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HSA health insurer shuts down because of ObamaCare

In response to the health control legislation, HR 3590, a small health insurance companies that focused on selling high-deductible policies is closing its doors. So reports Richmond BizSense (emphasis added)

The hotly debated healthcare reform bill signed into law in March has killed a local insurance company.

At least that’s according to a brief letter Richmond-based nHealth sent to insurance agents explaining the reason behind the shuttering of the once promising local startup. …

The letter explained that “considerable uncertainties” in the health insurance market caused by the recent federal healthcare legislation made the two year-old company’s business model unsustainable.

“Despite a product that was gaining increasing acceptance among companies throughout the Commonwealth, the uncertainties in the regulatory climate coupled with new demands imposed by national healthcare reforms have made it challenging to sustain the level of sales required to remain viable over the long run,” Slabaugh said in the letter. …

“People got skittish about writing any more checks,” Nezi said. …

“The most prudent and sensible conclusion for us is to discontinue the sale of healthcare policies and withdraw from the healthcare business,” Slabaugh wrote in the letter.

Founded in 2008, nHealth was built around a high deductible insurance plan model that utilized health savings accounts and kept costs down making consumers more involved in their healthcare decisions. …

The linchpin within the legislation for nHealth, Kitchen said, was related to pending requirements that would raise loss ratios for insurance companies, a ratio related to premiums versus claims.

Kitchen said the quick decision was based on a long-term outlook that showed healthcare reform would have a fatal effect on nHealth.

Read the whole article: Startup health insurer shutting.

nHealth’s CEO Paul Kitchen wrote an excellent op-ed last year about what’s wrong with the current unfree market in health insurance, and how free-market reforms would empower patients as both consumers and customers.

This might be a trend. As Michael Cannon of the Cato Institute has noted, ObamaCare’s Price Controls Threaten HSAs.

Also check out the commentary in Investor’s Business Daily on nHealth’s closing: Road to Single Payer.

(via the Galen Institute)