A Shot in the Arm: How Job Lock Hurts Entrepreneurs
washingtonmonthly.com
washingtonmonthly.com
I say this on HN constantly because it bears repeating: if you want to understand the problem with the current health insurance system, assume that a normal family of four cannot get private health care coverage at any reasonable price, or in some locales at all. It doesn't matter how much extra you pay your employees. There are many reasons, a bunch of which devolve to "we don't want to cover women with functioning uteruses", why a typical family cannot get covered outside the group coverage system.
This approach is also more compatible with the concept of "insurance" to begin with! I have never seen any sense in paying an insurance company to pay the doctor for your own routine care--shouldn't it be cheaper to just pay the doctor yourself? You buy insurance to level out the variance on unpredictable costs. Having children isn't some type of unpredictable medical emergency we buy insurance against, it's a voluntary decision with a relatively predictable cost. There's no sense in buying or selling maternity coverage.
Group coverage is just a way for those of us who don't have kids to subsidize those of us who do.
I think a mandate for insurance companies to ignore preexisting conditions, traded off against a mandate to buy health insurance, would be a sensible tradeoff for all parties. I think allowing competition between states would provide a better environment. I think there are good reasons for reform. I don't think maternity coverage needs to exist, I highly doubt it makes financial sense for insurance to cover routine care, and I don't think insurance should be bundled with employment.
Despite a total lack of chronic medical problems in my family, declining maternity coverage would not have helped us. So let's lose that red herring.
Do I agree that the government shouldn't have to pay for routine predictable medical expenses? Of course I do. I understand the concept of insurance (to avoid catastrophic losses from rare events), and I also understand how totally distorted our health care system is because of the twisted incentives and lack of transparency in the private employer-funded health insurance system. I'm not wishing for the NHS, but I'm also not naive enough to think that one regulatory tweak (guaranteed issue) is going to solve our problems.
Finally, if you have a problem with the idea that the young, healthy, and fortunate are subsidizing the old, infirm, and poor, you need to revisit the entire concept of insurance. People who avoid acquiring insurance in their 20s --- all of whom will certainly try to get coverage in their late 30s --- are free-riding.
(It is also, by the way, simply not the case that twentysomethings are overwhelmingly the source of startup founders; what they do seem to be is an overwhelming source of YC company founders. Go make a list of 10 VCs, read their portfolios, and go look at the "Management Team" sections on their websites.)
I personally think that health insurance is pretty far back on the list of reasons older people are less likely to found startups than young people. I'm willing to be convinced there by some sort of evidence. Regardless, in order for it to be the case that "[u]niversal health insurance, far from suppressing entrepreneurship, could be a boon to it," it would have encourage more older entrepreneurs than it discourages among the young.
You're right, though. I used the word "the" when I should have used the word "a".
No system is perfect. I think there are a lot of pieces of reform that have been proposed that would be an improvement, though.
As a Canadian I'm left saying, WTF America?
I've had two children in the last 2 1/2 years, wife delivered both via C unscheduled. Total cost directly to me: $0.
But it's a red herring. There are any number of issues that can prevent you from getting coverage even if you "decline maternity coverage". A big problem for insurers appears to be "having a female reproductive system". Another problem is "having been admitted to the hospital before".
For the 20somethings here without the life experience to know this, just for what it's worth --- cost of an emergency C section: calamitous.
There are many, many problems with our system here in Canada. There are many problems with EU systems as well, depending on where you go. The thing is that in 90% of all cases, the better deal on a per person basis is a form of socialized medicine. I just don't get how a large portion of the country seems not to understand this.
As for these problems you speak of. As an example I just tried to book a physical - the earliest possible appointment? March 10th! Another friend of mine needed to book an initial consult with another medical specialist and their first appointment is almost 17 months away. Sorry, I don't get how such a large percentage of Canadians seem not to understand how poorly our system works and how much better it could and how they are so ideologically opposed to the idea of at least having private options. It's not the rich who are inconvenienced since they just go down to the US and pay, but it's the middle class who are legally prevented from using private providers in Canada so we're stuck to wait.
And for the record I both acknowledge the issues in the Canadian system and support exploring ways the private sector can help improve them. But I agree, there is a lot of ideological resistance to private services, particularly because of the example the US sets.
If only that were the case. Why would we ignore the example set everywhere else in the world where there exists private services? Even France has a greater level of private services than Canada.
Incidentally, the US "example" as being free market or private market based is simply demagoguery particularly when you look at how regulations drastically distort the system (ie tax benefits exclusive to employers and the non-portability of most health insurance). Further, again, the issue with the amount spent per capita on public healthcare in the US is very much similar to Canada - so I'm not sure what example you think that the US sets as it could also be one of government influence and the disastrous effects of statist bureaucracy.
Unfortunately it would be futile to find another family doctor as we have a severe shortage of family doctors in the area. It's so severe in fact that any specialists are forced to spend at least some of their time in part as family doctors and still if you're new to the area you won't be able to find a family doctor. Fortunately, I have no pressing issues so I'm keeping the March appointment - it is still however remarkable and laughable that such a situation exists for such a basic level of care while we have the audacity to try touting how great our healthcare system is to the rest of the world.
I had a good conversation with my closest friend, an obstetrician, a month ago. After lots of discussion on what may happen with health care reform, he told me he thought most everyone would be best served if there were no institutions around any aspect of health care and every aspect was pay-out-of-your-pocket as it once was. He may be right, but you can't put the genie back in the bottle. The "country doctor" is a great metaphor for what was and what maybe should be, but there are numerous reason why we can't go back.
Like it or not, society pays for lots of things that are not evenly shared: the roads you drive on, the schools you attend, the court systems that protect people that wind up in law suits, the meat inspectors that are paid by government funds when clearly some people don't eat meat. The list goes on. This is not the root of the problem. Public compromise is part of the grand beauty of living in a diverse ecosystem.
I agree health care is far too complex and there should be more simple and competitive options. All I can say is if you want that, you probably need to spend more time being a part of ensuring for a larger pool of honest people that work in government. What we will get out of this new health care bill (if it does pass) will look like your typical big piece of congressional sausage. Your tired of congressional sausage? All I can recommend is to spend more effort getting honest brokers into Congress.
1. I don't need health insurance if I'm happy to be covered under the public system. Nobody goes bankrupt from healthcare costs in my country. 2. Because of universal coverage, purchasing private healthcare for my family costs about $200/month, and it's a personal policy, not an employer based policy. 3. If I employ someone I don't even have to have a discussion with them about healthcare. It is assumed they will sort out their own health insurance, the same as they sort out their own car insurance.
There is no doubt that health insurance has an effect on entrepreneurship and new company formation when it is one of the highest startup costs, that needn't even exist. I mean, before I started reading threads like this in HN, the thought never even entered my head.
"Americans who have an alternative source of health insurance, such as a spouse’s coverage, are much more likely to be self-employed than those who don’t. Wellington estimates that universal health care would therefore likely increase the share of workers who are self-employed (currently about 10 percent of the workforce) by another 2 percent or more."
"Universal coverage" as currently being debated just mandates that you purchase coverages and penalizes you with a tax if you don't; even with a "public option" you still have to pay for said option.
If you want to argue that tax-supported single-payer systems give you more freedom to quit your job and start a startup, fine, but nothing currently proposed in the US does that.
The difference between paying $0 and $200/month (especially when the first option is tax-subsidized) is trivial compared to the current situation where any "insurance" individuals are graced with being allowed to purchase can be revoked arbitrarily.
So, please, get your facts straight.
If you think that $200 a month is what mandated insurance will cost a family of 4 who aren't Medicaid-poor, I don't know what to tell you.
Mandated insurance with guaranteed-issue is a tax on the young and healthy to subsidize the old and sick. My plan, for example, is illegal in NY and NJ which have strong community rating requirements.
You can certainly think that taxing single 20somethings to subsidize families and the elderly is a good decision as a matter of policy, but it's not going to do a whole lot to increase entrepreneurship.
Without a mandate, how do you provide any reasonable coverage to the unfortunate without falling prey to adverse selection?
This argument just doesn't seem well thought out.
If you make healthy people buy fairly priced catastrophic coverage so that if they have an accident they don't declare bankruptcy and stick the rest of us with the bill, that's not a subsidy. It becomes a subsidy when you force them to pay the same rates as less healthy people, or force them to buy comprehensive policies that go beyond the coverage that they actually need.
Financially-savvy young entrepreneurs with families would obviously be better off with high-deductable plans and HSAs, which cost significantly less than $1200/year. But again, they can't do that, because private health insurance isn't guaranteed-issue.
I think people have missed this point. It's not as if there's a single-payer proposal working its way through Congress, although I think there ought to be. Health insurance sucks; even people who have it are often reluctant to visit the doctor in case it impacts its future coverage although this may result in a loss of economic productivity. A single-payer system will not deliver the desired results to everyone all of the time, but at least it won't treat people as if past illness were somehow a breach of contract.
Certainly, singe-payer means everyone paying a bit more tax to subsidize the least healthy, and if taxes are high enough the risk-/reward ratio of individual private enterprise becomes uneconomic. But if the required tax increases are modest, the benefits for job mobility and general financial security (vs medically-related bankruptcy) will more than outweigh the cost.
Right now an individual's medical problem all too often becomes a financial and legal problem as well. It seems to me that decisions with legal and financial aspects which must be taken in order to obtain medical treatment are made under duress. I had to have emergency medical attention last year and I really wonder about the enforceability of contracts I signed while puking and under the influence of morphine. And I had a good experience overall (no complications, not huge unexpected bills, quick recovery). Given how Kafkaesque the situation is for a good outcome, I shudder to think what it must be like for someone with a deadly or chronic condition.