The demise of nHealth is unfortunate, as it seems clear that many of the small businesses that chose to use the insurance company seemed to have been content with the services that they had received (“Reformed Out?” News & Features, Aug. 4).
It is important, however, to note that the cause of the breakdown of the company was not due solely to the new health care law. Ten million dollars in debt seems likely to be a more significant factor, while the new health care law's 80-20 rule is a convenient target. The rule ensures that insurance companies are not spending premium dollars on their own profits, chief-executive salaries and administrative expenses. The law ensures that only 20 percent may be spent on these costs. Instead, premium dollars must be used on medical care. This is, after all, why we pay for insurance in the first place.
It is not surprising that most insurance companies are unhappy with this requirement. If they are unable to meet it, they must pay their customers in the form of rebates. In essence, the idea is that if you give someone money to insure and pay for your future medical costs, and they do not use that money for the medical costs, they must refund it to you. Since this requirement does not go into effect until 2011, it is all the more interesting that it is being pointed to as the culprit for the demise of this company today. The 80-20 rule protects consumers and ensures that their hard-earned dollars go toward medical care, not filling the pockets of insurance company shareholders.
As a small business owner who col-laborates with other SBIs around the country, I can say that, among the folks I work with, the excitement and relief that this law was passed is great. We are glad there will now be options available to help us afford health insurance for ourselves and our employees and their families, and, thanks to the 80-20 rule, our premiums will be used to provide the insurance for which we pay.
It's irresponsible to claim that Obama's health care reform is forcing the insurance company out of business. NHealth is $10 million dollars in debt after two years in business. Its plan of selling high-deductible insurance to cash-strapped employers failed. The irony here is that Obama's health reform, most of which has not even gone into effect, and is being challenged in court by Virginia's attorney general, will soon give small business better insurance plans at better prices, and employers can't be turned down because of their employees' health. Speculation about so-called Obama care costing more than current market insurance is premature. Over 100 plans in the Richmond area will start publishing their prices in October. These private insurers will compete for more customers on a level playing field where companies such as nHealth will have to operate more efficiently. Small businesses and individuals will get tax breaks to mitigate the expense.