what they plan on doing once they achieve this however. They are aware that the vast majority of Americans want nothing to do with government-run health care, right?

Doughboy on June 8, 2010 at 2:26 PM

But I can keep my doctor and current health plan, right?

dirtseller on June 8, 2010 at 2:24 PM

Sure

(translation from demspeak) hell no and stop asking questions, we are logging your ip address.

sonofdy on June 8, 2010 at 2:27 PM

Senator Webb?

Senator Warner?

Buehler? Buehler?

Wethal on June 8, 2010 at 2:29 PM

Obamyopic.

LarryG on June 8, 2010 at 2:29 PM

You people have not seen anything yet. If this stays the law of the land expect VA quality care in about 10 years for everyone but the super rich. I am not knocking the docs at the VA, I let them work on me all the time, and most of them are super, but they are overwhelmed. When your routine daily appts. are graduated in blocks of 10 minutes each, you don’t get quality care.

Johnnyreb on June 8, 2010 at 2:29 PM

Congressional Democrats had absolutely no idea what it is they were doing.

They understand neither healthcare, nor our system of free enterprise.

They rushed to “cover” everyone and in the process will ruin some of the rare aspects of our system that were working well.

While preserving in amber some of the worst aspects, including employer mandates and third-party payments.

When Democrats aren’t ignorant, they are evil.

NoDonkey on June 8, 2010 at 2:30 PM

“You like your plan, you keep your plan.”

Joe Caps on June 8, 2010 at 2:30 PM

The unintended consequences of rampant stupidity!

JAM on June 8, 2010 at 2:31 PM

Who is Dr. John Galt?

Chip on June 8, 2010 at 2:31 PM

Where be my Free Healthcare,sucka?

portlandon on June 8, 2010 at 2:31 PM

Obama wants the money and control now held by the insurance, energy, and financial industries. One tactic in getting it is to demonize them at every turn. It really is the Chicago way — suck the private sector dry.

Paul-Cincy on June 8, 2010 at 2:31 PM

“If you like your plan, you can shove it. And then we’ll pack it in even deeper with our government-controlled plan.”

Daggett on June 8, 2010 at 2:34 PM

They will keep falling. Like dominoes. The future is bleak for insurance companies, and people. Because if Government approaches health care like they have the oil spill….we’re all in for a lot of hurt, and there aren’t going to be enough band aids.

capejasmine on June 8, 2010 at 2:35 PM

Who is John Galt?

Retired insurance salesman.

Emperor Norton on June 8, 2010 at 2:36 PM

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.”

Don’t feel bad, Paul.

Most competent business owners/managers in the country are saying the same thing.

cntrlfrk on June 8, 2010 at 2:38 PM

There is a time to make a profit.
Now is not the time.

seven on June 8, 2010 at 2:38 PM

Score!!!

/sarc

Bruno Strozek on June 8, 2010 at 2:39 PM

Wolverines!

shick on June 8, 2010 at 2:39 PM

Thanks, 52 %.

kingsjester on June 8, 2010 at 2:40 PM

Instead, this exercise shows where the actual cost drivers are — in government mandates.

Truth for the ages. Engrave it on a tablet. If you want to know what invariably drives costs UP — unlike competition and choice, which drive costs DOWN — cherchez le mandate.

J.E. Dyer on June 8, 2010 at 2:42 PM

they should be forced to stand trial for what they are doing to this country….or perhaps they will!

shov74 on June 8, 2010 at 2:43 PM

Count Brakula says.. One… One Insurance Company Aaa aaa aaa aaa

lm10001 on June 8, 2010 at 2:44 PM

Love that screencap. Looks like Barry farting the Cuban Nat’l Anthem while Nan and Dweebus keep the beat.

Patrick S on June 8, 2010 at 2:48 PM

The strongest signals on whether health insurance companies will believe they can weather the storm will come immediately after the elections in November. If they see that a good number of congress members are being sent there with the promise to repeal Obamacare they will try to hang in there. If on the other hand it remains status quo, look for the big guys to close up shop too.

The mandates are simply not reasonable or rational. Right now various government agencies are laying out the rules and regulations to go with the 2,000 pages of legislation that was passed, and what I have seen of those rules, many of which they want implemented immediately I guess in some sort of vain attempt to prove to the public that this will work, are designed with one goal in mind. Drive the private health insurance companies out of business.

Nobody is paying attention to the new rules and guidelines being issued by the Obama appointed political lackeys to flesh out the actual legislation, but I sure wish they would. On the other hand I understand most Americans don’t want to go that far in the weeds, but the fact is when you wake up one day and Obamacare is the only insurance you can get, don’t act surprised.

Just A Grunt on June 8, 2010 at 2:48 PM

Way to kick ass, Mr. President.

Kissmygrits on June 8, 2010 at 2:49 PM

And fewer insurers mean higher rates. As the poll that came out today revealed, progressives know the least of anyone about economics.

paul1149 on June 8, 2010 at 2:53 PM

Asked about nHealth’s decision to shut down, a White House aide President Obama said, “It’s difficult to comment on this case without fully evaluating the company in question.” He then went into a 30 minute tirade commenting on how the insurnace company acted stupdily.

OK, I kid, I kid.

mwdiver on June 8, 2010 at 2:53 PM

But I can keep my doctor and current health plan, right?

Everyone under Obamacare is entitled to visit Dr. Kevorikian as often as proves necessary.

Physics Geek on June 8, 2010 at 2:55 PM

whether health reform can be held responsible for the continuing woes of an already struggling system

I thought the whole point of “health reform” (“health reform?” Not even “health care reform?” Or “health insurance reform?”) was to fix the system. Now, apparently, it’s enough that it might possibly not be responsible for making it worse in this instance.

notropis on June 8, 2010 at 2:55 PM

His plan is working!

d1carter on June 8, 2010 at 2:56 PM

I run a small business in Philly, and we had an HSA health program for the past three years which worked really well. However, when it came time to renew this year the rates had gone up nearly 40% and we had to switch back to a PPO type product.

I’m afraid HSAs are headed for extinction.

phillypolitics on June 8, 2010 at 2:57 PM

I am not seeing a lot of gratitude on this thread.

Lily on June 8, 2010 at 2:57 PM

The Zero Regime: Kicking Consumers’ Asses Since 2009

Cicero43 on June 8, 2010 at 2:59 PM

Good, solid B+

Greek Fire on June 8, 2010 at 3:09 PM

Just A Grunt on June 8, 2010 at 2:48 PM

Where does one go to see these new rules and regs if one isn’t in the healthcare field?

journeyintothewhirlwind on June 8, 2010 at 3:15 PM

“If you like your current plan…”

Oh wait…

JusDreamin on June 8, 2010 at 3:16 PM

Don’t forget the 50 people whose jobs were deleted or destroyed by nHealth calling it quits. They should at least count against the saved & created.

DailyDanet on June 8, 2010 at 3:19 PM

I wrote in this post that the government’s idea of a solution is by dumping more people into Medicaid, a program who’s costs are spiralling out of control. Compared with how HSAs have bent the cost curve down for a number of years calls into question whether the Democrats’ health care plan was about achieving an ideological goal or about finding a sensible solution to rising health care costs.

LFRGary on June 8, 2010 at 3:23 PM

Don’t forget the 50 people whose jobs were deleted or destroyed by nHealth calling it quits. They should at least count against the saved & created.

DailyDanet on June 8, 2010 at 3:19 PM

Hater.

Bruno Strozek on June 8, 2010 at 3:24 PM

We’ve got to get this repealed.

Mirimichi on June 8, 2010 at 3:29 PM

Today, we are are federal employees.

Get back to work.

BobMbx on June 8, 2010 at 3:38 PM

“If you like your current plan…”

Oh wait…

JusDreamin on June 8, 2010 at 3:16 PM

“Thats a real nice health insurance plan you’ve got there….be a shame if something bad happened to it”

BobMbx on June 8, 2010 at 3:40 PM

Nostrolitus calls for hearings on leg-rustling insurance company who plans to layoff 50 employees and deprive thousands more of their right to healthcare.

“Time to kick some ass in the insurance industry”

BobMbx on June 8, 2010 at 3:43 PM

Well, you know that liberals and moderates fail miserably when asked 5th grade questions on Econ 101.

Vince on June 8, 2010 at 3:43 PM

ObammyCare: Bad for your health, bad for employment and bad for investors.

An Obama trifecta.

bloviator on June 8, 2010 at 3:56 PM

daddy, did you fire anyone today?

jbh45 on June 8, 2010 at 4:02 PM

At first, I read that as, “ObamaCare nails its first victim.”

Turns out, it makes just as much sense that way.

tom on June 8, 2010 at 4:04 PM

If the Republicans are the “party of ‘no’” then the Democrats must be the party of “out of business”.

Dr. ZhivBlago on June 8, 2010 at 4:12 PM

….calls into question whether the Democrats’ health care plan was about achieving an ideological goal or about finding a sensible solution to rising health care costs.

LFRGary on June 8, 2010 at 3:23 PM

Some may think they are evil (some are); some may think they are incompetent (most are); but ultimately, they all cared more about the IDEA of universal health care, and how good it sounded, and how caring they were going to appear to the American public.

That’s it. That’s all they cared about. They didn’t have a clue what they were doing, or how they were going to do it. That’s what we have to pound into peoples’ heads for the next 2 1/2 years:

“These people don’t know what they are doing…..”

TeresainFortWorth on June 8, 2010 at 4:27 PM

The whole point is to drive these guys out of business and insert a government institution in its place. The business of America is now… government, and lots of it.

WitchDoctor on June 8, 2010 at 2:24 PM

Exactly. Have I mentioned today that I hate these people?

Alana on June 8, 2010 at 4:31 PM

Why feel sorry for the American people? They gave virtually dictatorial power to the Democrats and we’re supposed to be shocked!, shocked! that the Democrats would move us into socialism as fast as they could? It’s time to pay for that error.

BillCarson on June 8, 2010 at 4:54 PM

This is a feature, not a bug. Obambi and the Left goose the markets by intervening to pick winners and losers, thus ensuring that the small players (entrepreneurial) fall away and the few remaining players are giants (“too big to fail”) who continue piling mountains of ca$h onto their elected leaders via lobbyists.

The end result of all this mess (automotive, medical and energy markets intervention/control by Uncle Sam) will be that the few remaining large corporations are continually extorted and plundered by the Dems while “protected” from the threat of competition by startup firms.

USA, meet “Eurosclerosis”. It’s our future.

Wanderlust on June 8, 2010 at 7:56 PM